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Tuesday, May 28, 2013

Boilerplate Symposium Part XIII: Charles Calleros on the Reasonable Expectations of Consumers

CallerosThis is the thirteenth in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.

Charles Calleros is a Professor of Law at Arizona State University's Sandra Day O'Connor College of Law.

Peggy Radin’s new book, Boilerplate, is welcome contribution to the literature precisely because it is sufficiently clearly and plainly written to be accessible to a broad spectrum of educated and intellectually curious readers.   It thusly helps to fulfill our obligation to educate not just future lawyers but also members of the general public, who can perform more effectively as consumers, business owners, and citizens if they are exposed to thoughtful presentations of the legal issues of the day, from civil liberties to contractual consent.

Professor Radin’s description of the increasing frequency of attenuated consent in adhesion contracts raises a significant questions:  Is World A (agreement), around which much of our first-year teaching is based, fast becoming the exception to the norm of World B (boilerplate), creating a disconnect between our laws and the realities of contracting. 

I still hold out hope for a world in which market or legal forces can advance meaningful assent, so – unlike Professor Lieb – I did not detect of “whiff of fetishizing of consent in Radin’s rendering.”  Moreover, although I agree with Professor Gold that “not knowing precisely what one has consented to is not a per se bar to consent,” truly voluntary and unconstrained consent of that nature ought to be exceedingly rare.

BoilerplateOf the broad array of possible remedies surveyed by Radin, in my view the most elegant would be market-driven sanctions for abusive clauses – such as loss of reputation and business stemming from negative consumer reviews disseminated on the web – and consumer self-help, such as actually holding up the line and reading the exculpatory clause on a short form and making a reasoned decision about whether to assent (as my wife did when she refused to enroll our child in an otherwise very attractive preschool when the two-page form included an extreme exculpatory and indemnification clause that the school refused to sever). To return to an earlier theme of educating the public about legal rights, our schools and other educational platforms (see, e.g., www.iCivics.org) should teach students in secondary school to be informed consumers and critical readers of forms, so that “holding up the line” is viewed as a responsible act (providing businesses with an incentive to efficiently inform consumers at a different point, so as to keep the line moving).

But, what of contexts in which objectionable clauses are buried in many pages of fine print, dissuading a rational consumer from expending the time and effort to engage in a critical reading, such as when deciding to click “I agree” on a web page without actually reading the terms?

Here, I am intrigued by the possibility of applying the reasonable expectations doctrine to all consumer adhesion contracts in which it would be unrealistic to expect the consumer to wade through a document to discover and understand terms to which the consumer likely would object if they were brought to her attention.  See, e.g., Harrington v. Pulte Home Corp. 211 Ariz. 241, 119 P.3d 1044 (Ct. App. 2005) (applying this doctrine outside of the insurance context, although finding the doctrine was not satisfied by the facts). 

True, the doctrine would need to be tweaked so that it did not validate highly objectionable clauses simply because consumers have come to expect oppressive corporate behavior and have resigned themselves to the futility of finding or understanding unfair terms.  Rather than allowing widespread corporate abuses to define the baseline, consumers should be empowered to expect that adhesive terms in lengthy standard forms will fall within a range that is judged to be objectively reasonable.  To firmly establish this baseline, I am drawn to the European model of an administrative agency defining types of clauses that are flatly or presumptively invalid, and to empowering the agency with private attorney general capacity to enforce the norms, even when individual claims are small, although I concede that our legal system is highly unlikely to embrace these mechanisms.

With respect to contract terms that do not fall within a limited list of flatly prohibited clauses, a robust reasonable expectations theory could further and more flexibly exclude terms that are buried in boilerplate and lie outside the boundaries of what consumers should be held to reasonably expect, thus providing an incentive to businesses to highlight and plainly express potentially objectionable terms so as to secure actual assent, perhaps evidenced by separate initialing or signature.  For example, on a website that links to terms so lengthy that most consumers are dissuaded from surveying them for objectionable terms, the doctrine would incentivize a business to highlight potentially objectionable terms at the beginning of any reference to the agreement, thus alerting a consumer immediately to the nature and location of clauses that warrant exploration.  If sales suffer as a result, businesses may be forced to moderate their terms so that consumers are willing to give actual consent to terms brought to the fore.     

[Posted, on Charles Calleros' behalf, by JT]

 

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