Wednesday, May 29, 2013
As many of you may already have noticed, Blog Emperor Paul Caron has announced a signfiicant change at the Law Professor Blogs Network, of which the ContractsProf Blog is a part. Here is the announcment:
Law Professor Blogs LLC announces today that co-founder Paul L. Caron has purchased the 50% interest of co-founder Joseph A. Hodnicki and now owns 100% of the company.
Paul Caron: "I will always be grateful to Joe for partnering with me nine years ago to launch TaxProf Blog and shortly thereafter the Law Professor Blogs Network. TaxProf Blog and the Law Professor Blogs Network would not exist today had Joe not partnered with me in their conception, design, and operation. I am delighted that Joe will continue to serve as the Co-Editor of Law Librarian Blog, one of the most influential law librarian blogs in the country."
Joe Hodnicki: "When Paul and I first ventured into this web publishing space we had no idea where it might take us. It certainly has been an interesting experience for both of us as we worked to develop the Law Professor Blogs Network. The legal blogosphere has matured over the years. It is now recognized as an acceptable communications medium for law professors, something it was not when we launched the Network. While I must scale back my involvement in the Network’s affairs, by selling my interest to Paul I am confident the blogs we have published will continue to be some of the best law-related blogosphere destinations for news, analysis and commentary on the topics they address. I look forward to forthcoming Network developments under Paul’s leadership."
Law Professor Blogs LLC is the nation's only network of legal blogs edited primarily by law professors. Law Professor Blogs LLC owns and operates over 40 legal blogs, edited by over 100 law professors, law librarians and practitioners. Editors include leading scholars and educators who are committed to providing the web destination for law professors, practitioners, government and nonprofit lawyers, legal information professionals and students in their respective fields.
This blog owes its existence to Paul and Joe's vision, and both have intervened at times to help us with behind-the-scenes technical issues beyond our abilities. The announcement reflects the fact that we are here dealing with two class acts.
And so, thanks to Joe for all of his support over the years, and we look forward to our continued collaboration with Paul.
This is the sixteenth in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
Guy A. Rub is an Assistant Professor of Law at the Ohio State University Moritz College of Law.
Those who have not read Professor Radin’s book, Boilerplate, might be tempted to believe that they are fully familiar with the problem of boilerplate provisions in standard form agreements. While the problem of consumers who accept agreements they did not read is well documented, Radin’s masterpiece is so comprehensive, and analyzes the issues that boilerplate provisions raise so thoroughly, and in many instances from a novel angle, that it makes us stop and re-think about this reality and its implications. The reader is challenged to reconsider the effects of these standardize arrangements on our democratic process, our autonomy, and our legal system as a whole.
One of the strengths of the book, and there are many of them, is that while it identifies and lucidly analyzes these problems it also acknowledges some of the advantages of mass-market standard form agreements and therefore includes a broad discussion of possible remedies to the identified problems.
One such suggested remedy is a market solution. Market solutions, if feasible, are in many respects superior to other solutions. First and foremost, they do not require a central decision making process, which turns out to be extremely hard in this context. Indeed, if market participants can effectively shop for efficient or fair contractual terms, then society probably does not need to make certain difficult decisions: for example, society might not need to decide whether consumer class actions are an effective mechanism to rein in large corporations (and therefore maybe the right to bring such claims should not be waivable) or mainly a vehicle for filing frivolous and expensive claims. Market solutions might also eliminate the need of a centralized entity to collect information on individuals’ preferences in a diverse world. Thus, if consumers effectively shop for better terms, society might not need to collectively decide the proper scope of a warranty; a question that might have different answers with respect to different products, different markets, and even different consumers.
Are market solutions feasible? Professor Radin, I believe, is somewhat skeptical and I am at least as pessimistic. It is well documented that consumers do not read standard form agreements and that regulatory schemes that are designed to give them the opportunity to read have little effect on their decision making process. See, e.g., Florencia Marotta-Wurgler, Will Increased Disclosure Help? Evaluating the Recommendations of the ALI’s “Principles of the Law of Software Contracts,” 78 U. Chi. L. Rev. 165 (2001). In a forthcoming article, Ian Ayres and Alan Schwartz suggest, inter alia, that reading might not be required as long as the contract does not include unexpected terms that are worse than the consumers’ expectation, and that a disclosure scheme should focus on these terms. While this might be true that consumers’ awareness of such terms might suffice, one might doubt whether, in most cases, consumers can reasonably be expected to read even a subset of simplified boilerplate terms.
Therefore, if we believe that no regulatory scheme can make a substantial number of consumers read even a subset of the boilerplate provisions, then other solutions must be explored to make consumers shop for contractual terms. Radin explores a few such solutions, including: watchdog groups, seals of approval, rating agencies, and automatic filtering. What is common to these solutions, or a combination of several of them, is that they require a third party to use some judgment to evaluate the desirability of the contractual terms. This is not an unusual way to make shopping decisions. Many of us use websites that rate laptops before we buy one and, at least in some cities, we look at the sanitation “grade cards” on the windows of restaurants before we chose where to eat (notwithstanding Dan Ho’s recent research on the problems in that scheme). It is important to appreciate that currently there are very few comparable systems with respect to boilerplate terms and, as explained below, I am skeptical if more will emerge in the future.
We need to first consider what should be the final product of this evaluation process by the third party evaluating entity. If we believe that consumers, rationally or not, do not bother to read contractual terms as they are too complex, then we should reasonably assume that after this evaluation process the third party must present the consumer with well-dissected and simple information. Indeed, consumers will probably not spend time reading a detailed report regarding the terms of the contract. Making a simplified report, which can be as simple as an A-B-C ranking, or even a binary decision to grant a seal of approval or not, requires the exercising of substantial discretion by the evaluating entity. This ranking process is not trivial. How should one rank an agreement that includes a Virginia choice of law provision and a broad warranty provision with limitations of consequential damages? How should the rating of such a contract be in comparison to a contract that has a choice of venue in Florida, a narrower warranty provision, and no limitations on remedies? How should the evaluating entity evaluate the inclusion of a mandatory arbitration provision? Doesn’t it depend on that entity’s perspective as to the desirability of consumer class actions? But didn’t we try to create a market scheme that avoids delegating these types of decisions from the consumers to a central entity?!
Indeed, it might have been ideal if we could have sketched a scheme in which the consumers drive the process of regulation boilerplate terms. However, the same seeds that lead to the problem in the first place—the consumers’ limited resources, limited rationality, and sometimes pure ignorance—might make such a solution impracticable. Thus, if we believe that the problem of unread boilerplate provisions is severe, other solutions, which are explored in Radin’s extensive book, e.g., regulation through tort law, should be seriously considered.
[Posted, on Guy Rub's behalf, by JT]
This is the fifteenth in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
Cheryl Preston is the Edwin M Thomas Professor of Law at Brigham Young University's J. Reuben Clark Law School.
Professor Radin’s book is a monumental effort to bring together in one place various facets of the seemly intractable problem of non-negotiated standard term contracts and to offer creative insights at each step. This legal problem is not new: Judge Cowen in Cole v. Goodwin, 19 Wend. 251, 273-74 (N.Y. Sup. Ct. 1838), was adamant that a common carrier could not post a notice of its intent not to be liable at the station and claim that each passenger entering the train gave contractual consent to waiving liability. To hold otherwise would change the deal from “give me a due reward [cost of passage], and I will be accountable as a common carrier” to “‘give me the same reward,’ (for the carrier fixes it; it may be less, but it may also be more,) ‘and yet, I claim to throw all risk upon you, or such a degree of it as I please.’” The judicial mindset later changed, and by the early 1900s courts lined up with businesses in generally enforcing such terms. Nonetheless, early courts ran interference with unconscionability and equivalent doctrines. The evolution to multitudes of daily online contracts hidden behind links, without size limitations, signatures, or someone to explain terms, as well as the increasing reluctance of judges to interfere, requires new analysis such as that offered by Radin.
Once the problem is exposed, the more difficult endeavor is framing a feasible solution. By characterizing such contracts as a form of “democratic denigration,” Radin suggests that the fundamental remedy is for legislatures, acting as democratic representatives of the people, to draw limits around powerful economic actors’ ability to override the default rules of enlightened contract doctrine. Radin argues that boilerplate schemes make a “sham” of democratic governance because they take away entitlements given through the democratic process “after extended debate and fierce political struggle.” Democratic ordering “at least give[s] us a voice” because politicians can be voted out if people are unhappy with what they enact.
Returning to the polity for a solution is dubious for three reasons. First, outside of copyright and perhaps employment, it is something of a stretch to say that the democratic process has created protections that such contracts “delete.” The regulatory rules that exist are at best default, subject expressly to the right to contract around them. What we seem to have lost, rather, is a judiciary willing to maintain reasonable boundaries of the kind envisioned by Karl Llewellyn and other Realist scholars.
Second, most consumers seem utterly content to be bound to terms they would not read even if such terms were brought forcefully to their attention, could not understand if read, and could not appropriately evaluate as risks. But the same problem applies to voters. Until consumers are educated or fall victim to such a contract, they will not understand the problem enough to vote out politicians who do not protect them. An unorganized few cannot change elections any more than they can convince firms to change undesirable contract terms.
Third, current legislative bodies seem effectively “influenced” by the same business interests that control consumers by contract. Money buys lobbyists, makes campaign contributions, and spins information, just as it hires the lawyers who draft and defend these contracts and the programmers and marketers who decide how to hide them. In the current political climate, consumers’ ability to influence change with election votes seems more of a stretch than consumers’ ability to unite to demand fairness with economic votes.
While Radin leans toward tort law as a solution, in Chapter 10 she offers a range of interesting possibilities for giving consumers the knowledge to make intelligent choices in contracting. Her suggestions include rating agencies, seals of approval programs, and contract term filter technology. Given the irrationality of reading all form contracts, workable initiatives depend on some surrogate to synthesize contract content and create a basis of comparison that a consumer can digest and act upon in seconds. Without a government mandate, how can consumer power be marshaled to organize and fund such programs? What existing organization has the resources to educate consumers or issue legal standards with sufficient credibility? A Statement of Principles issued by the American Law Institute might be influential, but the painful process of birthing a timid Principles of the Law of Software Contracts, and a failed revision to Article 2, show that the same powers and influences compete in that arena as well.
Until social change is possible, the courts remain the best defense of those unable to evoke sufficient power and money on their own behalf. As law professors, we need to train students to value principles of fairness and balance. As legal scholars, we need to encourage judges and contract drafters to stop exploitation.[Posted, on Cheryl Preston's behalf, by JT]
Tuesday, May 28, 2013
This is the fourteenth in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
Peggy Radin’s book, Boilerplate has got lots of people talking – and blogging, particularly about her argument that boilerplate contracts aren’t contracts at all, and shouldn’t be overseen by contract law. Peggy was expanding on the theme of the apologists for adhesion who argue that the form contract is simply part of the product; you’d pay less, and we’d analyze the transaction very differently if you were buying a used or dented washer, so why shouldn’t we treat the washer with a disclaimer of merchantability the same way? Peggy does a good job in undermining the idea that the benevolent sellers (they would say “licensors”) will share their savings with you by reducing the price, but the bigger objection is from those who are offended by the removal of form contracts from the contracts kingdom. Yet that has been the process throughout the history of products liability, the very area Peggy is pointing to.
The usual starting point of products liability is Winterbottom v. Wright, an 1842 decision of the Court of Exchequer, in which a coachman who had been injured when a defective mail coach “broke down,” attempted to recover from Wright, who had contracted with the Postmaster-General (who had immunity) to supply the coach and keep it in good repair. Lord Abinger, the Chief Baron, took considerable care to support his conclusion that no duties were owed that were not “public duties” or violations of the law of nuisance, unless they were created by contract. Since Winterbottom was not in privity of contract with Wright, Winterbottom had no claim against him for his injuries, though caused by Wright’s failure properly to perform his contractual duties. For nearly seventy-five years, the courts chipped away at this notion that a manufacturer (or, as in Winterbottom’s case, a maintenance contractor) had no tort duty to the ultimate user, until Cardozo, in Macpherson v. Buick Motor Co. destroyed the doctrine, with careful delineation of the caselaw, but really in three sentences: “We have put aside the notion that the duty to safeguard life and limb, when the consequences of negligence may be foreseen, grows out of contract and nothing else. We have put the source of the obligation where it ought to be. We have put its source in the law.”
This worked well when negligence could be shown, but it didn’t help Bertha Chysky, a waitress who had been furnished as part of her lunch a piece of cake containing a nail that punctured her gum and cost her three teeth. She couldn’t prove negligence against the wholesale baker and sued for breach of warranty. The New York Court of Appeals, only seven years after Macpherson, and with Cardozo joining with the majority, reversed a verdict for her because “privity of contract does not exist between the seller and such third persons [like Bertha], and unless there be privity of contract there can be no implied warranty.” Yet in the same era, in other states, courts were focusing on the nature of food to expand liability, until it became the widespread law that implied warranties were not limited to a contractual privity, and until Roger Traynor, in 1944, could use the fact that a Coke bottle contained “foodstuffs” to buttress his seminal opinion in Escola v. Coca-Cola Bottling Co., the well-spring of strict products liability.
By focusing on the subject matter of the transaction rather than the formalities of contract or the assumption that tort is based on fault and wrong, Cardozo, Traynor and many other judges and writers were able to transform the issue to a question of who should bear the cost when a product injures a consumer, regardless of contract, regardless of fault. Similarly, the courts, Congress and state legislatures should look, not at the mechanics of contract, but at the many factors relied upon by Professor Radin, to restrain the power of sellers to deprive consumers of rights that the social system has granted them and that form contracts attempt to take away.
[Posted, on Peter Linzer's behalf, by JT]
This 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.
Of 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]
Monday, May 27, 2013
This is the twelfth in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
Jean Braucher is the Roger C. Henderson Professor of Law at the University of Arizona.
Peggy Radin in Boilerplate gives a rich, comprehensive account of contract law and theory as applied to standard form terms. For anyone inclined to focus on the common law of contract as the primary way to think about the problem of nasty form terms, this book is an obvious go-to source.
My critique may seem odd for a contracts blog, but here goes: I don’t think the common law of contracts is the right place to focus when thinking about unfair deals, except as a history lesson to understand the origins of regulation that is now more rigorous. Emphasis on the common law tends to put a “freedom of contract” ideological spin on problems that are already regulated otherwise and in more effective ways, based on more sophisticated theory. Radin includes perspectives other than those of standard contract theory, so my objection is a subtle one about emphasis.
We live in the age of the regulatory state and administrative agencies. The theory and practice of this type of regulation are now at the core of the law governing contracts, with judge-made common law playing a minor, residual role. Most important types of contracts are regulated by more than common law. Radin devotes her last chapter to regulatory solutions to overreaching in boilerplate, so she has certainly not missed that regulation matters, but she gives primacy of place to the common law of contracts and its theory. Contracts scholars often do this, but we need to change if we are to theorize about current reality and not give law students the misimpression that the common law provides a nearly complete system of law for contracts, only touched up around the edges with a little regulation. In the 21st century, and after an economic collapse brought on by mass exploitation by contracts, we should be spending less time on offer and acceptance or even unconscionability and more on the vast existing statutory and administrative regulation of the substance of contracts.
Consumer contracts illustrate well the point that statutes, often administratively applied, dominate the law applied to contracts. In her discussion of boilerplate, Radin features many consumer contract examples—Part I of the book is headed “Boilerplate, Consumers’ Rights, and the Rule of Law.” Consumer contracts are governed by thousands of federal, state, and local consumer protection statutes that provide stronger remedies than those of the common law. Some statutes are very specific and others use general standards. When consumers’ lawyers draft complaints, they put common law causes of action at the end, after statutory theories; statutory remedies often could be better implemented (judges sometimes undermine them), but they are already way better than those of contract law. Public enforcement is also more powerful. When the Federal Trade Commission and state attorneys general bring enforcement actions against unfairness and deception, they don’t have to worry about arbitration and forum clauses or class action prohibitions. They aren’t parties to the contract.
So, when thinking about problematic consumer contracts today, two key points bear emphasis: (1) the common law of contracts is typically not the best or first resort for protection of consumers and is therefore residual law, and (2) the Dodd-Frank Act recently gave consumer protection law a huge shot in the arm by creating a new regulatory power to address exploitation of consumer misperceptions in credit contracts. Consumer misperceptions are not limited to form terms but also come into play with salient terms such as price (a point also made by Oren Bar-Gill in his comment for this symposium).
Dodd-Frank created the Consumer Financial Protection Bureau (CFPB) and gave it broad power to regulate not just unfair and deceptive acts and practices (as federal and state statutory law has long done for many consumer contracts) but also abusive consumer credit contracts. (And, by the way, as Radin notes at the end of her book, CFPB also is required to study mandatory pre-dispute arbitration and has power to decide whether it serves consumer interests and regulate if not.)
The powerful behavioral economics theory for the CFPB’s anti-abuse power is likely to suffuse consumer law over time. For a fuller discussion, see my paper Form and Substance in Consumer Financial Protection. This theory, backed up by extensive research by many empirical scholars, is that consumers not only make systematic misperceptions, but also that businesses are forced by competition for investors to study and exploit the patterns of these misperceptions to maximize their returns. Regulation is thus essential both to free businesses from a race to the bottom so that they can be straightforward with their consumer customers and to empower vulnerable consumers to get deals they understand.
The CFPB does not use common law methodology. It addresses exploitative practices through the responsive regulation tool of examination of financial institutions, backed up by enforcement actions. CFPB examiners now pour through the records of financial institutions and consumer complaints for evidence that consumers don’t understand credit products with complex tricks and traps. The power to regulate abusive practices is not limited to those set in boilerplate; it also applies even if the exploitation is in plain sight but consumers do not understand their credit products, including how they will use them. When we think about abuses in consumer contracts, we should start with the theory underlying the CFPB’s new power, not with stale ideas about consent or choice.
Contracts teachers as well as law reformers, such as the American Law Institute in its newly-launched Restatement Third of the Law of Consumer Contracts, should not forget that consumer protection law is the central and most powerful part of the law governing consumer contracts. ALI’s project description shows that it understands that consumer law is heavily statutory and administrative, but the question remains whether ALI will embrace our vast, popular statutory and administrative law of consumer protection or inaccurately try to treat it as incidental to the common law.
Similar points to these concerning consumer contracts could of course be made about the regulation of many other types of contract. The general point is that the law of contracts is much broader than contract law, and the common law is not the primary way to address overreaching in contracts, whether in boilerplate or not. Radin ends in agreement with this policy direction, but her focus on theory underlying common law rather than the theory of regulation makes the analytical journey more difficult than it needs to be. Contract theory needs updating to embrace regulatory theory as part of its core and not as an afterthought or add-on.
Some acknowledgments: Nearly everything worth saying about consumer contracts was said long ago, and much of the above is inspired by earlier work of others. In 1933, based on lectures given in 1928-29, Karl Llewellyn wrote in The Case Law System in America (in German, only published in English in 1989; see at 67-68 for the discussion in the English translation) that case law is inadequate to address the enormous problem of consumer protection. See also Arthur Leff, Unconscionability and the Crowd—Consumers and the Common Law Tradition, 31 U. Pitt L. Rev. 349 (1970) (arguing that common law litigation will not root out unfairness and that administrative regulation is necessary to deal effectively with consumer contracts), and Stewart Macaulay, Bambi Meets Gozilla: Reflections on Contract Scholarship and Teaching vs. State Unfair and Deceptive Trade Practices and Consumer Protection Statutes, 26 Hous. L. Rev. 575 (1989) (noting that consumer protection regulation is more powerful than contract law in providing remedies and that contracts teaching should introduce that key point).[Posted, on Jean Braucher's behalf, by JT]
This is the eleventh in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
Professor Radin’s Boilerplate is a pragmatist repudiation of an important social and legal phenomenon. That practice has a number of features: (1) waivers of rights and liability contained in boilerplate are often unknown to the individuals who grant those waivers (2) consumers need to waive common law and statutory rights in order to purchase a wide range of goods and services, many of which are regarded as essential to ordinary American life (3) the waivers in boilerplate govern so many contractual relationships that some rights otherwise granted by law are effectively eliminated for large portions of the consumer population.
Much of the literature on boilerplate focuses on the first feature of boilerplate, above. Radin has an argument about normative degradation and the poor quality of consent to boilerplate. But I think the most important contribution of the book is to highlight features (2) and (3).
The fact that consumers need to waive many rights, including the right to compensation for harm incurred by the negligence of others and the right to pursue legal remedies in courts or by way of class actions, is not important because it renders their consent ineffective. (I would argue it does not.) The fact of necessity is important because it explains feature (3) and suggests that the mass “rights deletion” that Radin observes does not necessarily reflect consumers’ collective preferences.
Whether consumers prefer contracts with or without boilerplate, i.e., whether they are prepared to pay to preserve some rights now usually waived in consumer contracts, depends on the decision mechanism by which that preference is expressed. Because many rights that private individuals have against one another are default rights that individuals are free to alienate, we effectively use the market to sort consumer preferences. The result is that individual consumers decide whether, on the margin, the value they might derive from a legal right is worth the money they save from giving it up, or whether it is worth the value of the good or service to which that waiver is attached.
The deep question that Radin raises in her discussion of democratic degradation is whether markets are indeed the right way to decide the scope of some legal rights. Especially where the frequency or distribution of a right in society has important cumulative effects on legal culture or social practice, we might wish to remove certain rights from the marketplace and decide through collectivized decision-making (i.e., legislative action or inaction) the scope of rights that govern certain private interactions. One of her most compelling examples is the case of copyrights that individuals frequently waive. She persuasively observes that we may have a collective interest in the wide diffusion of copyrights that is underserved by the separate decisions of millions of individuals to waive their copyrights at a small price.
More generally, we need to think about what proportion of our private rights (rights held against other private individuals) should depend on our market power. The idea of a “social wage” refers to the proportion of our material resources that depends on our status as citizens -- as opposed to our market wage, which is the proportion of our income that turns on our performance in the marketplace. Countries differ in their social wage level. For example, countries with national health care or generous unemployment benefits make your material situation somewhat less dependent on your labor market position than in countries without public health care or generous unemployment benefits. The United States has a low social wage as compared to other developed countries of comparable wealth. We probably also have a “low private rights” regime, inasmuch as individuals vary (more than elsewhere) in their ability to preserve legal rights depending on their ability to pay for them. I imagine that whether this outcome is acceptable turns significantly on the particular right at issue. For example, we might reject a regime under which service providers exercise greater caution to avoid bodily injury when dealing with some consumers than with others. Yet we might be comfortable with a regime in which some proportion of the population relies primarily on arbitration for redress. We can thank Radin for highlighting these important social choices.
[Posted, on Aditi Bagchi's behalf, by JT]
For those who missed it, over the last two weeks we posted nine mini reviews of Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law as well as Professor Radin's resposnes to those reviews.
The prior posts can be found here:
- Peter Alces on consent;
- Theresa Amato on proposed solutions to the problems posed by Boilerplate;
- Andrew Gold on the question of whether boilerplate is contractual;
- David Horton on mass arbitration and democratic degradation;
- Ethan Leib on the fetishization of consent;
- Brian Bix on democratic degradation;
- Oren Bar-Gill on consent without reading;
- Daniel Schwarcz on a tort-based approach to standard form contracts;
- Kim Krawiec on contracts as disclosure, Part I and Part II; and
- Margaret Jane Radin's responsesm, Part I and Part II
This week, we will feature posts from the following contracts scholars:Aditi Bagchi teaches Contracts and Labor Law at the Fordham University School of Law, where she is an Associate Professor. Her writing in contract theory challenges classical views of contractual obligation. For example she questions its promissory foundation (Separating Contract and Promise, Promises and Permissions in Contract) and its fully voluntary character (Promises and Permissions in Contract, Normative Triangulation in Contract Interpretation). She has argued that contract may be multilateral and dynamic (Parallel Contract) and has examined considerations of distributive justice in the formation, interpretation, and enforcement of contract (Distributive Injustice and Private Law, Managing Moral Risk: the Case of Contract, Distributive Justice and Contract). She has explored these issues with respect to employment and consumer contracts in particular (The Myth of Equality in the Employment Relation, Unequal Promises, Unions and the Duty of Good Faith in Employment Contracts). Professor Bagchi also has a related interest in the comparative political economy of contract, labor, and corporate law (The Political Economy of Contract Regulation, Varieties of Employee Ownership, The Political Economy of Merger Regulation). For a full list of her publications and current projects, se her Research page.
Jean Braucher is the Roger C. Henderson Professor of Law at the University of Arizona’s James E. Rogers College of Law (Tucson), where she has taught since 1998. Prior to joining the faculty at the University of Arizona, Professor Braucher served as the Gustavus H. Wald Research Professor of Law at the University of Cincinnati College of Law. She has also served as a visiting professor of law at Cornell Law School, University of Texas School of Law and Boston College Law School. Since 2007, Professor Braucher has served as the Distinguished Scholar and Chair of the Wisconsin Contracts Project of the Institute for Legal Studies at the University of Wisconsin Law School. The Project is dedicated to a socio-legal approach to contract law and to revising the Contracts casebook by Stewart Macaulay et al., which Professor Braucher has joined as an author. Prof. Braucher specializes in bankruptcy, contracts and commercial law.
Charles Calleros is a Professor of Law at Arizona State University's Sandra Day O'Connor College of Law. Professor Calleros’ research interests include international and comparative contract law; international conflict of laws; the intersection of free speech with race and gender discrimination; and various issues regarding legal education. At ASU, he teaches Contracts, International Contracts, Civil Rights Legislation, and Legal Method and Writing. At the Universite Paris Descartes, he annually teaches short courses in Common Law Legal Method, Comparative and International Contracts, and International Conflict of Laws. Professor Calleros is a member of the American Law Institute. In addition to earning several teaching awards over the years, he received the ABA’s Spirit of Excellence Award in 2011 and received an award in 2010 from the Arizona State Bar Committee on Minorities and Women in the law for his work in mentoring programs and outreach to youth in the community. Prior to joining the College faculty in 1981, he clerked for Circuit Judge Procter Hug Jr., of the U.S. Court of Appeals. Professor Calleros is past-President of Region XIV of the Hispanic National Bar Association.
Peter Linzer is a Professor of Law at the University of Houston Law Center, where he has taught since 1984. Before going into teaching, Professor Linzer practiced law both as a Wall Street lawyer and as an Assistant Corporation Counsel for the City of New York. Professor Linzer is a member of the American Law Institute. Professor Linzer has served as the Chair of the Contracts Section of the Association of American Law Schools and is a Board Certified civil appellate specialist. He served for nearly a decade on the Pattern Jury Charge Committee of the State Bar of Texas. His principal academic subjects include Contracts; Constitutional Law; Equal Protection; First Amendment; International Contracting; Transactional Clinic; Contract Negotiation and Drafting; Introduction to American Law (for foreign LL. M. candidates); and Torts. Working with experienced practitioners, he pioneered a transactional course in international contracting that sees students negotiate and draft documents in simulated international deals. A list of his publications can be found here.
Cheryl Preston is the Edwin M Thomas Professor of Law at Brigham Young University's J. Reuben Clark Law School, where she has taught since 1989. Professor Preston is a nationally recognized expert in Internet contracts, the contract infancy doctrine, legal protections for minors, and Internet regulation. Professor Preston also publishes on the relationship of law and popular culture images, law and religion, and feminist legal theory. She produced an educational DVD, entitled Fashioning Women in Law. Her DVD won the prestigious Chris Award at the 2003 Columbus International Film Festival. Prior to joining BYU's faculty, Professor Preston served as a law clerk to the Honorable Monroe G. McKay, United States Court of Appeals for the Tenth Circuit and was in private practice for ten years. A list of her publications can be found here.
Guy A. Rub is an Assistant Professor at the Ohio State University Moritz College of Law. Professor Rub is an expert in the intersection between intellectual property law and economic theory. Prior to joining Moritz, he was practicing at Munger, Tolles & Olson LLP in Los Angeles. Professor Rub has studied law on three continents. He completed his studies as an SJD candidate and received an LL.M. degree from the University of Michigan Law School; a master's degree in Law & Economics from the University of Madrid; a European Master in Law and Economics from the Erasmus University in Rotterdam, Netherlands; and a LL.B. degree from Tel-Aviv University. He was a law clerk to the Hon. Rina S. Meshel of the Tel-Aviv Appellate Court. His recent article, Contracting Around Copyright: the Uneasy Case for Unbundling Rights in Creative Works, was published in the University of Chicago Law Review. A list of his publiactions can be found here.
Thanks to all of our contributors. We look forward to an exciting finale to our symposium!