Forum Selection Clauses and Consumer Contracts in Canada

Every day, billions of people use the online social media platform, Facebook. Facebook requires, as a condition of use, that users “accept” its terms and conditions—which include a forum selection clause nominating California as the exclusive forum for dispute resolution. In Douez v. Facebook, the Supreme Court of Canada considered whether this forum selection clause was enforceable, or whether the plaintiff could proceed with her suit in British Columbia. The Supreme Court of Canada ultimately decided that the forum selection clause was not enforceable. It held that the plaintiff had established “strong cause” for departing from the forum selection clause. The Court premised its decision on two primary considerations: the contract involved a consumer and was one of adhesion, and the claim involved the vindication of privacy rights. The Court’s analysis suffers from several major weaknesses that will undoubtedly cause confusion in this area of law. This Article will examine those weaknesses, and argue that the Supreme Court of Canada actually abandoned the strong cause test that it claimed to be applying. The consequence of the Douez decision is that many forum selection clauses—at least in the consumer context—will be rendered unenforceable. While this may be a salutary development from the perspective of consumer protection, it will undoubtedly have an effect on companies choosing to do business in Canada

Mandatory Arbitration for Customers But Not for Peers: A Study of Arbitration Clauses in Consumer and Non-Consumer Contracts

We conducted a study of contractual practices by well-known firms marketing consumer products, comparing the firms\u27 consumer contracts with contracts the same firms negotiated with business peers. The frequency of arbitration clauses in consumer contracts has been studied before, as has the frequency of arbitration clauses in non-consumer contracts. Our study is the first to compare the use of arbitration clauses within firms, in different contractual contexts. The results are striking: in our sample, mandatory arbitration clauses appeared in more than three-quarters of consumer contracts and less than one tenth of non-consumer contracts (excluding employment contracts) negotiated by the same firms. This suggests that the firms\u27 faith in arbitration is considerably weaker than they have claimed. For the purpose of business-to-business disputes, in which they may be either plaintiffs or defendants, they prefer the option to litigate in court

Error-Resilient Consumer Contracts

When firms contracting with consumers make mistakes, people get hurt. Inaccurate billing, misapplied payments, and similar problems push lucky consumers into Kafkaesque customer service queues—and unlucky ones off the financial cliff. Despite significant regulatory interventions, firms contracting with consumers continue to struggle to accurately bill customers, update accounts, and process payments. Firms largely rely on technology, especially databases and software, to discharge these servicing obligations. This technology must accommodate firms’ innovations in their contracts, shifting governmental regulations, and consumers’ unpredictable behavior. Given the complexity of servicing, even when firms invest significantly in technology, it will inevitably produce mistakes. When firms skimp on their servicing technology, errors that harm consumers become even more likely. And even if it were possible to build perfect servicing technology, the costs that firms would pass on to consumers may outweigh the benefits. The challenge, then, is how to reduce customer harm, accepting that perfect servicing is neither possible nor desirable. This Article argues that structural improvements to consumer contracts can make them more resilient to errors. Far from being new, these structural improvements have long been recognized in contract theory. But the resulting theoretical insights have not been applied to modern consumer financial contracts. Specifically, modularity and formalities improve resilience by mitigating the complexity of servicing, regulation, and consumer behavior. While mitigating complexity may reduce errors ex ante, the bigger payoff is in simplifying customer redress if and when errors occur. Intervening in the structure of consumer financial contracts is an underappreciated tool for achieving substantive consumer protection

The Tango between the Brussels Ia Regulation and Rome I Regulation under the beat of directive 2008/122/EC on timeshare contracts towards consumer protection

Timeshare contracts are expressly protected as consumer contracts under Article 6(4)(c) Rome I. With the extended notion of timeshare in Directive 2008/122/EC, the question is whether timeshare-related contracts should be protected as consumer contracts. Additionally, unlike Article 6(4)(c) Rome I, Article 17 Brussels Ia does not explicitly include timeshare contracts into its material scope nor mention the concept of timeshare. It gives rise to the question whether, and if yes, how, timeshare contracts should be protected as consumer contracts under Brussels Ia. This article argues that both timeshare contracts and timeshare-related contracts should be protected as consumer contracts under EU private international law. To this end, Brussels Ia should establish a new provision, Article 17(4), which expressly includes timeshare contracts in its material scope, by referring to the timeshare notion in Directive 2008/122/EC in the same way as in Article 6(4)(c) Rome I

Sneak in Contracts

Consumer contracts are a pervasive legal tool that governmany of our daily activities. Yet, consumer contracts areroutinely modified by businesses after customers accept them.Common modifications include, for example, a change in fees,alteration of a dispute resolution clause, or revision to the firm’sprivacy policy. In fact, unilateral modifications can affectvirtually every aspect of a contract.While the literature widely discusses the problem of ex anteconsent to consumer contracts, it does not adequately addressthe problem of ex post consent to unilateral modifications. Butthe practice of unilateral changes to consumer form contractscomes with significant detriments and social costs. Despitethese costs, there are no systematic empirical studies exploringthis phenomenon. This Article aims to fill this gap byempirically examining the frequency, mechanics, and degree oftransparency of unilateral change mechanisms in consumercontracts.This Article examines 500 sign-in-wrap contracts of the mostpopular websites in the United States that use such agreements.We find that the vast majority of consumer contracts in oursample are “sneak in” contracts—that is, they allow firms unilateral and broad discretion to covertly change consumers’rights and obligations after consumers accept them. Thisstudy’s findings raise concerns as to whether sneak in contractsare aligned with prominent core values and principles ofcontract law, such as consent, promise, reliance, consideration,freedom, choice, empowerment, and community. The study thuscalls for greater transparency in the law that governs themodification of consumer contracts

Viewing Unconscionability through a Market Lens

This Article calls for a move to the third phase in courts\u27 attitudes toward consumer contracts. In the first phase, consumer contracts were considered ordinary contracts by courts thus requiring no special treatment. In the second phase, courts and legislatures became suspicious of consumer contracts and developed several tools for handling them, focusing on the characteristics of the parties and the transaction. In this Article, we suggest that it is time to introduce a third phase: Rather than examining each consumer contract in isolation, courts need to acknowledge that consumer contracts are a market-phenomenon which calls for a market-based approach. Instead of focusing on the characteristics of the parties and the transaction, courts should inquire whether there is competition, or potential competition, over contracts in the supplier\u27s market. In order to do so, courts should look at the particular features of the supplier\u27s market, that we identify, and also on the potential strategic interaction among competitors. We argue that when competition over contracts, or the threat of such competition, is sufficiently strong, consumer contracts should be deemed efficient and fair, and courts should not strike down clauses incorporated in such contracts. Interestingly, and counter-intuitively, this conclusion holds even where consumers are uninformed. We offer workable guidelines for courts as to how they could implement the market-based approach proposed in this Article and show how this approach could produce outcomes opposite to, but more efficient and fair, than the ones conventionally adopted by courts or offered by legal scholars

Pacta sunt servanda a prawo konsumenta do odstąpienia od umowy sprzedaży

The article refers to one of fundamental principles of civil law: the principle pacta sund servanda in the context of consumer contracts. Due to the introduction of the institution of „cooling off period” into consumer contracts it is possible to withdraw from a contract without any negative consequences. Only a consumer is vested with such tempus deliberandum. It is a unique situation in Polish civil law, definitively breaching a very consistent principle pacta sund servandaUniwersytet w Białymstok

Compulsory Arbitration Clauses in Domestic and International Consumer Contracts

This paper examines the UK Unfair Terms in Consumer Contracts Regulations (UTCCR)'s prohibition on clauses in consumer contracts that mandate dispute settlement in an arbitration tribunal as potentially unfair and oppressive as against consumers because it denies their right to civil adjudication. The understanding of UTCCR's unfairness as developed by the UK House of Lords is not necessarily applicable to arbitration clauses because of the lower cost of such proceedings and the availability of legal aid, even in the international context. International arbitration decisions may also be reviewed for procedural irregularities under the New York Convention. Various European court decisions are reviewed where compulsory arbitration clauses in consumer contracts were evaluated for fairness to conclude that courts should be more receptive to such terms because of procedural advantages that they may accord to consumers

“Volunteering” to Arbitrate Through Predispute Arbitration Clauses: The Average Consumer’s Experience

This article helps build the empirical foundation necessary for an informed debate regarding arbitration clauses in consumer contracts by providing preliminary insight into how businesses\u27 use of these clauses affects consumers\u27 ability to pursue their legal rights. To this end, the article reports the results of a study investigating, in a wide variety of consumer purchases, the frequency with which the average consumer encounters arbitration clauses, the key provisions of these clauses, and the implications of these clauses for consumers who subsequently have disputes with businesses they patronize