Assignment: Business Law Paper
BACKGROUND
Michele is a single mother who dropped out of college after she became pregnant during her freshman year. While looking for a more permanent job, she works as a dog-walker. She has a profile on Wag, a popular dog-walking app, which pays out her earnings every two weeks. Sometimes, when Michele needs the money sooner, she connects Wag with another app, EarnedIt, which allows her to cash out for the hours she has worked so far. EarnedIt then automatically withdraws the money it has lent her from her bank account on payday. For example, if Michele makes $50 dog-walking on April 1 but doesn't get paid for this work by Wag until April 15, she can log into EarnedIt and transfer $50 into her bank account on April 1. Then, on April 15, EarnedIt will recoup the $50 from her. Apart from the data it collects from other connected apps about Michele's hours worked and wages owed, EarnedIt has no other information about her.
Michele uses EarnedIt often and without issue until she trips during one of her walks and fractures her ankle. Facing a significant hospital bill, she accidentally overdraws her bank account and is unable to pay back EarnedIt for the money that she previously received from her dog-walking gig. A few weeks later she is notified by EarnedIt that she owes thousands of dollars. She is confused because she only ever requested a few hundred dollars at a time. Michele decides to consult EarnedIt's terms and conditions, which she accepted without reading before she started using the app. She finds that Section 9 (Fees) states:
"We will recoup payment for advances directly from your bank account upon deposit of your next paycheck. If we are unable to access funds from your bank account to complete a payment that is owed, we will charge interest on the payment which shall accrue at a rate per annum of five hundred percent (500%) from the initial date of incomplete payment, and shall be payable semi-weekly, in arrears."
Shocked at the interest amount, Michele asks a legal clinic at the local law school to take on her case. The clinical professor looks into EarnedIt's practices and finds that the company has a history of buying targeted ads in low-income communities. Even though EarnedIt's interest rate is not a violation of the state's usury laws (meaning that it does not exceed the legal maximum amount of interest allowable), she decides to bring suit on Michele's behalf to invalidate the contract as unconscionable.
EarnedIt learns of the legal clinic's intention to sue and releases a statement. In it, EarnedIt points out that all users must accept the terms and conditions before using the app and emphasizes that its interest rate is in compliance with existing law. "Under the principle of freedom of contract," the statement reads, "courts should avoid a finding of unconscionability, which gives judges far too much discretion over the private dealings of individual actors."
INSTRUCTIONS
You may choose whether you would like to serve as legal counsel for Michele or EarnedIt. Write a brief supporting your side, demonstrating an understanding of legal reasoning and using at least three of the cases provided under "Universe." No outside research or reading except for these materials are allowed; however, you may use any of the LBS materials on NYUClasses for supplemental information.
Apart from following the guidelines set forth by your professor, your brief should address, at a minimum, the following questions:
1. Should unconscionability apply in this case? Why or why not?
2. How does the unconscionability doctrine sit with the general principle of freedom to contract?
3. How is this scenario similar to the case(s) that provide the most support for your argument? How is it different than the case(s) in which the judges decided the opposite of the result you hope to achieve now?
4. What assumptions about the parties were made when judges used unconscionability to void in the past? Are these assumptions valid? Do they apply here?
5. Would finding unconscionability be an example of judicial overstep? Why or why not?
UNIVERSE
In this universe, this is a case of first impression. The following guidelines and cases are the only ones that apply. Treat the cases as persuasive authority, not binding precedent.
• Uniform Commercial Code §2.302 (setting forth the guideline on unconscionability)
• Embola v. Tuppela (1923)
• Williams v. Walker-Thomas Furniture Company (1965)
• Weaver v. American Oil Company (1971)
• Wille v. Southwestern Bell Tel. Co. (1976)
• Waters v. Min Ltd. (1992)
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.