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Monday, December 10, 2012

Indemnification Clauses in Consumer Contracts Discussed in Sunday New York Times

MjradinThis week's Sunday New York Times had a strking piece about the prevalance of indemification clauses in standard form contracts.  The article, Daniel Akst's "Those Crazy Indemnity Forms We All Sign," cites to ContractsProf Margaret Jane Radin (pictured), whose book, Boilerplate, we hope to feature in a roundtable discussion sometime early next year.  

Akst provides numerous shocking examples of form contracts through which businesses require "consumers to protect a business or some other party from damage claims and legal fees, sometimes even those arising from their own negligence."  He has come across such indemnification clauses in forms relating to use of sports facilities, publication agreements, use of a couple for Iam's cat food, EULA's for Skype, eBay, and Facebook, summer camp at Bard College, participating in Girl Scouts actitivies and even staying at another person's home.  

I have to admit that I've never paid any attention to such indemnification provisions.  I always assumed that they only applied to indemnification of third parties against harm that I have somehow caused, and since I never imagined that I would do significant harm by, for example, using sports faciltiies, redeeming coupons for cat food, permitting my child to participate in athletic activities or joing Facebook, etc., I never regarded the indemnification provisions as an obstacle.

But Akst suggests that at least in some cases businesses are asking consumers to hold them harmless for their own negligent conduct.  The Indiana Supreme Court struck down such an indemnification clause as unconscionable after it was successfully deployed in the trial court.  As Professor Radin pionts out, that means that, even if these clauses ultimately don't hold up, they are a powerful deterrent to the proper functioning of the tort law system.  Consumers might be intimidated by the threatened invocation of an indemnification provision and not seek redress.  

[JT]

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Comments

I was about to blog about this. I haven't yet had a chance to read Radin's book, but plan to do so soon.... Like Akst, I also strike indemnity clauses when I can get away with it. I think, in some cases, they might even be effective as counteroffers....In any event, I think consumers should try it more often just to signal their dissatisfaction with the clause.

Posted by: Nancy | Dec 10, 2012 9:56:03 AM

If this kind of thing is of interest to you, visit your nearest PetSmart that has a PetHotel in it. Ask them for a copy of their (no lie) "Master Boarding Agreement". :)

Posted by: Jeff Gordon | Dec 10, 2012 7:19:44 PM

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