Williams defaulted on a monthly installment payment in 2017, and Walker-Thomas sought to repossess all the items that Williams had purchased since 2012. Discuss.

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Williams defaulted on a monthly installment payment in 2017, and Walker-Thomas sought to repossess all the items that Williams had purchased since 2012. Discuss.

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Between 2012 and 2017, Williams purchased a number of household items on credit from Walker-Thomas Furniture Co., a retail furniture store. Walker-Thomas retained the right in its contracts to repossess an item if Williams defaulted on an installment payment. Each contract also provided that each installment payment by Williams would be credited pro rata to all outstanding accounts or bills owed to Walker-Thomas. As a result of this provision, an unpaid balance would remain on every item purchased until the entire balance due on all items, whenever purchased, was paid in full. Williams defaulted on a monthly installment payment in 2017, and Walker-Thomas sought to repossess all the items that Williams had purchased since 2012. Discuss.

Explanation & AnswerSolution by a verified expert

Explanation

Generally, when one signatory party to an agreement is unaware of the terms in the agreement, it is then believed the risk that the bargain is one-sided. It means that majority of the risk lies with one party and that party is also unaware of the risk in agreement.
In this case, a party has a little power to bargain with no significant alternative and still enters into a contract, which is not reasonable on a commercial front, without or little knowledge of the terms of such a contract. It cannot be said that the acceptance was a motive for approval of all terms.
The contract is an example of an unconscionable contract wherein it is biased in a way that it is unfair to one of the parties and is, therefore, unenforceable under law.

Sample Response

In a case, where the contract involves unconscionable terms, the court evaluates whether such terms were fair and reasonable at the time of inception of the contract. This is done to decide whether the contract is enforceable or not.
If any term is included that is doubtful, from a general commercial viewpoint, the reason for including such a term is then found. In this case, the term is found to be unqualified, which means it is unconscionable. In such a case, the enforcement of such terms should be denied.
The term included in this contract, mentioning that the payment on each purchase is going to be treated on pro-rata, is unconscionable and, therefore, unenforceable.

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