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Nassau County District Court - 274 N.Y.S.2d 757, 52 Misc.2d 26
Tags: Contracts, Unconscionability
tl;dr:
Defendant bought a fridge/freezer from Plaintiff, but was unable to actually afford it. The Plaintiff used some questionable sales tactics to secure the sale.Video Summary
Case Summary
In Frostifresh Corp. v. Reynoso (1966), a significant contract law case, the Nassau County District Court in New York considered whether a refrigerator-freezer buyer could cancel the contract due to the seller's unfair conduct. The case examined if the seller's disclosure duty included non-physical flaws affecting the item's value.
Frostifresh Corp. (plaintiff) sold home appliances. A Spanish-speaking Frostifresh salesman negotiated with Reynoso (defendant), who also spoke Spanish, to sell him a refrigerator-freezer. Reynoso said he couldn't afford it as he was losing his job soon. The salesman ignored this and claimed the unit would be paid for by referral commissions. They signed an English contract for $1,145.88, and Reynoso later defaulted after paying $32.00. Frostifresh sued Reynoso for breach of contract, wanting to recover the outstanding amount plus interest and costs. Reynoso argued he didn't understand the contract, and it was unfair.
The court ruled in Reynoso's favor, allowing contract cancellation based on fairness. The court defined unconscionable conduct broadly, finding that Frostifresh took advantage of Reynoso's lack of knowledge, language barrier, and financial troubles. The court also mentioned Frostifresh charged an excessive price for the appliance, worth only $348.00 according to their own admission.
This case demonstrates how fairness can outweigh contractual principles and how courts can address unconscionability, disclosure, and language barriers in contract law. It's often cited in discussing unconscionable contracts and the relevant factors for determining them.
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The plaintiff is suing the defendants for $1,364.10, which includes the original purchase price of a refrigerator-freezer, attorney fees, and a late charge. The contract for the appliance was negotiated orally in Spanish, but the retail installment contract was in English and not translated or explained to the defendants. The defendants were misled by the salesman into believing they would not have to pay for the appliance and signed the contract without fully understanding its terms. The only payment made on the debt was $32. The lower court did not err. However, the court found the contract price and service charge to be unconscionable and will not enforce it. The plaintiff cannot recover based on the price and service charge set forth in the retail installment contract. The court is considering whether to use section 2-302 of the Uniform Commercial Code to refuse to enforce the price and credit provisions of the contract to prevent an unconscionable result. No defense of fraud was set forth in the pleadings. The principle of preventing oppression and unfair surprise by policing contracts or clauses that are found to be unconscionable is allowed under the Uniform Commercial Code.
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