## Facts

- Walker-Thomas Furniture Co. sold household goods in Washington, D.C. on installment contracts to low-income consumers, including Ora Lee Williams.
- Between 1957 and 1962, Williams made multiple purchases under the store’s printed-form contracts, which retained title in the seller until payment.
- The contracts contained an “add-on” (cross-collateralization) clause requiring each payment to be applied pro rata across all outstanding balances.
- The practical effect was that no individual item was treated as fully paid until the buyer paid the entire cumulative balance for all purchases.
- The clause permitted the seller, upon default, to repossess all goods purchased under the account, including items nearly paid off.
- In 1962, Williams purchased a stereo (about $514.95). After she defaulted, the seller sought replevin of all items Williams had bought since 1957.
- The trial court entered judgment for the seller in the replevin actions despite criticizing the seller’s business conduct; the local appellate court affirmed on the view that it lacked authority to grant relief.
- The buyers appealed to the U.S. Court of Appeals for the D.C. Circuit.

## Issues

1. Whether a court may refuse to enforce a consumer installment contract (or clause) as unconscionable at the time of contract formation, even without specific statutory authorization.
2. What standard governs unconscionability, including the roles of bargaining process (choice/knowledge) and the harshness of contract terms.
3. Whether the add-on clause and related circumstances warranted denying enforcement or limiting remedies, requiring further fact-finding.

## Decision

- The D.C. Circuit reversed the judgments for the seller and remanded for further proceedings.
- The court held that if a contract is unconscionable at the time it is made, it should not be enforced.
- The court stated unconscionability generally involves both (i) absence of meaningful choice and (ii) terms unreasonably favorable to the other party.
- The court did not finally determine that these contracts were unconscionable; it required the trial court to apply the standard to the facts on remand.
- Judge Danaher dissented, arguing that such policy judgments should be left primarily to legislative action.

## Legal Principles

- Courts possess authority in law and equity to deny enforcement of unconscionable contracts or clauses, and may treat UCC § 2-302 as expressing a general principle rather than a narrow, code-only rule.
- Unconscionability commonly requires:
  - procedural elements: lack of meaningful choice, often linked to gross inequality of bargaining power and a buyer’s limited ability to understand hidden or complex terms; and
  - substantive elements: terms so one-sided or extreme that they depart from acceptable commercial standards for the relevant time and place.
- A signed form contract may be subject to nonenforcement where the weaker party had little real choice and little or no knowledge of commercially unreasonable terms.
- An add-on clause that preserves a balance on every item until all debts are paid, enabling repossession of nearly paid-for necessities after default, may support an unconscionability finding depending on the formation context and commercial reasonableness.

## Conclusion

The D.C. Circuit recognized unconscionability as a judicial basis to deny enforcement of oppressive consumer contract terms and remanded for a trial-level determination whether the add-on installment contracts were unconscionable when made, focusing on both meaningful choice and the one-sidedness of the clause.


Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965)