387 research outputs found
Open Doors, Trap Doors, and the Law
Accordingly, the term open door will be used to refer to situations in which an individual can exercise, ex post, a right to rescind or withdraw from (and thus reverse) an ex ante commitment or decision. More specifically, within the realm of contract theory, this article focuses on implications for contract formation interpretation and the design of contractual default rules
A Fair Contracts Approval Mechanism: Reconciling Consumer Contracts and Conventional Contract Law
Consumer contracts diverge from the traditional paradigm of contract law in various conspicuous ways. They are pre-drafted by one party; they cannot be altered or negotiated; they are executed between unfamiliar contracting parties unequal in their market power and sophistication; they are offered frequently by agents who act on behalf of the seller; and promisees (i.e., consumers) do not read or understand them. Consumer contracts are thus useful in modern markets of mass production, but they cast doubt on some fundamental notions of contract law.
To reframe the long-lasting debate over consumer contracts, this Article develops a superior legal regime whereby sellers can obtain certification of a form contract by an independent third-party. Such approval may be viewed as a quality certification, akin to a Good Housekeeping Seal of Approval, for standard form contracts.
The many impediments to the design of such a project notwithstanding, its overall advantages are promising. The tension between the duty to read contracts and the common practice of signing consumer contracts without reading them will be better reconciled. The adverse consequences of asymmetric information possessed by typical sellers and consumers will be obviated. This regime will also minimize sellers\u27 ability to manipulate consumers\u27 bounded rationality, increase social welfare by reducing transaction costs, diminish socially undesirable litigation over standardized contracts, make a notable step towards minimizing the alleged anomaly that punitive damage awards create in consumer contract cases, and promote market participants\u27 autonomy by advancing trust between the contracting parties
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
Hidden Contracts
Transparency is a promising means for enhancing democratic values, countering corruption, and reducing power abuse. Nonetheless, the potential of transparency in the domain of consumer contracts is untapped. This Article suggests utilizing the power of transparency to increase consumer access to justice, better distribute technological gains between businesses and consumers, and deter sellers from breaching their consumer contracts while exploiting consumers’ inferior position.
In doing so, this Article focuses on what we dub “Hidden Contracts.” Part I conceptualizes the idea of hidden contracts. It first defines hidden contracts as consumer form contracts that firms unilaterally modify and subsequently remove from the public sphere, despite being binding on consumers. Thereafter, the Article delineates the considerable social costs of hidden contracts.
Given these social costs, Part II discusses our empirical study of hidden contracts. The results of this study indicate that leading firms that supply goods and services to billions of online consumers worldwide routinely employ hidden contracts to the detriment of consumers and society. Against this background, Part III proposes introducing a novel contract transparency duty. It further explains how to design this duty to counter firms’ incentive to employ hidden contracts. Next, Part IV tackles key objections to our proposal. Concluding remarks follow
Ending the License to Exploit: Administrative Oversight of Consumer Contracts
Current approaches to consumer standard form contracts generally assume that aggrieved consumers can adequately detect and challenge exploitative terms and that vigilant courts can effectively scrutinize them. Some even believe that market forces and reputational constraints can deter firms from incorporating exploitative terms into their form contracts or dissuade them from actually relying on such terms. Criticizing these assumptions, this Article calls for a conceptual shift toward the problem of exploitative consumer contracts. This Article suggests supplementing the current means of addressing exploitation in consumer contracts with a dynamic preventive model of administrative oversight. Specifically, this Article proposes a professional system of public supervision over the content of consumer form contracts. This Article demonstrates how such a mechanism, if shrewdly designed, can cost-effectively tackle the widespread use of unfair, unconscionable, or legally invalid terms. Although not a panacea, the proposed regulatory regime has the promise of shifting the main burden of tackling exploitative boilerplate from the currently feeble and ineffective system of private enforcement to a sophisticated and robust scheme of administrative scrutiny
In Consumer Protection We Trust? Re-Thinking the Legal Framework for Country of Origin Cases
Markets are becoming more complicated in an ever faster changing world. New findings pertaining to human behavior and consumer markets constantly challenge traditional legal and policy assumptions. Social science offers a myriad of insights into the ways trust, identity, ideology, and preferences interact and impact one another. Against this background, the need to advance a nuanced legal framework is increasingly vital.
Consumer law policy requires an interdisciplinary and holistic approach. Recent scholarship has acknowledged this need, proposing novel ways to enrich the academic discourse and develop consumer law policy. Along these lines, a growing body of literature examines how notions of identity and trust affect consumer behavior and how the law should respond to these phenomena. However, this body of literature is under-developed and under-theorized.
This article bridges some of this gap, proposing a well-rounded agenda that adopts a multi-dimensional approach to country of origin cases. As we illustrate throughout the article, there is more in country of origin cases than initially meets the eye. Such cases require integrating behavioral, economic, and social developments, such as people’s search for identity markers. This, in turn, yields a superior legal analysis that is applicable to the development of consumer law more generally
The Law of Standard Form Contracts: Misguided Intuitions and Suggestions for Reconstruction
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