The Myth of the ‘Opportunity to Read’ in Contract Law

Standard form contracts in consumer transactions are usually not read by consumers. This unreadness of contracts creates opportunities for drafters to engage in unfair trade practices. Various doctrines of contracts and consumer protection law address this concern. One of the prominent solutions coming out of recent proposals for reform is to give individuals a more substantial opportunity to read the contract before manifesting assent. With the greater opportunity to read, more transactors will actually read the terms and assent to the boilerplate will be more robust. This Essay argues that solutions that focus on providing consumers an opportunity to read are useless, and can potentially be harmful. Most likely, greater opportunity to read would not produce greater readership of contracts—not the type that can help people make informed decisions—and the purpose of this solution would not be achieved, and could have unintended consequences. Even if the compliance with the requirement of opportunity-to-read is fairly cheap (e.g., giving consumers access to the boilerplate in advance), making this a central feature of the legal regulation of standard form contracts makes little sense. The paper ends by proposing non-legal approaches to making the contract terms more transparent, by building on market devices such as ratings and labeling

\u27Agreeing to Disagree\u27: Filling Gaps in Deliberately Incomplete Contracts

Incomplete contracts have always been viewed as raising the following challenge for contract law: does the incompleteness-or, indefiniteness, as it is usually called-rise to such a level that renders the agreement legally unenforceable? When the indefiniteness concerns important terms, it is presumed that the parties have not reached an agreement to which they intend to be bound. This fundamental policy is the upshot of the view that contracts should be made by the parties, not by the courts. \u27 When, in contrast, the indefiniteness concerns less important terms, courts supplement the agreement with gap fillers and enforce the supplemented contract

Boilerplate : An Introduction

This short essay introduces the themes that are developed in twelve articles that were delivered recently in a symposium on “Boilerplate: Foundations of Market Contracts” at the University of Michigan Law School. The proceeding of the symposium will be published in Volume 104 of the Michigan Law Review

How to Repair Unconscionable Contracts

Several doctrines of contract law allow courts to strike down excessively one-sided terms. A large literature explored which terms should be viewed as excessive, but a related question is often ignored—what provision should replace the vacated excessive term? This paper begins by suggesting that there are three competing criteria for a replacement provision: (1) the most reasonable term; (2) a punitive term, strongly unfavorable to the overreaching party; and (3) the maximally tolerable term. The paper explores in depth the third criterion—the maximally tolerable term—under which the excessive term is reduced merely to the highest level that the law considers tolerable. This solution preserves the original bargain to maximal permissible extent, but brings it within the tolerable range. The paper demonstrates that this criterion, which received no prior scholarly notice, is quite prevalent in legal doctrine, and that its adoption is based on powerful conceptual and normative underpinnings

\u27Agreeing to Disagree\u27: Filling Gaps in Deliberately Incomplete Contracts

Incomplete contracts have always been viewed as raising the following challenge for contract law: does the incompleteness-or, indefiniteness, as it is usually called-rise to such a level that renders the agreement legally unenforceable? When the indefiniteness concerns important terms, it is presumed that the parties have not reached an agreement to which they intend to be bound. This fundamental policy is the upshot of the view that contracts should be made by the parties, not by the courts. \u27 When, in contrast, the indefiniteness concerns less important terms, courts supplement the agreement with gap fillers and enforce the supplemented contract

How Liability Distorts Incentives of Manufacturers to Recall Products

The nature and likelihood of harms associated with products may be revealed over time. As more information is gathered, a manufacturer must decide whether to continue selling the product as is, or to recall it. The paper shows that existing products liability law gives the manufacturers bad incentive to recall products. It shows, counter-intuitively, that as the post-recall liability becomes more severe, manufacturers would be more likely to leave products in the market longer and more often than is socially desirable. It also demonstrates that the law hurts the incentives of manufacturers to acquire better information about the riskiness of products already in use. The paper discusses several ways in which liability can be designed in a way that would produce more efficient recall and safety-research decisions, to the benefit of society in general and of consumers in particular

The Tentative Case against Flexibility in Commercial Law

Well-rooted in modern commercial law is the idea that the law and the obligations that it enforces should reflect the empirical reality of the relationship between the contracting parties. The Uniform Commercial Code ( Code ) champions this tradition by viewing the performance practices formed among the parties throughout their interaction as a primary source for interpreting and supplementing their explicit contracts. The generous recognition of waiver and modifications, as well as the binding force the Code accords to course of performance, course of dealings, and customary trade usages, effectively permits unwritten commercial practices to vary and to erode explicit contractual provisions

Legal Durability

This paper develops a framework to study the effects of the durability of legal allocation decisions, such as trial outcomes, regulatory enactments and property entitlements. For a party favored by the legal allocation, a more durable decision is also more costly to secure, ex-ante. Thus, it is not the greater durability of the allocation that determines whether the “winner” is better-off, but other factors that are affected by the durability attribute, such as the cost of securing a favorable outcome and the ability of contesting parties to affect this cost. The paper develops conditions under which greater durability is irrelevant, or even undesirable to the winner. The analysis is applied to shed light on durability doctrines relating to trial outcomes (e.g., res judicata and double jeopardy), rules and regulations (e.g., transition relief when rules change), entitlements (e.g., adverse possession and statutes of limitations), and marriages

How to Repair Unconscionable Contracts

Several doctrines of contract law allow courts to strike down excessively one-sided terms. A large literature explored which terms should be viewed as excessive, but a related question is often ignored—what provision should replace the vacated excessive term? This paper begins by suggesting that there are three competing criteria for a replacement provision: (1) the most reasonable term; (2) a punitive term, strongly unfavorable to the overreaching party; and (3) the maximally tolerable term. The paper explores in depth the third criterion—the maximally tolerable term—under which the excessive term is reduced merely to the highest level that the law considers tolerable. This solution preserves the original bargain to maximal permissible extent, but brings it within the tolerable range. The paper demonstrates that this criterion, which received no prior scholarly notice, is quite prevalent in legal doctrine, and that its adoption is based on powerful conceptual and normative underpinnings

The Tentative Case against Flexibility in Commercial Law

Well-rooted in modern commercial law is the idea that the law and the obligations that it enforces should reflect the empirical reality of the relationship between the contracting parties. The Uniform Commercial Code ( Code ) champions this tradition by viewing the performance practices formed among the parties throughout their interaction as a primary source for interpreting and supplementing their explicit contracts. The generous recognition of waiver and modifications, as well as the binding force the Code accords to course of performance, course of dealings, and customary trade usages, effectively permits unwritten commercial practices to vary and to erode explicit contractual provisions