Williams v. Walker-Thomas Furniture Co. vs. ProCD, Inc. v. Zeidenberg
A side-by-side comparison of two landmark contracts cases
Williams v. Walker-Thomas Furniture Co.
350 F.2d 445 (D.C. Cir. 1965) (1965)
Holding
The court held that unconscionability is a valid defense to contract enforcement and remanded the case for a factual determination of whether the cross-collateral clause was unconscionable. Judge Skelly Wright articulated a two-part test requiring both procedural unconscionability (absence of meaningful choice on the part of one party) and substantive unconscionability (contract terms unreasonably favorable to the other party).
Doctrine Established
Unconscionability Doctrine (Procedural and Substantive)
ProCD, Inc. v. Zeidenberg
86 F.3d 1447 (7th Cir. 1996) (1996)
Holding
The court held that the shrinkwrap license was enforceable. Judge Easterbrook reasoned that transactions may involve a process in which terms are proposed after the initial purchase, and the buyer accepts them by using the product after having an opportunity to review the terms and return the product for a refund. The license clearly stated its terms, the buyer was given notice of the terms and an opportunity to return the product, and the buyer's continued use constituted acceptance.
Doctrine Established
Shrinkwrap License Enforceability (Rolling Contract Formation)
Comparison Analysis
Williams v. Walker-Thomas Furniture (1965) and ProCD v. Zeidenberg (1996) both address the enforceability of contract terms in consumer transactions where one party has significantly less bargaining power, but they reach contrasting conclusions that reflect different judicial attitudes toward standard-form contracts. Williams held that a cross-collateral clause in a furniture installment contract was potentially unconscionable because of the gross inequality of bargaining power, the buyer's lack of meaningful choice, and the unreasonably favorable terms to the seller. ProCD held that 'shrinkwrap' license terms inside a software box were enforceable even though the buyer could not review them before purchase, reasoning that such layered contracting is a reasonable commercial practice.
The tension between these cases reflects the broader debate about how aggressively courts should police consumer contracts for fairness. Williams adopted an interventionist approach, empowering courts to refuse enforcement of terms that are procedurally unconscionable (no meaningful choice) and substantively unconscionable (unreasonably one-sided). Judge Wright's opinion in Williams recognized that the formalist notion of 'freedom of contract' can be a fiction when one party has no realistic ability to negotiate or even understand the terms. ProCD, by contrast, adopted a market-oriented approach, with Judge Easterbrook reasoning that standard-form terms are efficient, that consumers can return products if they object to the terms, and that judicial intervention into routine commercial terms would increase transaction costs.
Students should recognize that both approaches have merit and that modern contract law attempts to balance them. Unconscionability under Williams requires both procedural and substantive elements, and courts apply it sparingly. ProCD's 'rolling contract' theory has been widely adopted for software and online transactions but has also been criticized for enforcing terms that consumers never meaningfully consented to. The Restatement (Second) Section 211 and UCC Section 2-302 provide the doctrinal framework for resolving these disputes.
Similarities
- Both involve standard-form consumer contracts where one party drafted all the terms and the other had limited ability to negotiate
- Both address the fundamental question of when courts should refuse to enforce contract terms that consumers did not meaningfully agree to
- Both require balancing the efficiency of standard-form contracts against the risk of exploitation of weaker parties
- Both are widely taught as leading cases on the limits of contractual freedom in consumer transactions
Differences
- Williams found the terms potentially unenforceable under the unconscionability doctrine, while ProCD enforced the shrinkwrap terms as a valid part of the contract
- Williams emphasized the inequality of bargaining power and the buyer's lack of meaningful choice, while ProCD emphasized market discipline and the buyer's ability to return the product
- Williams involved a low-income consumer purchasing furniture on installment credit, while ProCD involved a commercial software transaction
- Williams reflects a consumer-protection approach that intervenes to prevent unfair terms, while ProCD reflects a law-and-economics approach that trusts market mechanisms to police fairness
- The Williams approach requires both procedural and substantive unconscionability, while ProCD does not engage in unconscionability analysis at all, instead finding valid contract formation through the rolling-contract theory
Why This Comparison Matters
Unconscionability and standard-form contract questions are staples of Contracts exams. A typical fact pattern will present a consumer who signed or clicked through a contract with unfavorable terms and later seeks to avoid them. Students must analyze both procedural unconscionability (was there meaningful choice?) and substantive unconscionability (are the terms unreasonably one-sided?). The ProCD framework is particularly important for any question involving online terms of service, clickwrap agreements, or browsewrap terms -- students must determine whether the layered contracting model was properly executed.
More Contracts Comparisons
Hadley v. Baxendale vs. Hawkins v. McGee
Hadley v. Baxendale (1854) and Hawkins v. McGee (1929) are both foundational cases on contract damages, but they address different aspects of the remedies framework. Hadley established the foreseeability limitation on consequential damages, holding that a breaching party is liable only for damages that were reasonably foreseeable at the time of contract formation -- either arising naturally from the breach or within the contemplation of both parties due to special circumstances communicated at formation. Hawkins v. McGee ('the hairy hand case') established the expectation damages measure, holding that the proper remedy for breach puts the plaintiff in the position they would have occupied had the contract been performed.
Lucy v. Zehmer vs. Raffles v. Wichelhaus
Lucy v. Zehmer (1954) and Raffles v. Wichelhaus (1864) are both seminal cases on mutual assent and the role of subjective intent in contract formation, but they reach opposite conclusions about when a valid contract exists. Lucy held that a contract existed for the sale of a farm even though the seller claimed he was joking, because the objective manifestations of intent -- signing a written agreement, discussing terms over an extended period, involving the seller's wife -- indicated a serious transaction. Raffles held that no contract existed for the sale of cotton to arrive on the ship 'Peerless' because there were two ships named Peerless and each party had a different ship in mind, creating a latent ambiguity that prevented mutual assent.
Hamer v. Sidway vs. Mills v. Wyman
Hamer v. Sidway (1891) and Mills v. Wyman (1825) both involve promises made in recognition of some prior or existing relationship, but they reach different conclusions about whether the promises are supported by sufficient consideration. Hamer held that an uncle's promise to pay his nephew $5,000 if the nephew refrained from drinking, smoking, and gambling until age 21 was supported by consideration, because the nephew's forbearance from legal activities constituted a legal detriment. Mills held that a father's promise to pay a Good Samaritan who had cared for his sick adult son was not enforceable because the care had already been rendered before the promise was made -- past consideration is not consideration.
Taylor v. Caldwell vs. Krell v. Henry
Taylor v. Caldwell (1863) and Krell v. Henry (1903) are the foundational English cases establishing the doctrines of impossibility and frustration of purpose, respectively. Taylor held that when a music hall was destroyed by fire before the date of a scheduled concert, the contract was discharged because its performance had become impossible through no fault of either party. The implied condition that the hall would continue to exist failed, excusing both parties from their obligations. Krell extended this reasoning to situations where performance remains physically possible but the entire purpose of the contract has been frustrated by an unforeseen event -- specifically, the cancellation of King Edward VII's coronation procession, which eliminated the reason the defendant had rented an apartment overlooking the parade route.