Thursday, August 22, 2013
This is the fourth in a series of posts in our online symposium on the Contracts Scholarship of Stewart Macaulay. More about the online symposium can be found here. More information about this week's guest bloggers can be found here.
One Contracts Professor’s Preference for State Court Decisions
In the essay that I contributed to Revisiting the Scholarship of Stewart Macaulay: On the Empirical and the Lyrical, I gave vent to the frustration I experienced over the years reading decisions written by the 7th Circuit Judges Richard Posner and Frank Easterbrook. Stewart wrote to me recently and in two sentences, appropriately lyrical, summed up the source of my frustration: “In theory, of course, the court applies state law in a diversity situation. About the one thing that you can expect is that Judges Posner and Easterbrook will be off on a frolic of their own.”
I have a healthy respect these days, and a strong preference for, the decisions of state courts. I try to use the best of these to teach contract law to my students. I admire the tenacity of state courts that insist, for example, that the commentary to the UCC matters in interpreting that statute. See e.g. Simcala Inc. v. American Coal Trade, Inc. 821 So.2d 197 (Ala. 2001) (the word “center” in comment 3 to UCC section 2-306 means something when used to describe the way a stated estimate limits the “intended elasticity” of an output or requirements contract).
I am particularly gratified by the persistence of courts that have used the unconscionability doctrine to invalidate boilerplate arbitration clauses. Implicit in these cases is a duality. Oppression exists on two levels. The terms of the transactions are oppressive and unconscionable, and the terms of the arbitration agreement are oppressive. Two cases I discussed previously at the 8th Annual International Contracts Conference at Texas A & M University Law School.
In Brewer v. Missouri Title Loans, 364 S.W.3d 486 (Mo. 2012), the Missouri Supreme Court describes the terms of a loan agreement. Ms. Brewer borrowed $2,215 and paid back $2000, at which point she had reduced the principal balance on the loan by $.06. The interest rate on that loan was 300%. Ms. Brewer brought suit under the Missouri consumer protection statute, the Missouri Merchandising Practices Statute.
In Tillman v. Commercial Credit Loans Inc., 655 S.E.2d 362 (N.C. 2008), Ms. Tillman and Ms. Richardson, the named plaintiffs in a class action, purchased single premium credit insurance from a lender. Within a year the North Carolina legislature made this species of loan illegal, but the statute was not retroactive. Ms. Tillman and Ms. Richardson sued under the North Carolina Unfair and Deceptive Trade Practices Act. The North Carolina Supreme Court found the arbitration clause in the contract, which barred class actions, unconscionable in a 3-2-2 decision.
When the United States Supreme
Court vacated the decision in the Brewer
case and remanded it to the Missouri court for reconsideration in light of A.T.& T. Mobility LLC v. Concepcion,
131 S. Ct. 1740 (2011), Chief Justice Richard Teitelman
, responded that
the unconscionability doctrine in Missouri law was not an “obstacle to the
accomplishment of the act’s objectives.”
The arbitration agreement was unconscionable because there was expert
testimony that no consumer would pursue a claim against the Title Company. The cost was too high. The Tillman
court made much the same point. Of the
68,000 loans that Citifinancial made in North Carolina, no borrower ever
pursued arbitration of a claim.
Citifinancial on the other hand, had reserved its right to go to court
and had exercised that privilege over 3,000 times in civil suits and
foreclosure actions. The Tillman court also provided information
about the actual cost of arbitration, a factual discussion that is missing in a
lot of these cases. It turns out that
arbitration is cost prohibitive for most low income consumers.
Exploitive or predatory contracts saturate the market for credit, housing, furniture for the least well off in our society. The Montana Supreme Court recently held a payday loan and its arbitration provision unconscionable. Kelker v. Geneva-Roth Ventures, Inc., 303 P.3d 777 ( Mont. 2013)(780% APR was violation of Montana Consumer Loan Act) If the U.S. Supreme Court grants certiorari in Kelker, the decision in that payday loan case will probably meet the fate of its progenitors, Casarotto v. Lombardi, 886 P.2d 931 (Mont. 1994)(Casarotto I) and Casarotto v. Lombardi, 901 P.2d 596 (Mont. 1995)(Casarotto II). Justice Trieweiler maintained in Casarotto I that the Federal Arbitration Act had not pre-empted state laws addressing arbitration because the federal statute had not addressed every aspect or possibility with respect to arbitration agreements. In Casarotto II he argued that the U.S. Supreme Court’s decision to strike down an Alabama statute that made pre-dispute arbitration agreements unenforceable was irrelevant to the decision in Casarotto I. He was reversed in an opinion written by none other than Justice Ginsberg.
Justice Terry N. Trieweiler, the twice rebuked but unrepentant Montana Supreme Court jurist, actually wrote three Casarotto opinions. He penned a special concurring opinion in Casarotto I to address “those federal judges who consider forced arbitration as the panacea for their “heavy caseloads” and to single out for criticism Judge Bruce M. Selya, First Circuit Court of Appeals, who called the prevalence in state courts of “traditional notions of fairness” an “anachronism.” 886 P.2d at 940. Justice Trieweiler’s rejoinder was that some federal judges are arrogant. I think of it as hubris.
The number of cases challenging arbitration agreements has not diminished over time. I can think of at least two reasons for this phenomenon. One is ever expanding disparity in wealth and power in the United States in this post-industrial society. There are very few ways individuals can challenge those who have power over them or expose what they feel to be an injustice that has been done to them. We are conditioned to believe that there is “equal justice under the law” and to believe that a citizen may seek redress in court. The second reason is the failure of federal courts to recognize that the FAA is indefensible when it is applied in consumer cases. That was the subject of the last series of blog posts discussing Margaret Radin’s book, Boilerplate. The FAA is a statute frozen in time, applied to transactions almost ninety years after Congress held those hearings on the resistance of state courts to arbitration and used to enforce arbitration “agreements” in contracts that were not even dreamed of when the FAA was passed -- online, clickwrap contracts such as the contract in Kelker. Contract defenses that police agreements where there is no real consent and no real bargaining are rendered impotent by the FAA. It does not matter if Certiorari is denied in Kelker, because the 9th Circuit has already used a pre-emption argument to defeat the Montana court’s use of “reasonable expectations” and unconscionability doctrines to invalidate arbitration provisions. Mortensen v. Bresnen Communications, LLC, 2013 U.S. App. Lexis 14211.
This past weekend I had the pleasure of meeting the judge who wrote the plurality opinion in the Tillman case, Justice Patricia Timmons-Goodson (pictured), who retired from the North Carolina Supreme Court in December 2012. I did not plan this meeting. It was completely serendipitous. I was looking for the meeting room where the Task Force on the Future of Legal Education was discussing the end of law school as we know it. I asked her for directions, and then I glanced at her name tag. It took me a moment to realize who she was. I was told by Judge James Wynn, who is now on the 4th Circuit U.S. Court of Appeals, but who once served with Judge Timmons-Goodson on the North Carolina Court of Appeals and the Supreme Court, that she was a recent recipient of the Legend in the Law award at Charlotte School of Law.
I knew that Justice Timmons-Goodson was a black woman. I looked for background information when I decided to write about the case. I knew, courtesy of North Carolina’s Lawyers Weekly, that two lawyers from Raleigh, John Alan Jones and G. Christopher Olson, obtained a judgment in Tillman and two companion cases in the amount of $81.25 million. Of the borrowers represented in the Tillman case, 759 received approximately $31,291 each. Another 9,670 received $544 each.
Taking the admonition of Stewart Macaulay seriously, striving to do something that looks like empirical research, I asked Justice Timmons-Goodson if she would consent to an interview. She hasn’t agreed yet, but I hope she will. I would like to know more about the process that she used to reach a decision in the Tillman case; how she persuaded enough of her colleagues to agree that the contract and the arbitration clause were unconscionable, even if two of them relied on a “totality of the circumstances” analysis that they thought sufficiently different from her opinion to merit a separate concurring opinion. Two justices signed her opinion relying on substantive unconscionability; two joined in finding the arbitration clause unconscionable but stressed the importance of deference to the fact-finding of the trial judge under a “totality of the circumstances” approach, and two justices dissented.
The Justice writing the dissenting opinion, appears to believe that the unconscionabiity doctrine is somehow illegitimate. He noted that it had never been used in North Carolina to invalidate a contract or a term in a contract. If I do interview Justice Timmons-Goodman, I will ask her about her reaction to the most recent U. S. Supreme Court decisions. She has herself written about the importance of state court judges at every level, particularly in the trial courts.
I am not sure that she would call her own acts as a justice on the Supreme Court “resistance.” She might simply say that logic and adherence to an ethic of principled decision-making impelled her to write the decision in Tillman as she did. I cannot be sure that she believes, as I do, that the drafters of the FAA never intended to completely pre-empt state law, especially those contract doctrines that are designed to control avarice and unscrupulous behavior. I do think, however, she will enjoy discussing the decisions of Justice Trieweiler.
[Posted, on Deborah Post's behalf, by JT]
Wednesday, August 21, 2013
This is the third in a series of posts in our online symposium on the Contracts Scholarship of Stewart Macaulay. More about the online symposium can be found here. More information about this week's guest bloggers can be found here.
Kate O'Neill's is Professor of Law at the University of Washington School of Law. Her principal interests are contracts, copyright, legal rhetoric, and law school teaching.
These essays present enlightening, provocative, and well-written analyses of relational contract theory, contract doctrine, legal practice, and social justice. The editors have sequenced and grouped them skillfully so that the reader can clearly see how the authors’ ideas intersect and diverge. As a result, the collection is more than its parts.
I want to draw readers’ attention to a problem the collection suggests but doesn’t address directly. What are we going to do about the contracts course in law school?
Several essays suggest, and Robert Scott’s expressly argues for, an emerging consensus that Macaulay’s original insights remain valid and are foundational for both law & economics and law & society theorists and that these warring camps may have more in common than either has yet recognized. If Scott and Macaulay are right, then I would wager that most contract courses not only fail to reflect the consensus but camouflage its most promising lessons.
The consensus seems to include two major points of agreement. First, unmessy doctrine can be handy (“Messy,” of course, was Macaulay’s description of much contract doctrine). Some “sophisticated” contracting parties should be able to make binding commitments on precisely the terms that they negotiate and, in case of dispute, they should be able to limit a judge’s interpretative discretion to alter their allocations of risk. In particular, they should be able to preclude the judge from resorting to “context” to alter the (presumably) plain meaning of the terms.
Second, consumers and employees should not necessarily be bound by all of the commitments purportedly imposed upon them by adhesion documents. Here, we can see fruit borne from Macaulay’s distinction between the real deal and the paper deal. Terms that are reasonable, typical, or expected are part of the deal; terms that are not are not. The expected nature of the relationship dictates the real contract terms; the paper contract terms do not necessarily govern the relationship. We are freed from the mutually exclusive and entirely fictional alternatives that either a contract was formed on the paper terms or it was not formed at all.
On the other hand, the collection makes clear that a fundamental policy issue remains contested especially in the consumer context – how much contract law should intervene in the market. The familiar alternatives are reflected: 1) let the market discipline bad actors even if there are a few casualties before the market works its magic because there is no agency more capable than the market in determining best (read, efficient?) practices; 2) let judges intervene to strike down bad terms – especially those that limit access to courts and class actions – because doing so will hasten market discipline of bad actors and will also relieve hardship in at least a few cases; or 3) regulate certain kinds of terms out of existence.
All the authors think that empirical data could help resolve the policy dispute. Edward Rubin, in particular, suggests that we think of contract law as a management tool. If we were to focus on whether the tool works well to achieve whatever objectives we set, then the legal system could essentially be taught to treat empirical evidence as intrinsic to the development of law. This is encouraging stuff. A systemic devotion to empiricism within the legal system might enable us, and the body politic, to clarify debates about what laws are fair and efficacious.
So far, so good, but here is the question that keeps troubling me. If we all are relationists and empiricists now, and we could use data to make contracting law and practice both fairer and more efficient (or whatever other goals we might conceivably agree upon), what and how we should teach law students?
Macaulay has taught us that contract law has relatively little explanatory power for many of the actual practices involved in the formation, performance, and modification of exchanges, or even the practices involved in resolving disputes. Serious attention to the nature of exchange relationships makes it hard to characterize contract law as unified, coherent and consistent or if it is unified theoretically, the unity operates at such a high level of abstraction that will matter little to judges or practitioners.
We praise these and other insights from empiricism both for what they tell us about law and society now and what they might teach us about alternatives. Yet most lawyers and judges plod on, oblivious or dismissive. Are we in part responsible? Look at our casebooks, listen to our classroom discussions! Traditional doctrinal analysis is alive, well, and I suspect dominant. Economic analysis “lite” has crept in, but attention to empirical methods, much less data on context or consequences, is scant. I suspect that even those of us who assign “law & society” contracts casebooks, like the ones edited by Macaulay and Deborah Post, still devote the bulk of class time to doctrinal analysis.
Perhaps this must be. Perhaps doctrinal analysis is our discipline’s unique identifier and must be taught first because it is foundational; perhaps we need to train litigators to understand the elements of a claim for breach; perhaps there is some utility in using the same basic case method in all 1L courses; or perhaps we are simply boxed in by student expectations, bar examiners, tradition, or confusion about what else to do?
Although there certainly are barriers to changing what and how we teach, I wonder if the core problem is that the work that needs to be done is profoundly interdisciplinary, challenging, and time-consuming. Many of us lack the skills to do it alone, and the scholarship, promotion standards, and instructional traditions at many law schools still make collaborations difficult.
Contracts teachers may alert law students to Macaulay’s insights, but I don’t think we give students sufficient tools to help clients and or work effectively on big systemic problems. Stewart might say that’s because we kinda like the mess the way it is.
[Posted, on Kate O'Neill's behalf, by JT]
Contract Law – 2nd Edition
By John Cartwright
This book gives an introduction to the English law of contract. In this new and fully updated edition the book retains the primary focus of the first edition: it is designed to introduce the lawyer trained in a civil law jurisdiction to the method of reasoning in the common law, and in particular to the English law of contract. It is written for the lawyer-whether student or practitioner-from another jurisdiction who already has an understanding of a (different) law of contract, but who wishes to discover the way in which an English lawyer views a contract. However, setting English contract law generally in the context of other European and international approaches, the book forms an introductory text for the English student, who can see not only how English contract law works but also get a glimpse of different ways of thinking about some of the fundamental rules of contract law. After a general introduction to the common law system-how a common lawyer reasons and finds the law-the book explains the principles of the law of contract in English law covering all the aspects of a contract from its formation to the remedies available for breach, whilst directing attention in particular to those areas where the approach of English law is in marked contrast to that taken in many civil law systems.
John Cartwright is Professor of the Law of Contract at the University of Oxford, Tutor in Law at Christ Church, Oxford, Professor of Anglo-American Private Law at the University of Leiden, and a Solicitor.
August 2013 362pp Pbk 9781849464796
RSP: £25 / €33 / US$50
20% DISCOUNT PRICE: £20 / €26.40 / US $40
Order Online in the US
If you would like to place an order you can do so through the Hart Publishing website (link below). To receive the discount please mention ref: ‘CONTRACTSPROFBLOG’ in the special instructions field. Please note that the discount will not be shown on your order but will be applied when your order is processed.
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If you would like to place an order you can do so through the Hart Publishing website (link below). To receive the discount please type the reference ‘CONTRACTSPROFBLOG’ in the voucher code field and click ‘apply’.
UK, EU and ROW website: http://www.hartpub.co.uk/BookDetails.aspx?ISBN=9781849464796[JT]
Tuesday, August 20, 2013
This is the second in a series of posts in our online symposium on the Contracts Scholarship of Stewart Macaulay. More about the online symposium can be found here. More information about this week's guest bloggers can be found here.
Alan Hyde is Distinguished Professor and Sidney Reitman Scholar at Rutgers University School of Law, Newark, where he writes mostly about labor, employment, and immigration law.
Stewart Macaulay, System Builder
I’ve often wondered whether Stewart Macaulay would have had even more influence if he had used his social science research into business practice to construct theories and systems. In most of his writing, Stewart used empirical research to debunk. Often, there is a specific target. For example, Stewart will take on the idea that business professionals want to be sure that the documents they sign constitute contracts that will be enforceable as such in court. As everyone knows (I hope), Stewart’s research showed, so long ago, that people who did deals cared little about formal enforceability. My impression is that most American contracts teachers know this, and ignore it in their actual teaching practice. The typical contracts class probably spends as much time today on the line between unenforceable agreement, and enforceable contract, as it did before Stewart began writing, or was born.
As a public service, I have synthesized the following Counterstatement (First) of Actual US Contract Law in Action, as Given by the Dealmakers of the US, Under the Interpretation of Stewart Macaulay (Tentative Draft No.1). Casebooks may now cite it—I grant permission-- as an alternative approach (though with precisely the same claim to legal authority as the product of that Institute in Philadelphia, the name of which I do not choose to recall, that is so often treated by contracts teachers today as if it were the Civil Code). Authors can argue with it. For sometimes it takes a system to beat a system. For convenience, I will synthesize this Counterstatement from Stewart’s fabulous casebook (with Kidwell, Whitford, Braucher, and sometimes others), Contracts: Law in Action, because I teach from it every year and thus get the benefit of hearing Stewart’s voice in my head as I teach.
Counterstatement (First) of Actual US Contract Law . . .
Chapter One: Remedies. [Since this is a Stewart Macaulay Counterstatement of Actual US Contract Law, it naturally begins with Remedies]
Section 1: Remedies expected and demanded for failures to meet promises shall reflect the expectations of the parties based on the norms of their industry, and their sense of fairness. Remedies shall not depend on technicalities of formal enforceability as discussed in Chapter Two of this Counterstatement, and in no case shall refer to decisions of courts of law except insofar as these have been incorporated into business norms, which, if parties are rational, would be never. For example, if a machine sold doesn’t work, “this is not something any lawyer could handle without putting you [Seller] out of business. This must be handled on a business basis by a salesperson and the person who bought the machine. We don’t look for legal loopholes to avoid obligations like this. After all, you are selling reliability and your reputation gets around.”
Section 2: Buyer’s cancellation of an order
- A Buyer under a formal or informal arrangement for the sale of goods, whether or not a law court would find it to be a “contract,” may cancel an order when its needs have changed.
- In such a case, the Buyer shall be liable to the Seller for cancellation costs, defined as expenses incurred by the Seller that have been turned to waste by Buyer’s cancellation. Such expenses include completed product scrapped or unsellable after Buyer’s cancellation, and raw materials purchased in order to fulfill Buyer’s order but that cannot be salvaged.
- A seller that sues a cancelling Buyer for profits it thinks it would have made from Buyer’s purchase is probably nuts, especially where that Buyer is a consumer. Such a Seller that sues for lost profits can hardly expect people to continue to deal with it.
- Lawyers can call cancellation of an order “breach of contract,” if they like, but that doesn’t mean that their clients will agree with this characterization.
- On notification by Seller that it is unable to fulfill Buyer’s order, Buyer may purchase any reasonable substitute and bill Seller for the difference.
- If Seller is going to be late, it should try to work things out with the Buyer. If Buyer had enough notice that the Seller would be late, and didn’t do anything to protect itself, nobody is going to give Buyer any damages.
Section 4: Miscellaneous remedies
- All parties understand that failure to keep your word in business is likely to result in people saying bad things about your reputation.
- When things go wrong, try to work things out with your contractual partner. This probably means keeping the lawyers out. “If business had to be done by lawyers as buyers and sellers, the economy would stop. No one would buy or sell anything; they’d just negotiate forever.”
- The party that drafts the documents will probably disclaim any liability, in vague, illegible gobbledy-gook, and courts that are there to protect wealth and privilege will probably let them get away with it, so really all this study of remedies is somewhat beside the point.
Chapter Two: Enforceability [like you care, anyway]
Section 5: Enforceability of promises and arrangements made in family settings
Courts should not hesitate to enforce promises made by one family member to another, if the situation permits the court to play a useful role in sorting things out and restoring harmony, which is rare.
Section 6: Contract formation in general
- Honest people keep their promises without worrying about any technicalities of contract formation. The so-called law of offer-and-acceptance is just a bunch of loopholes that lawyers use to get people out from promises that they plainly made but now feel like getting out of.
- When the parties’ documents do not appear to create what courts think is an enforceable contract, for example by reserving in one party such freedom of action as to raise the question whether it is even committing to anything, try to imagine that maybe they didn’t intend judicial enforcement, preferring to work things out.
- The idea that people have no commitments to each other, and then, after one magic moment (called contract formation), do, is just magical thinking. People should act like moral adults and work out the issues between them, without taking refuge in legal mumbo-jumbo, which is nearly always a very hostile step to take and interpreted by others as such.
Section 7: Consideration
There is no such doctrine. A plaintiff who seeks specific performance of a contract to sell valuable real estate in consideration of one peppercorn (tendered) has a great deal of explaining to do.
Section 8. Excuse.
If you owe $50,000 to a bank, and can’t pay, you are in trouble. But if you owe $50 million to a bank, and can’t pay, the bank is in trouble.
You get the idea, anyway. It’s time for Stewart Macaulay fans to move beyond mere debunking. That Institute in Philadelphia should support the Counterstatement (First) of Actual US Contract Law in Action, as Given by the Dealmakers of the US, Under the Interpretation of Stewart Macaulay. But who should be Chief Reporter?
[Posted, on Alan Hyde's behalf, by JT]
Monday, August 19, 2013
This is the first in a series of posts in our online symposium on the Contracts Scholarship of Stewart Macaulay. More about the online symposium can be found here. More information about this week's guest bloggers can be found here.
Jay Feinman is Distinguished Professor of Law at Rutgers School of Law‒Camden.
My contribution to Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and the Lyrical is a chapter entitled “Ambition and Humility in Contract Law.” The chapter focuses on several of Macaulay’s articles in the 1960s in which he presented an organization of the fundamental policies underlying contract law, the structures through which contract law acts, and some policies of the legal system that influence the fundamental and structural policies. The organization encapsulates in a remarkable 2x2 matrix the essential issues of contract law.
Here is the matrix, which separates the substantive policies that contract law serves (market and other-than-market goals) from the ways in which the legal system can realize those goals (through rules or case-by-case adjudication). (As Macaulay recognizes, the elements of the matrix are actually ends of continua rather than discrete categories.)
Generalizing approach (‘rules’)
social (or economic) planning policy
Particularizing approach (‘case-by-case’)
Macaulay’s organization clearly and powerfully expresses the underpinnings and operations of the field. For mainstream scholars, the identification of policies and approaches provides a framework that clarifies analysis in legislation, adjudication, and scholarship. But the matrix also contains the seeds of a critique that demonstrated that contract law is at best badly confused and at worst incoherent and largely ineffective. In that way, Macaulay’s work contributed to critical legal studies’ account of private law through its influence on Duncan Kennedy’s monumental “Form and Substance In Private Law Adjudication,” 89 Harv. L. Rev. 1685 (1976) and other works.
For contract law, the market is the primary social institution, so market goals predominate. Macaulay’s framing of market-promoting goals as primary and market-correcting goals as secondary correctly states the customary objectives of contract law as ambition tempered with humility. But that framing makes apparent why contract law needs to temper its ambition of serving the market with a large dose of humility.
First, the conflicting market and non-market goals need to be balanced, and the measures for doing so are controversial. The case law and literature offer a variety of mechanisms for carrying out this balancing. Courts employ different tropes including avoidance by doctrinal formalism, casual policy analysis, and ad hoc paternalism. The Restatement Second frequently lists factors to be balanced without specifying the techniques of balancing. Economic analysis aims for efficient results, variously defined and sought. In his later reflections on the systematic presentation of contract law policies, Macaulay recognized the inadequacy of these efforts and the difficulty, perhaps impossibility of this balancing process. There he entitles the matrix “The Contradictions of Contract Law” and comments that contract law “inconsistently rests on policies that both promote the market and those that attempt to blunt it.” Macaulay, “Klein and the Contradictions of Corporate Law, 2 Berkeley Bus. L. J. 119 (2005).
Second, the hierarchy and separation between market and non-market goals needs to be established in practice. Consider the choice between a rule-oriented market functioning policy and a case-by-case transactional policy. One of the substantive contract policies Macaulay identifies is self-reliance. In the conception of the market as private, individual, and self-actuating, self-reliance is crucial. Macaulay writes of promoting self-reliance by encouraging or requiring parties to look out for themselves, in a world in which the law will rigidly enforce apparent bargains they have made, through a market-functioning or transactional policy.
But implicit in this construction is the illogic of simply promoting the market by promoting self-reliance through a body of contract law that rewards initiative and punishes dependence. Instead, the law can further self-reliance in either of two opposite ways—by creating a minimal body of contract law that puts parties at risk or an aggressively interventionist body of law that provides parties with security. A body of contract that provides relief from one’s ill-informed or ill-fated promises encourages self-reliant action by assuring that the consequences of action will not be too severe. The risk of intervention or non-intervention in this way protects all economic actors, as all are potentially subject to bad decisions or bad luck, although the weak probably more so than the strong.
Third, as the theoretical conflict about self-reliance illustrates, it is problematic even to attempt to define market and non-market goals as separate. Inherent in the separation is the conception that market goals involve the facilitation of private activity, a process that is distinct from the imposition of public values such as redressing inequality. Private activity is fundamentally individual, whereas public goals are collective. Courts in private law cases are primarily a forum for the adjudication of private disputes; legislatures are the arena in which public goals are primarily enunciated. And so on.
But these dichotomies are exaggerated. There is no institution of the market separate from and preexisting non-market activity, just as there is no private law not constituted by public values. The exchange of goods may be a private activity, but the exchange of goods that the law has made the subject of property and which exchange is enforceable by law is an essentially public activity. Law constitutes the market for reasons of the public good, so supporting the market through contract law is only another way of advancing the public good, and not a particularly distinct way at that.
Because the market is not distinctively private, the hierarchy of market goals and the need for self-reliance in the service of those goals are not evident. The justification for contract law and its rules must rest elsewhere than on a claim that the market is distinctive and distinctively important. And that is a claim that is assumed but seldom justified in the case law or literature. Part of the power of Macaulay’s organization is the way in which it makes clear the great defects of contract law’s ambition.
[Posted, on Jay Feinman's behalf, by JT]
Friday, August 16, 2013
We begin our online symposium inspired by Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and the Lyrical (Jean Braucher, John Kidwell, and William C. Whitford, eds., Hart Publishing 2013) with four posts next week. In addition to helping edit the book Jean Braucher has also been instrumental in recruiting participants and shaping this symposium. So we at the blog are all very grateful to her.
This post will serve to introduce next week's guest bloggers.
Jay Feinman is Distinguished Professor of Law at Rutgers School of Law‒Camden. He writes and teaches in contracts, insurance law, and torts. His books include Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It; Law 101: Everything You Need to Know About American Law; and Professional Liability to Third Parties. His contracts scholarship includes articles on relational contract theory (“The Insurance Relationship as Relational Contract and the ‘Fairly Debatable’ Rule for First-Party Bad Faith,” 46 San Diego L. Rev. (2009); “Relational Contract Theory in Context,” 94 Nw. U. L. Rev. 737 (1999), critical legal studies (“Critical Approaches to Contract Law,” 30 UCLA Law Review 829 (1983)), and formation doctrine (“Is an Advertisement an Offer? Why It Is, and Why It Matters,” 58 Hastings L.J. 61 (2006)). In the AALS, Feinman has served as chair of the Section on Contracts and chair of the planning committee for the contracts conference. At Rutgers, he has served as Associate Dean and Acting Dean of the law school and a member of the Rutgers Center for Risk and Responsibility, and he has received every teaching prize awarded by the university.
Links to many of Professor Feinman's publications can be found here.
Alan Hyde is Distinguished Professor and Sidney Reitman Scholar at Rutgers University School of Law, Newark, where he writes mostly about labor, employment, and immigration law. He is a member of the American Law Institute and consultant to the Restatement of Employment Law. He also teaches contracts and discusses contracts in his books Bodies of Law (1997), Working in Silicon Valley (2003), and articles on covenants not to compete and employment contracts that contracts teachers do not read.
Links to many of Professor Hydes publications can be found here.
Kate O'Neill's principal interests are contracts, copyright, legal rhetoric, and law school teaching. She shares the following biographical details:
I am a professor at University of Washington School of Law. I have been teaching Contracts for about 15 years. I started out, copying my colleagues, by using the Dawson casebook. I had first encountered contracts as a student with a much earlier edition of the same book. I embarrassed to admit that I began teaching contracts without much insight into the subject, and I can’t remember exactly when I first discovered Macaulay and relational contracts theory. I certainly had not encountered them in my own legal education, although my four years of commercial practice did perhaps make me susceptible to their insights. But what a relief they were! I have been teaching from Macaulay, et al., contracts: law in Action for many years now.
If you are interested in why we teach contracts as most of us do, you might enjoy a piece I wrote about Richard Posner’s effect on casebooks and law teaching. Rhetoric Counts: What We Should Teach When We Teach Posner, 39 Seton Hall L. Rev. 507 (2009).
Links to many of Professor O'Neill's publications can be found here.
Deborah Post is Associate Dean for Academic Affairs and Faculty Development and Professor of Law at Touro College Jacob D. Fuchsberg Law Center. She began her legal career working in the corporate section of a law firm in Houston, Texas, Bracewell & Patterson, now renamed Bracewell & Guiliani. She left practice to teach at the University of Houston Law School and moved to New York to Touro Law Center in 1987. She has been a visiting professor at Syracuse Law School, DePaul Law School, and State University of New Jersey Rutgers School of Law Newark. She also has taught as an adjunct at Hofstra Law School, UMass Dartmouth and St. Johns University School of Law. Professor Post has written for and about legal education. Among her most notable publications are a book on legal education, Cultivating Intelligence: Power, Law and the Politics of Teaching written with a colleague, Louise Harmon and a casebook in Contract, Contracting Law, with co-authors Amy Kastely and Nancy Ota. She has been a member of the Society of American Law Teachers Board of Governors for ten years and was co-president of that organization with Professor Margaret Barry from 2008-2010.
Links to many of Professor Post's publications can be found here.
We look forward to an engaging first round of posts.
Thursday, August 15, 2013
This symposium marks the publication of Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and the Lyrical (Hart Publishing 2013), a volume edited by Jean Braucher, John Kidwell, and William C. Whitford. Starting next week and continuing for several weeks, this blog will publish entries both by contributors to the book and by others who have engaged with Macaulay’s work in the field of contracts.
Fifty years ago, the American Sociological Review published Macaulay’s Non-Contractual Relations in Business—A Preliminary Study, an empirical examination of the use and, more strikingly, the non-use of contracts in business. One of the 20 most cited articles in the history of ASR, its influence has grown with each passing decade. Macaulay (pictured) has produced an impressive number of other significant articles in contract law, as well as influential work in law and social science, and is the lead author of the casebook, Contracts: Law in Action, Vol. I and II (LexisNexis 3rd Ed. 2010/2011), co-authored by Braucher, Kidwell, and Whitford (introduction available here).
“Bill Whitford, the late John Kidwell, and I wanted to celebrate Macaulay’s contributions to contracts scholarship, particularly his use of law in action and relational perspectives,” explains Jean Braucher, Roger C. Henderson Professor of Law at the University of Arizona. “We were extremely pleased that leading and rising scholars contributed 15 original chapters to the book, everything from theoretical essays to new empirical work to relational critiques of legal doctrine.” Braucher adds that Kidwell, who died in 2012, participated fully in the development of the book and edited several of the chapters.
Kidwell, Whitford, and Macaulay all served for many years on the faculty at the Wisconsin Law School, where the law in action approach is a tradition. Whitford and Macaulay are both emeritus professors there. Macaulay, who joined the Wisconsin law faculty in 1957, has held two named professorships there, serving as the Malcolm Pitman Sharp Professor and Theodore W. Brazeau Professor of Law.
Revisiting the Contracts Scholarship of Stewart Macaulay begins with Non-Contractual Relations in Business, reproduced in full, and then provides extended excerpts from two other significant articles by Macaulay, Private Legislation and the Duty to Read—Business Run by IBM Machine, the Law of Contracts and Credit Cards (1966) and The Real Deal and the Paper Deal: Empirical Pictures of Relationships, Complexity and the Urge for Transparent Simple Rules (2003). The book also includes 15 chapters written by other scholars, Brian H. Bix, David Campbell, Jay M. Feinman, Robert W. Gordon, Claire A. Hill, Charles L. Knapp, Ethan J. Lieb, Li-Wen Lin, Deborah Waire Post, Edward Rubin, Carol Sanger, Robert E. Scott, D. Gordon Smith, Josh Whitford, John Wightman, and William J. Woodward, Jr. The book’s table of contents and preface are available here (giving the title and author of each chapter, briefly describing each chapter, and providing an overview of Macaulay’s career and contributions to contracts teaching).
Monday, July 22, 2013
Hart Publishing has asked us to share the following book announcement with our readers:
Rethinking Enrichment by Transfer
By Helen Scott
Conventional thinking teaches that the absence of liability-in particular contractual invalidity - is itself the reason for the restitution of transfers in the South African law of unjustified enrichment. However, this book argues that while the absence of a relationship of indebtedness is a necessary condition for restitution in such cases, it is not a sufficient condition. The book takes as its focus those instances in which the invalidity thesis is strongest, namely, those traditionally classified as instances of the condictio indebiti, the claim to recover undue transfers. It seeks to demonstrate that in all such instances it is necessary for the plaintiff to show not only the absence of his liability to transfer but also a specific reason for restitution, such as mistake, compulsion or incapacity. Furthermore, this book explores the reasons for the rise of unjust factors in South African law, attributing this development in part to the influence of the Roman-Dutch restitutio in integrum, an extraordinary, equitable remedy that has historically operated independently of the established enrichment remedies of the civilian tradition, and which even now remains imperfectly integrated into the substantive law of enrichment. Finally, the book seeks to defend in principled terms the mixed approach to enrichment by transfer (an approach based both on unjust factors and on the absence of a legal ground) which appears to characterise modern South African law. It advocates the rationalisation of the causes of action comprised within the condictio indebiti, many of which are subject to additional historically-determined requirements, in light of this mixed analysis.
Helen Scott is an Associate Professor in the Department of Private Law at the University of Cape Town.
July 2013 250pp Hbk 9781849462235
RSP: £55 / €71.50 / US$110
20% DISCOUNT PRICE: £44 / €57.20 / US $88
Order Online in the US
If you would like to place an order you can do so through the Hart Publishing website (link below). To receive the discount please mention ref:‘CONTRACTSPROFBLOG’ in the special instructions field. Please note that the discount will not be shown on your order but will be applied when your order is processed.
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If you would like to place an order you can do so through the Hart Publishing website (link below). To receive the discount please type the reference‘CONTRACTSPROFBLOG’ in the voucher code field and click ‘apply’.
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Thursday, July 11, 2013
There may be some irony in this situation, or perhaps it is strategic: the website performs, and makes one of Nancy's points for her. Wrap contracts are everywhere and have become an unavoidable fact of life for the computer literate.
Wednesday, June 12, 2013
For those of you who cannot get enough input on Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law, we have yet another review. This one is from friend of the blog Steven Feldman. Links to other contributions from our online symposium on the book can be found here.
In her book, Boilerplate: The Fine Print, Vanishing Rights, and The Rule of Law, Professor Margaret Jane Radin suggests the expansion of tort law as the centerpiece remedy for what she terms abusive mass market contract boilerplate. (Radin, p. 216). As a complement to existing contract remedies, she posits a new tort, i.e., “intentional deprivation of basic legal rights.” (Radin, pp. 198, 211, 216). According to Radin, this intentional tort would cover abusive boilerplate, i.e., “a firm that imposed severe remedy deletions of rights that are at least partially market-inalienable, under circumstances of non-consent and mass market distribution . . . .” (Radin, p. 211).This intentional tort would be a companion to another new tort reconceptualizing abusive boilerplate as a defective “product” under the law of product liability. (Radin, pp. 198, 222-23).
Radin’s proposal to use the tort law system to remedy boilerplate abuse has attracted support from respected academic commentators. Professor Omri Ben-Shahar in his review of the book calls Radin’s suggestion a “welcome new framework” and “an immensely creative idea, surely to become a legacy of the book, and it deserves careful attention . . . .” Omri Ben-Shahar, Regulation Through Boilerplate: An Apologia, ___ Mich. L. Rev. ___ (2013) (forthcoming) (available at the SSRN Electronic Library). Because I believe that Radin’s suggested tort remedies contradict numerous legal principles, my critique will explain why the chances are minimal that any U.S jurisdiction would accept her proposals to make a tort out of a contract dispute.
Radin: Precedent exists for the creation of new torts by common law courts, such as the torts involving invasion of privacy. (Radin, p. 198).
Response: Radin is correct that the torts involving invasion of privacy were judicially created. What Radin omits is that although some courts claim the common law authority to create new torts, they characteristically “tread cautiously” in this area, Rees v. Smith, 301 S.W.3d 467, 471 (Ark. 2009), as they balance numerous legal and substantive considerations, Burns v. Neiman Marcus Group, Inc., 93 Cal. Rptr. 3d 130, 136 (Cal. Dist. App. 2009)(listing considerations). Thus, for example, courts considering a new tort must balance the need to meet society's changing needs against the prospect of boundless claims in an already crowded judicial system. Rees, 301 S.W.3d at 471. In another policy, courts “[w]ill decline to recognize a new cause of action if there are sufficient other avenues, short of creating a new cause of action, that serve to remedy the situation for a plaintiff.” Id.
Radin fails to point out that the usual outcome is “countless refusals” by judges to create new torts. Anita Bernstein, How To Make A New Tort: Three Paradoxes, 75 Tex. L. Rev. 1539, 1546 n.38 (1997)(citing decisions). Indeed, some courts decline altogether to create new actions in tort. Their rationale is that legislatures have better institutional capability to balance the competing public policy considerations attendant with new forms of liability. Murphy v. American Home Products Corp., 448 N.E.2d 86, 89-90 (N.Y. 1983); Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223, 1226 (R.I. 1996)(“We have long held … that the creation of new causes of action is a legislative function.”). Radin does not mention this split of authority and does not make a convincing case that existing contract remedies, such as contract invalidation based on unconscionability, are inadequate to address meritorious consumer claims.
Estimates are that ninety-nine percent of all contracts are standard form adhesion contracts. Wayne R. Barnes, Toward A Fairer Model of Consumer Consent To Standard Form Contracts: In Defense Of Restatement Section 211(3), 82 Wash. L. Rev. 227, 233 (2007). Because Radin’s new torts would conceivably cover a high percentage of these standardized mass distribution contracts nationwide, courts should think twice before hampering the use of a business tool that “[i]s essential to the functioning of the economy.” See 1-1 Corbin on Contracts § 1.4. (Rev. ed. 1993). A real possibility also exists that Radin’s proposals would incite boundless claims in an already crowded judicial system. Thus, it is highly unlikely that any court would approve Radin’s proposals for expansive new tort liability. Also improbable is whether any state legislature--with many dominated by conservative representatives--would expand consumer rights beyond existing consumer protection statutes.
Tuesday, June 11, 2013
Irma S. Russell is Dean and Professor of Law at the University of Montana School of Law.
Kenneth Adams’ recently released third edition of A Manual of Style for Contract Drafting, is a hefty volume. When I opened the package containing this manual my first thought was: “Wow, this is bigger than expected. It looks really time consuming.” At 455 pages, the book is closer to Fowler’s than Strunk & White. It is worth the time to read it. In fact, once you start reading, it is hard to put down. The writing is clear and concise, the tone is engaging, and the range of usage addressed is impressive.
This book provides far more than drafting tips. This author
has considered language in a deep way and gives thoughtful and sometimes
provocative assessments of the usages he endorses. His discussion of the
language of belief, the language of intention, the language of recommendation
and the distinctions among the categories is notable for its logic and even
philosophical assessment as well as for its authority of declaring a particular
usage superior to other constructions.
(Be sure to look for his treatment of "between" and
"among" in reference to multiple parties. This discussion may also apply to my last
sentence before this parenthetical.)
The manual is useful for all lawyers who draft agreements, and most do of course. Indeed few lawyers can separate themselves from contract drafting or the need for precise language. A plea arrangement in the criminal context is as subject to the risk of ambiguity as a lease agreement. A tort settlement is in as great a need of careful word choice as a corporate merger. The trap for the casual drafter can involve malpractice claims as well as disappointed expectations of clients.
The author’s introduction makes clear the work’s goal of providing precise and
consistent language in contracts. He endorses consistency “because
differences in wording can result in unintended differences in meaning.”
He notes the necessity of a manual of style “because traditional contract
language needs a thorough overhaul.”
This point underscores the need for the point-by-point treatment
provided in the book.
The goals the author sets for this work are indeed as worthwhile (and as hard to achieve) in today’s world as in Fowler’s. Creating documents with few opportunities for confusion means that the careful drafter will not need to see his words in court and the client will not need to roll the dice of litigation in arguing for his belief or assumptions about the intentions of the parties.
The book delivers on its promise to serve to help its user find "greater clarity and consistency in written usages." Though modest in its succinct statement, this is an ambitious promise, and one that the book fulfills. The principle of Occam's razor is at work here despite the heft of the volume. Each discussion of a phrase or word is brief and to the point. The length of the book results from the number and scope of the issues addressed rather than from any drawn out discussions. More elegant contract language is the result of the guidance offered here. While Strunk & White is certainly shorter, it does not take on the range of issues Adams reaches, and I am convinced both revered authors would approve of this manual of style.
Opening this book was a Pandora-type move for me, and now I am hooked on the author’s blog: Adams on Drafting. You can access it here but I warn you now: You can’t read just one. The risk for the reader opening either the book or the blog is getting caught up in the fascinating world of contract drafting. Even after you find the answer to the specific question that sent you to the book, you may be unable to stop reading. I’m heading back to the blog now to look for more on “between” and “among.”
[Posted, on Irma Russell's behalf, by JT]
Monday, June 10, 2013
Kenneth Adams’ third edition to the Manual of Style for Contract Drafting (“Contract Drafting”) delivers invaluable advice to any attorney or professional who drafts contracts or contract terms. The book is also highly suitable for law school classroom use in drafting classes, business school, or undergraduate business courses. This book has found a permanent place on my shelf among my go-to style manuals.
Contract Drafting is a style manual that goes well beyond explicating basic contract conventions, admonishing attorneys to use “plain English” and avoid “legalese,” and providing lists of awkward or ambiguous words and phrases to excise from the drafting lexicon. Adams does all of these things effectively and efficiently, but Contract Drafting delivers on many more levels.
Like previous editions, this book will be useful across a wide range of applications. As Adams notes in the introduction:
This manual should be of use to readers in every contract ecosystem—a solo or small-firm general practitioner handling a broad range of contracts . . ., a contract-management professional responsible for negotiating contracts with customers; a big-law associate drafting mergers-and-acquisitions contracts; an in-house lawyer overhauling the company’s template sales contract; a paralegal reviewing confidentiality agreements a company is asked to sign; a judge trying to make sense of a confusing contract provision.
In this list, Adams omits another important audience – law students. Contract Drafting is a nearly ideal tool for teaching a contract drafting course. As discussed below, the content of the manual goes beyond listing blackletter principles and providing tables of words and phrases to avoid. In this most recent edition of Contract Drafting, Adams carefully walks the reader through detailed explanations of his drafting principles while at the same time presenting an extraordinarily complete manual that teaches the inexperienced and informs the senior practitioner. Any professional – lawyer or non-lawyer – or law student who deals with contracts in any manner should keep this book near at hand.
Friday, June 7, 2013
Next week, we will have two guests posts reviewing Kenneth A. Adams, A Manual of Style for Contract Drafting (3d ed.).
From the book's website:With A Manual of Style for Contract Drafting, Kenneth A. Adams has created a uniquely in-depth survey of the building blocks of contract language. First published in 2004, it offers those who draft, review, negotiate, or interpret contracts an alternative to the dysfunction of traditional contract language and the flawed conventional wisdom that perpetuates it. This manual has become a vital resource throughout the legal profession, in the U.S. and internationally.
This is the third edition of A Manual of Style for Contract Drafting. One-third longer than the second edition (published in 2008) and in a larger format, it contains much new material and has otherwise been revised and supplemented, making it even more essential.
This manual's focus remains how to express contract terms in prose that is free of the archaisms, redundancies, ambiguities, and other problems that afflict traditional contract language. With exceptional analysis and an unmatched level of practical detail, Adams highlights common sources of confusion and recommends clearer and more concise alternatives. This manual is organized to facilitate easy reference, and it illustrates its analysis with numerous examples. Consult it to save time in drafting and negotiation and to reduce the risk of dispute.
Our reviewers are:
Daniel D. Barnhizer, Professor of Law & The Bradford Stone Faculty Scholar, Michigan State University College of Law.
Professor Barnhizer graduated with honors from Harvard Law School, where he served as managing editor of the Harvard Environmental Law Review. After graduation, he was a judicial clerk for the Honorable Richard L. Nygaard, U.S. Court of Appeals for the 3rd Circuit, and for the Honorable Robert B. Krupansky, U.S. Court of Appeals for the 6th Circuit, sitting by designation on the U.S. District Court for the Northern District of Ohio. Professor Barnhizer has practiced as a litigator with the law firms of Hogan & Hartson and Cadwalader, Wickersham & Taft. Before joining the MSU College of Law faculty, he was an adjunct professor of law at American University - Washington College of Law, where he taught legal reasoning, research, and writing. At MSU Law, he teaches Contracts, Contract Theory, Business Enterprises, Securities Litigation, and Legal History.
Some of Professor Barnhizers scholarship can be found here.
Irma S. Russell, Dean and Professor of Law, University of Montana School of Law.
Prior to coming to Montana, Dean Russell was the NELPI Professor and Director of the National Energy-Environment Law & Policy Institute at the University of Tulsa College of Law. She became Dean of the University of Montana School of Law in 2009.
Dean Russell is immediate past chair of the ABA Section of Environment, Energy and Resources and the immediate past chair of the AALS Section of Natural Resources and Energy Law. She is a newly appointed member of the Board of Dividing the Waters, an organization of judges and lawyers focused on issues of water adjudication in the Western United States. She has served as the chair of the Professionalism Committee of the ABA Section of Legal Education and Admission to the Bar and as a member of the ABA Standing Committee on Professionalism and the ABA Standing Committee on Ethics and Professional Responsibility. She also has served as a member of the Executive Committee and Secretary of the AALS Natural Resources Section and as chair of chair of the AALS Section on Professional Responsibility, the AALS Section on Socio-Economics, and as a member of the Publications Committee of the Center for Professional Responsibility.
Dean Russell earned undergraduate degrees in liberal arts and education, a master’s degree in English literature, and her law degree at the University of Kansas. She clerked for The Honorable James K. Logan, United States Court of Appeals for the Tenth Circuit. Russell engaged in private practice for several years in Kansas, Missouri, and Tennessee.
We look forward to some stimulating reviews and hopefully some fans of the book (and Ken Adams' blog on legal drafting) will chime in as well.
Tuesday, June 4, 2013
Legal education is being transformed before our eyes. In part, this transformation has been so gradual that it has gone unappreciated. I routinely read critiques of legal education that seem to be based on the assumption that we all still teach like Professor Kingsfield. I know of very few people who still use that sort of strict Socratic method. Most doctrinal law teachers that I know teach through a mix of soft Socratic method, lecture, problems and discussion. But a great deal of the curriculum at most law schools is now dedicated to skills training, externships, co-curricular activities (moot court competitions, trial advocacy, journals, etc.) and of course clinics.
In the face of blistering criticism of legal education, law schools have been striving to demonstrate a commitment to reform, often by bolstering, highlighting or simply re-packaging existing programs. But to the extent that real change is occurring, it is often based on our intuitions about what ought to work for our students rather than on actual evidence of what works. As Holmes tells Watson, “It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.” But the partnership that produced Teaching to Every Student: Explicitly Integrating Skills and Theory into the Contracts Class bridges the gap between theory and facts. Deborah Zalesne is a contracts scholar at CUNY law and David Nadvorney is the director of academic support programs at CUNY. They have worked together for years to make certain that their pedagogical strategies actually work for their students
Introducing new approaches to the legal curriculum involves teaching old dogs new tricks, because law schools have to work with the faculties they’ve got. I consider myself a moderately old dog. I cannot easily abandon my doctrinal/theoretical approach to focus in my doctrinal courses on skills training and bar preparation. I need guidance to help me work on my approach. Nadvorney and Zalesne provide such guidance for contracts profs in Teaching to Every Student. The book is slim and affordable (under $30 on Amazon), and I think its approach is unique – or at least highly unusual – in that the authors insist on incorporating theoretical perspectives while also highlighting their very practical, skills-based approach to teaching first-year contracts.
Their approach to teaching contracts focuses on three areas of training: academic training, which includes everything from case briefing to exam preparation; legal reasoning, which includes the traditional skills set that enables students to learn how to issue spot and apply rules to unique factual situations; and theoretical perspectives, which encompasses learning theory, identifying and critiquing theoretical approaches, and integrating such approaches into advocacy.
The book can be a wonderful supplement to any casebook (or whatever other materials one chooses to use). It comes complete with in-depth sections on each of the three areas of training mentioned above, exercises, sample syllabi and some edited cases.
Even if one chooses not to adopt the book, I recommend it to law professors interested in looking for new stimuli that will enable them to shake up their approaches to teaching
Monday, June 3, 2013
Although this is the last official post in the our online symposium on Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law, I have heard from a few scholars who would like to weigh in, so there will likely be a few more posts on Boilerplate appearing over the summer.
In today's post, our author, Margeret Jane Radin, responds to her reviewers from the third week of the Symposium
Response to Aditi Bagchi:
You are quite right to say that what I was trying to do in my book is bring to the fore what you label features (2) and (3): that boilerplate in effect forces consumers to give up important legal rights and that boilerplate effectively eliminates rights for large portions of the consumer population. These features cause an inquiry into what we might label (4) in my intentions in the book: there are background rights that are constitutive of civil society, or inherent in the social contract, and these are not within the purview of individuals to waive, one by one, even if they truly wish to, one by one. In writing this book, I did feel it was necessary to rehearse the role of consent (the basis of justification for enforcement of contracts) in the context of how badly this rationale fits mass-market boilerplate deployment, akin to your feature (1). Unfortunately, it appears that some readers seize on this as the book's main point, and are quick to say that this observation is old hat. What is not old hat, at any rate, is what follows: much that is called contract today should not be called contract, and should not be enforced as contract.
At least: We shouldn't be able to sell off certain rights, even if, as individuals, we want to. (And it's quite possible that many of us, as individuals, want to, because we think we, as individuals, don't need them, and we don't, as individuals, find the needs of society as a whole to be salient for our decision making.) We do need, now, to turn our attention to which rights these are, as indeed I believe you are saying.
You mention my copyright example: the purpose of rights that exist for the benefit of society as a whole is destroyed when individuals (in the millions) can waive them one by one. The example I like to invoke is the right to be free of negligent harm inflicted by others. As long as we believe that negligent harm-causing behavior is at least somewhat deterred by legal liability, tort law--even if flawed at present, and unless we replace it with some other legal regime--has to fill this role. Service providers are the best party to hold responsibile for preventing harm to their customers: they can investigate their employees, maintain their equipment, keep the premises sanitary, etc, etc, and their customers cannot. If each of us has to be endlessly on guard against being harmed by others with whom we come into contact, we are back in the state of nature.
Response to Jean Braucher:
As a powerful and learned voice in consumer protection legislation, you should, or I certainly hope you will, expand what you have written here into a book that can be both helpful for contracts scholars and teachers and a much wider audience. I certainly agree that contracts teachers should make consumer regulation known to students; and they should also make it known that boilerplate doesn't fit into the offer/acceptance/consideration paradigm.
In writing Boilerplate, I was trying to gather together many strands of thought and argument about it, so as to provide a platform from which further thought could commence. As I mentioned in another of these replies, I had to go through the idea of consent (promises, agreement) because that is the basis of contract justification; that is what is supposed to justify enforcing these things. And courts do enforce them; as contracts. Unfortunately, some readers may think I am over-preoccupied with consent. But rather I am preoccupied with the tragedy that deletion of important rights is routinely being enforced against citizens in the name of contract. So, before making other suggestions, I tried to detach these things from the honorary title of contract.
I would be great if the FTC would declare many of the clauses to be unfair methods of doing business (especially wholesale remedy avoidance or deletion). It would be great if Dodd-Frank is not gutted, and if the CPFB manages to do away with arbitration clauses against financial consumers. It would be great if the Supreme Court would not make it difficult for states to implement their consumer protection regulation. It would be great if insurance regulators would prevent insurers from forcing their insureds to shunt risk to the insureds' customers. I think you are perhaps more hopeful than I am at this point, but I'd like to be more hopeful. It's good to keep on fighting, and trying to gather support. (See the review by Theresa Amato.)
Response to Charles Calleros:
I admire your sense of ethical obligation to educate both future lawyers and members of the general public about the features of citizenship. Thank you. I hope you will inspire us all.
On the topic of reasonable expectations: Although you clearly understand the problem caused by the normative/positive ambiguity, I am still very much concerned that many judges and other officials will just lapse into believing that the more something is prevalent the more we expect it, thus reinforcing "Everybody does it" as justification. Whereas, of course, the more something unjust is being done, the worse is the injustice in society.
Your solution to the "Everybody does it" justification would be comprehensive black listing of oppressive clauses on the European model. I wish we could do this, but I'm a pragmatist, and I think we cannot (and it seems you agree). So what might be possible for us?
You suggest that businesses should highlight potentially objectionable terms. Some businesses are already doing that. For example, there are now up-front solemn warnings about the presence of an arbitration clause. But I don't think that works either--consumers just sign or click "I agree" anyway--though we could use some empirical data on this. And who gets to decide what is potentially objectionable? Here you seem to come back to the idea of lying "outside the boundaries of what consumers should be held to reaonably expect," so we are back to the invitation to use the "Everybody does it" method of determing what is reasonably expectable.
Response to Peter Linzer:
Thank you for reminding us of the historical progression, and the great quote from Cardozo. Indeed, as you say, courts, legislatures, and agencies should look not to the mechanics of contract but rather to the rights of the social system.
Indeed, in addition to fussing with the mechanics of contract, we should think more about the rights that cannot be disclaimed by individuals. There are some rights that cannot be disclaimed by individuals even with true consent: what rights are those? I contend that at least the right to viable legal remedy is one.
Response to Cheryl Preston:
Is it a "stretch" to say that the democratic process has created protections that boilerplate deletes? Copyright and class actions are examples where this is not a "stretch," I believe. It is perhaps question-begging to say that after all, these are default rules; at least, I am trying to argue that they should not be, and that the judiciary could take some steps against too-easy waiver.
BUT it is certainly true that legislative bodies are "influenced" (i.e., bought) "by the same business interests that control consumers by contract." This is more true, I think, of federal than of state and local legislatures, perhaps because of the immense amount of money we allow to be spent in federal elections. This is a sorry state for democracy.
The interesting thing about the copyright example is that the federal law was indeed written pretty much at the behest of the major business interests themselves. So in this case it seems that what these interests "bought" was a coordination solution from which individual firms should be prevented from defecting.
Response to Guy Rub:
Thank you for engaging with me on the topic of market solutions. I meant my chapter 10 to be suggestive, hoping it might be helpful to get thought about this going. I appreciate your having given this matter some of your time and thought, and I hope this will encourage others.
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;
- Margaret Jane Radin's responses, Part I and Part II;
- Aditi Bagchi on Boilerplate Waivers;
- Jean Braucher on the common law of contracts as residual law;
- Charles Calleros on the reasonable expectations of consumers;
- Peter Linzer, That Was No Contract, That Was My Lunch;
- Cheryl Preston on boilerplate and the role of courts; and
- Guy Rub on market solutions to the boilerplate problem
Thanks to all of our participants.
[Editor's note: We interrupt our Boilerplate Symposium to bring you this report from Shubhs Ghosh on another discussion of Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
A panel of five contracts law scholars met to discuss Margaret Radin’s Boilerplate in front of an audience of over thirty attendees at the annual Law & Society meeting in Boston on Saturday, June 1, 2013. Tal Kastner of Princeton University did a great job moderating and raising a provocative discussion. Although scheduled to end at 6:15 pm, the attendees stayed until almost 7 pm. What follows is a brief write-up of the discussion with my own comments interspersed.
The readers included Stewart Macaulay, David Campbell, Aditi Bagchi, Peter Benson, and Guy Rub, speaking in that order. Stewart was positive about the book and began his comments with a reminder of the anti-lawsuit attitude given voice in tort reform. The restrictions on rights that occur through boilerplate, he suggested, is a further reflection of this attitude as boilerplate drafters limit remedies and rights of consumers and their access to courts. As Stewart put it, advocates of court reform complain about money-chasing tort and class action attorneys but there is no mention of how much corporate lawyers make in drafting rights-limiting boilerplate clauses. Stewart ended his comments with skepticism about Radin’s proposals for top down reform from the legislature, whether federal or state.
David Campbell was more critical of the book, especially what he described as Radin’s idealized portrait of the contract bargain. Not all terms are always deliberated by the parties, but nonetheless contract terms can be read into the contract by courts. He was particularly skeptical that the solution lay outside contract. Properly applied, doctrines like formation, unconscionability and other contract terms can limit the negative applications of boilerplate. Unfortunately, some courts in the United States have not been enforcing the existing law in a reasonable manner.
Aditi Bagchi emphasized Radin’s theme of democratic degradation, boilerplate’s role in limiting key rights of citizenship through terms that remove rights of access to courts and compensation for injury. Although Aditi was less concerned with loss of procedural rights (such as class actions), she agreed that boilerplate terms should receive greater scrutiny when they involve limitations on compensation for personal injuries. Introducing the concept of a social wage, Aditi made the point that liberal society extols contractual freedom as part of a broader array of rights delineated in tort, property and other regimes. What society deems to be waivable through contract rests on choices regarding what should be allocated through markets and what should be allocated through political processes. Boilerplate allows a shift of these choices without democratic deliberation. The market de facto and de jure determines individual rights.
Peter Benson elaborated on some of the critical points raised by David Campbell. Introducing a comparative perspective from Canada and the EU, where boilerplate terms are regulated, Peter emphasized doctrines within the United States that could also serve to limit the imposition of noxious terms through boilerplate. The challenge Peter posed is identifying a legal standard for what terms would be deemed noxious, or troublesome. Commenting on Radin’s development of such standards subsequent to the publication of her book, Peter questioned whether such standards would be workable. He described them as highly manipulable and indeterminate.
Guy Rub ended the formal comments with criticisms of Radin’s proposed market-based and state-based solutions. Disclosure-type solutions would not work even if disclosures were simplified and coded so that they could be readily digested. Consumers either would tune such information out or would be willing to trade off unfavorable terms for a lower price. Similarly, any legislative solution would be subject to the same capture that gave rise to boilerplate. Guy provided the example of federal legislation on arbitration as an example. Guy did suggest grass roots-like solutions involving activism through exposure of noxious terms through social media and blogs. Such activism could be more effective, he suggested, than top-down regulation.
The interactions continued with Peggy’s responses. She took issue with some broad characterizations of her book, particularly her view of an idealized contract. Her concern is with overreaching by business entities in drafting terms that severely limit the rights of consumers. As she pointed out, she never said that no rights can be waived or limited. But some companies go too far in limiting their liability in the daycare and elder care contexts. Such noxious terms, she suggested, may have more to do with insurance companies than with the actual service providers. Nonetheless, the market dynamics lead to a market failure that occurs through boilerplate terms that severely shift risks to consumers in market transactions. The world does not have to be that way. Drawing a connection with her work on market inalienability, Peggy argued that boilerplate forces consumers to alienate fundamental attributes of citizenship through take it or leave it offers. Sympathetic to the comments on her proposed solutions, she tantalizingly suggested that a possible solution would be a return to an earlier common law of contract that existed before the law took a pro-business turn. She appealed to an older generation of common law judges to offer a correction to this turn. I wondered whether such judges actually exist anymore.
Discussion afterward was lively. Tal Kastner emphasized points about democratic degradation and the decline of communication and deliberation. Richard Lempert pointed out the betrayal of trust that occurs with boilerplate as consumers are invited to trust companies through the signing of boilerplate terms that are designed to “screw consumers.” Richard suggested that government may be trustworthy than private businesses, contrary to contemporary rhetoric. Amy Kastely raised a point about the drafting of the Restatement on Consumer Contracts that might exacerbate the problems with boilerplate. Robert Gordon questioned whether boilerplate should even be referred to as private ordering since it represented the imposition of terms by dominant players backed up by the sanctioning power of the state. Other points (which I could not attribute) were made about the regulatory approach to standard terms in the Netherlands and the possibilities of consumer activism to expose consumer-unfriendly terms that prominent companies impose through boilerplate.
The Author Meets Reader panel was a stimulating event. My own thoughts are that in some instances boilerplate in contract is used to realign the rights of consumers without having to engage in the democratic process. The consumer rights that companies may want to delimit could be imposed through legislation. In many instances, such legislative efforts would fail. Boilerplate provides a way to impose a change in underlying entitlements without having to engage the political process. In such situations, there is a real threat to the democratic process as market processes dominate.
The discussion of private power, public power, and individual rights made me think of Shelly v. Kramer, the landmark case in which judicial enforcement of racially restrictive covenants were deemed to be state action for the purposes of the Equal Protection Clause. If boilerplate is substituting for legislation, then perhaps noxious terms should be the basis for a due process or other constitutional violation. I raise this point to highlight the underlying issues as well as to pinpoint solutions. No court would be likely to adopt such a broad reading of Shelly v Kramer, a case that has already been limited to its narrow facts. But where constitutional efforts invariably fail activism on the legislative and through market pressure serve as more effective alternatives. Margaret Jane Radin’s Boilerplate is a great book about legal reform in a world where contracts and market processes have been used to displace democratic deliberation and legislation.
[Posted, on Shubha Ghosh's behalf, by JT]
Wednesday, May 29, 2013
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]