Plaw 210 Memorandum of Law Essay

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Plaw 210 Memorandum of Law

You asked me to answer the question, “Are the Virginia courts likely to follow the unconscionability doctrine as set out and applied in Jones v. Star Credit Corp.”, based on the opinion and rulings of previous similar cases. SHORT ANSWER

The Virginia courts are highly likely to follow the unconscionability doctrine that has been set out and applied in Jones v. Star Credit Corp. The Jones purchased a freezer unit from Star Credit Corp for $900, three times the retail value of the unit. In this case, the court held that the contract between parties was unconscionable because it violated [HN2] U.C.C. § 2-302 (1964), which is set in place to prevent the oppression and unfair surprise of the consumer. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) The U.C.C. § 2-302 (1964) enacted the moral sense of the community into the law of commercial transactions. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) There was no fraud involved in this case. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) [HN6] U.C.C. § 2-302 explains that the meaningfulness of choice essentials to the making of a contract can be negated by a gross inequality of bargaining power. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) Since the salesman was aware of the plaintiff’s limited financial funds, and coerced them into signing the agreement, then that agreement is deemed unconscionable under this law. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) ANALYSIS

1. Jones v. Star Credit Corp. Standard of Unconscionability Plaintiffs Clifton Jones and his wife, both welfare recipients, purchased a $900.00 home freezer unit, with a maximum retail value of $300.00, for a total of $1,234.80. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) Their income is grossly unequal to the salesman. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) The total price of the home freezer unit included the credit charges, credit life insurance, credit property insurance, and sales tax. Id. Their first payment towards this unit was $619.88. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) Star Credit Corp, the Defendant, claims that with the various added credit charges paid for an extension of time the Jones still owes a balance of $819.81 Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) The credit charges alone exceed more than $100.00 the retail value of the unit. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) Plaintiff argues that the sales agreement was unconscionable according to the Uniform Commercial Code, U.C.C. §2-302 (1964), which is intended to encompass the price term of an agreement. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) As welfare recipients, the Plaintiff(s) has/have limited finances; therefore the Defendant was able to take advantage of [them]. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969).

This was taken into consideration, also whether or not an exploitive and callous act had taken place. Id. “The very limited financial resources of the purchaser, known to the sellers at the time of the sale, is entitled to weight in the balance. Indeed, the value disparity itself leads inevitably to the felt conclusion that knowing advantage was taken of the plaintiffs.” Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969). The court ruled in the Plaintiffs favor, declaring that the defendant has been amply compensated by the $600.00+ already paid. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) The court believes that the sale of a freezer unit having a retail value of $300.00 being sold for $900.00, not including credit charges and $18.00 sales tax is unconscionable as a matter of law. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) a. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989)

Sandra A Derby was seeking a divorce from her husband, George E. Derby, of 22 years. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) Husband filed a cross-bill on claims of his wife’s adultery, and persuasion to sign a property settlement agreement without consultation with counsel. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) The husband claimed he was coerced into signing the papers with a false pretense of his wife’s eventual return to the family home. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) In this case, Sandra A. Derby had been married to George E. Derby, Jr. for 22 years before seeking a divorce alleging cruelty. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) The wife managed to persuade her husband to amend their property settlement agreement, allowing her to receive the entire value of essentially all of the valuable real estate that they owned. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) This took place in a parking lot with no consultation or counselor present. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) The husband explained that he signed the agreement because he thought if he did, his wife would return to the home.

Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) Evidence of his wife’s adultery was presented at trial and the husband was granted a divorce on that ground by the trial court. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) The trial court also held that the separation agreement was invalid due to terms of unconscionability and constructive fraud or duress. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) The courts applied this rule because a contract can be deemed unconscionable if “oppressive influences affected the agreement to the extent that the process was unfair and the terms of the resultant agreement unconscionable.” Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) Also, the separation agreement can be held as invalid because “marriage and divorce create a relationship which is particularly susceptible to overreaching and oppression.” Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) This case applied to Jones v. Star Credit Corp. because the plaintiff was taken advantage of by the defendant. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) The wife had knowledge of inflicted emotional distress on her husband when she coerced him to sign the agreement.

Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) The trial judge held, and the evidence supports that finding, that Mrs. Derby, “played upon the weakness of her husband and his desire to reconcile” to exact Mr. Derby. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) The Virginia court affirmed the order granting the divorce and invalidating the separation agreement. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989)The court affirmed the order for divorce on grounds of adultery, also holding that the separation agreement was unconscionable due to credible evidence. Derby v. Derby, 378 S.E. 2d 74 (Va. Ct. App. 1989) b. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) In this case, Beckner and her husband entered into a commercial lease with Friendly Ice Cream Incorporation commencing in 1976 with an original term limit of 15 years. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) Lease required annual payment of 2% of the store’s gross earnings above $275,000. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) In 2002, Mrs. Beckner signed agreement to redevelop the property. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) Shortly after, Beckner’s son indicated concern for his mother’s actions, thus requesting the documents be considered invalid and withdrawn for further consideration. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) This is considered establishing a prima facie case of undue influence.

Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) If the party seeking rescission of the deed or contract produces clear and convincing evidence of great weakness of mind and grossly inadequate consideration or suspicious circumstances, and absent sufficient rebuttal evidence, is entitled to rescission of the document. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) The trial court found that Beckner suffered from “great weakness of mind” and the consideration was grossly inadequate and the transaction had taken place under suspicious circumstances; however court found no support of a grossly inadequate compensation. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) The Virginia court found, on the contrary, that the lesser, Beckner, was a business woman. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) On March 22, 2002, Ms. Beckner filed a bill of complaint against Friendly and FriendCo. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) The chancellor entered into judgment, ruling in Ms. Beckner’s favor on Count II of her Bill of Complaint-grossly inadequate consideration. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) The court reversed the trial court’s decree rescinding the amendment to the lease and requiring repayment of funds by Mrs. Beckner. Friendly Ice Cream Corp. v. Beckner, 597 S.E. 2d 34 (Va. 2004) Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005)

Diana Ruth Galloway, former spouse, appeared before the court seeking review of the Mathews County Circuit Court’s ruling reversing the trial court’s ruling that the property settlement agreement between wife and former husband was unconscionable under Va. Code Ann. §20-151. Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) Wife failed to prove any overreaching by the husband, even if she had been able to prove a gross disparity in the division of assets. Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) Also there was no clear and convincing evidence of overreaching or oppressive behavior by the husband. Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) The parties were married on June 1, 1984, and separated on October 1, 2001. Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) They had neither born nor adopted children into this marriage.

Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) After their separation in 2001, husband brought the property settlement agreement to wife’s apartment where the wife read it and proposed no changes. Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) The agreement was executed on September 29, 2001. Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) The commissioner found the agreement to be unconscionable, because there was a “gross disparity” that existed between the value of the property each party would receive. Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) The trial court sustained husband’s objection to the commissioner’s finding of unconscionability. Galloway v. Galloway, 622 S.E. 2d 267 (Va. Ct. App. 2005) This case relates to Jones v. Star Credit Corp in the similarity of monetary value. The freezer was worth a lot less than was priced; the Jones were unaware of the actual value of the unit. Similarly, in this case, the value of the property was not made known to the wife. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009)

Appellant wife, Rabha Chaplain, “challenged the order of the Circuit Court of the city of Virginia Beach (Virginia), which granted appellee husband’s motion to strike the wife’s evidence and found that the parties’ premarital agreement was not unconscionable on its face and was enforceable.” Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) The wife had no source of income and was also foreign, having limited knowledge of English, therefore not allowing her to read or understand the agreement. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) She claimed that her husband had also failed to sit down and explain the terms of the agreement to her before it was executed. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) The wife’s native language was Arabic, having lived in Morocco until the summer of 1996. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) Six months after coming to the United States to visit her brother, she met her husband. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) They were married on September 4, 1997. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) She spoke limited English and relied on a translator. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) Husband testified that she could read the English menu in a Chinese restaurant.

Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) Within two months of meeting, parties became engaged. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) The wife signed a premarital agreement “because she trusted her husband.” Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) She had no knowledge of what the agreement held, or that it was a premarital agreement. Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) She thought it was just “a paper for marriage…like [a] license or something.” Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) This case also relates to Jones v. Star Credit Corp because the husband failed to disclose a [his] net worth to his wife prior to the execution of the agreement. He declared to his wife that he was a “poor man” and “didn’t have the money much.” Chaplain v. Chaplain, 682 S.E. 2d 108 (Va. App. 2009) Jessee v. Smith 278 S.E. 2d 793 (Va. 1981)

Jessee, Plaintiff, sued store owner, Smith, seeking $2673.26 for labor pursuant to an oral contract for interior finishing work. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) The parties are disputing the method of determining the labor charge, there being evidence that the plaintiff’s oral contract aligned with the trade custom. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) The trial court held that there had been no meeting of the minds concerning the labor price and the price demanded by plaintiff was “exorbitant” and contrary to public policy. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) The Defendant, Jesse, a carpenter, testified that he was asked by Smith and by Brenda Garrett, manager of Smith’s store in Norton, if he would finish the work on the interior of the store for a price of “cost plus ten percent.” Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) He declined and presented a” cost plus twenty-five percent”, explaining he would have to pay for the materials. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) Garrett called Smith at home and told him to “go ahead and start on Monday.” Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) Smith refused to pay when Jessee presented Smith with a labor bill of $2,673.26, representing 125% of the cost of the materials. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) Smith contended there had been a misunderstanding concerning the labor charge. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) The trial court moved to strike down the evidence of the oral contract. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) It also ruled the contract unenforceable on the ground of public policy.

Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) The judge had reasoned the labor charge was “exorbitant.” Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) The courts reversed the trial court’s judgment, which dismissed the carpenter’s action against the store owner to recover under an oral contract, because they failed to submit the contract question to the jury. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) The case was remanded for a new trial, if the parties were advised to do so. Jessee v. Smith 278 S.E. 2d 793 (Va. 1981) This case is similar to Jones v. Star Credit Corp. because monetary value was an issue of controversy. The monetary value of this job was not made clear or explained properly to the Plaintiff beforehand. Conclusion

Because the salesman was dishonest in his dealing with Jones, and did not reveal the actual price value of the home freezer unit, the courts will find the contract unconscionable based on previous rulings of similar cases. Jones v. Star Credit Corp., 298 N.Y.S.2d 1 (Sup. Ct. 1969) The Virginia court will apply the same standard as set forth in Jones, and will not apply any other standard. In each of these cases, people were misled into or coerced into signing a contract, when they were unsure of the terms and conditions, and were without counsel, causing the defendant to feel as if they had the upper right hand in the matter. In each case the plaintiff was left unknowing the actual monetary value of the issue, the defendant failed to reveal it. A contract is considered unconscionable when the defendant does not take the proper steps to ensure that the plaintiff is made fully aware and understands what is involved in the contract, and also the exact monetary value in the contract. So in answer to the presented question, yes, the Virginia courts are highly likely to follow the unconscionability doctrine that has been set out and applied in the Jones v. Star Credit Corp. case.

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