Ace Heating and Cooling sells air conditioners. One unit, the Freezy, has a fair market value of $300. During a heat wave, Ace sells three Freezys for $1,000 to the following:
- Breanna, single mom with poor credit, who can’t afford to pay cash for an AC unit. Breanna signs a contract to pay $1,000 on a credit plan, with an additional $500 in interest and financing fees.
- Barry Bigshot, investment banker, who knows the price is way too high but who is far too important to waste his time driving around town trying to get a better deal.
- Glamour Café, a fancy restaurant with an upscale clientele, whose AC went out in the middle of the lunch rush. The manager is desperate to get the place cooled down before people like Barry Bigshot come in for the evening happy hour.
- Shady Rest Nursing Home, a business with a narrow profit margin. The manager isn’t happy about the price, but old people are very vulnerable to heat, and she’s afraid that her patients’ health could be compromised by any delay in getting AC.
Read the Ace Heating and Cooling scenario in your text and answer the following questions:
- Under UCC 2-302, who has the best chance of getting out of the contract due to unconsionability?
- The symbol for justice features a woman wearing a blindfold illustrating that the law should be applied the same way regardless of who the parties are. Does the UCC rule seem to contradict this? Which approach do you think is more ethical?
- Note that both Glamour and Shady Rest are businesses, and courts rarely find that contracts between two businesses are unconscionable. The rationale is that a business is a sophisticated entity, familiar with transactions and able to protect itself. Do you think Glamour and Shady Rest are in a comparable position in regard to this contract? Why or why not?