FrostiFresh Corp. v. Reynoso – Case Brief
Summary of FrostiFresh Corp. v. Reynoso, 52 Misc. 2d 26, 274 N.Y.S.2d 757 (N.Y. Dist. Ct. 1966).
Facts: FrostiFresh (P) sold a combination refrigerator-freezer to Reynoso (D). The sales contract was negotiated in Spanish with a Spanish speaking salesperson and the contract was never translated. The cost of the refrigerator to FrostiFresh was $348 and under the sales contract the price of the refrigerator was $900 with a credit charge of $245.88.
FrostiFresh filed suit against Reynoso to collect on the balance due for the refrigerator. Reynoso asserted that the contract was unconscionable and therefore unenforceable because the price was grossly excessive and because Frostifresh engaged in sharp business practices. At trial the court found that the contract was unconscionable and entered judgment in favor of the defendant. Frostifresh appealed.
Issue: Does a court have the power to refuse to enforce the price and credit provisions of a contract in order to prevent an unconscionable result?
Holding and Rule: Yes. A court has the power to refuse to enforce the price and credit provisions of a contract in order to prevent an unconscionable result.
Under UCC 2-203 courts have the power to police explicitly against unconscionable contracts or clauses. The principle public policy to be enforced by this modification is the prevention of oppression and unfair surprise. The court held that the sales contract was too hard a bargain and the conscience of the court would not permit its enforcement as written. The court held that Reynoso must reimburse Frostifresh for the refrigerator at cost because he had not returned it.
Disposition: The contract was not enforced but Reynoso was required to pay $348, the amount Frostifresh had paid for the refrigerator.
Notes: This case presents an example of procedural unconscionability; one party was induced to agree to the contract without a meaningful choice. Situations in which this result is usually found include cases in which there are oppressive clauses hidden in boilerplate or high pressure sales tactics applied against uneducated or illiterate consumers, and where there is neither bargain nor negotiation.
See Toker v. Westerman for a law school contracts case brief in which the court held that unconscionability is found where there are inequalities so strong, gross, and manifest that they are impossible to justify.