The Rise and Fall of Unconscionability as the “Law of the Poor”
Citation: 102 Geo L.J. 1383 (2014)
What happened to unconscionability? Here’s one version of the story: The
doctrine of unconscionability experienced a brief resurgence in the mid-1960s
at the hands of naive, left-liberal, activist judges, who used it to rewrite private
consumer contracts according to their own sense of justice. These folks meant
well, no doubt, much like present-day consumer protection crusaders who seek
to ensure the “fairness” of financial products and services. But courts’ refusal
to enforce terms they deemed “unconscionable” served only to increase the cost
of doing business with low-income households. Judges ended up hurting the
very people they were trying to help. In the face of incisive criticism, judicial
enthusiasm for the doctrine of unconscionability quickly faded. A new consensus
emerged in favor of legislation requiring better disclosure of consumer
contract terms ex ante, rather than ex post judicial review.
This Article presents a different narrative, one that is informed by extensive
research in previously untapped archival sources. In this story, the wise legislature
does not overrule the misguided courts. On the contrary, it reveals that
lawmakers laid the groundwork for the judicial revival of unconscionability,
and then rewrote statutory rules to codify the ensuing court decisions. In the
District of Columbia, home to the famous Williams v. Walker-Thomas Furniture
Co. litigation, the legislature revived unconscionability through the enactment
of the Uniform Commercial Code (U.C.C.), which reintroduced the oncearchaic
doctrine into the legal vernacular. Just as the U.C.C. drafters intended,
unconscionability review allowed courts to do openly what they had been doing
covertly for years—refuse to enforce harsh, one-sided bargains as written. In
1965, the D.C. Circuit seized the opportunity unconscionability offered to
prevent the loss of a poor woman’s furniture. But the Williams litigation also
did something more. It drew public attention to the controversy before the court
and alerted D.C. lawmakers to a recurring problem in need of a legislative fix.
In response, local leaders set to work drafting consumer credit reform legislation.
Lawmakers eventually adopted a firm set of rules to govern “installment”
sales contracts in the District of Columbia, including a ban on the objectionable
contract term at issue in Williams.
In this narrative, judges and legislators did not advance competing regulatory
visions. They agreed on the need for substantive limits on installment sales
to poor borrowers. Moreover, contrary to what some scholars might predict,
litigation did not divert scarce resources down a dead-end path. Rather, it
catalyzed the process of legislative change, raising public consciousness of
problems in the low-income marketplace and fueling the drive for substantive
reforms on the local level.