June 19, 2013
New in Print
Justin DuClos, The Etiology of a Malfunction in Democratic Processes. 45 Ariz. St. L.J. 53 (2013)
Hilary Kao, Beyond Solyndra: Examining the Department of Energy's Loan Guarantee Program. 37 Wm. & Mary Envtl. L. & Pol'y Rev. 425 (2013)
Amy J. Schmitz, Sex Matters: Considering Gender in Consumer Contracting, 19 Cardozo J.L. & Gender 437 (2013) (and see Nancy Kim's discsusion of this article on this blog here)
Symeon C. Symeonides, Choice of Law in the American Courts in 2012: Twenty-Sixth Annual Survey. 61 Am. J. Comp. L. 217 (2013)
Mark Weidemaier, Robert Scott and Mitu Gulati. Origin Myths, Contracts, and the Hunt for Pari Passu, 38 Law & Soc. Inquiry 72 (2013)
[JT]
June 19, 2013 in Recent Scholarship | Permalink | TrackBack
June 18, 2013
Weekly Top Tens from the Social Science Research Council
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal
April 19, 2013 to June 18, 2013
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic) 
April 19, 2013 to June 18, 2013
[JT]
June 18, 2013 in Recent Scholarship | Permalink | TrackBack
June 14, 2013
Scholarship Highlight: Sex* Matters
I just finished reading contracts prof Amy J. Schmitz's article, Sex Matters: Considering Gender in Consumer Contracting, 19 CARDOZO J. LAW & GENDER 437 (2013) which I thought was particularly timely given all the interest in consumer contracts. As Schmitz points out, too often discussions about "context" are left out of discussions about consumer contracts, especially from efficiency theorists who "mistakenly assume that market competition and antidiscrimination legislation address any improper biases in contracting." Schmitz's article is a thoughtful and comprehensive work that canvasses and synthesizes existing research, including behavioral economics and consumer legislation, in this area. She does a great job of highlighting ways in which existing legislation falls short of protecting against gender discrimination and incorporates a great deal of empirical and cognitive research regarding how gender affects both parties in consumer contracting scenarios. She notes that the available data suggests that women receive "less financially attractive sales and loan contracts, which may lead to higher debt loads for women." (at 447) Schmitz also conducted her own survey and shares the results which indicated gender disparities in areas such as confidence in ability to negotiate terms and ability to get companies to change terms. She argues in this article (as she has elsewhere) that context and "contracting culture" matters, and argues that gender be considered among the factors contributing to a contracting culture. For those who think that the free market is a fair market, Schmitz's paper should provide food for thought (as should this article that discrimination in housing persists against non-whites).
*Yes, I knew that putting "sex" in the title would increase traffic.
[Nancy Kim]
June 14, 2013 in Contract Profs, In the News, Miscellaneous, Recent Scholarship | Permalink | Comments (0) | TrackBack
June 12, 2013
New in Print
Robert W. Emerson, Franchise Goodwill: Take a Sad Song and Make It Better, 46 U. Mich. J.L. Reform 349 (2013)
Orit Gan, Promissory Estoppel: A Call for a More Inclusive Contract Law, 16 J. Gender Race & Just. 47 (2013)
Mark R. Patterson, Must Licenses Be Contracts? Consent and Notice in Intellectual Property. 40 Fla. St. U. L. Rev. 105 (2012)
Jarrod Wong, Arbitrating in the Ether of Intent. 40 Fla. St. U. L. Rev. 165 (2012)
Sebastian Zimmeck, The Information Privacy Law of Web Applications and Cloud Computing, 29 Santa Clara Computer & High Tech. L.J. 451 (2013)
[JT]
June 12, 2013 in Recent Scholarship | Permalink | TrackBack
Steven Feldman Reviews Boilerplate
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.
Radin: A tort remedy for intentional deprivation of basic legal rights is a better conceptual fit than contract law to address boilerplate abuse. (Radin, pp. 198, 222, 248, 253 n.11)Response: Radin barely acknowledges settled doctrine (see Radin, p. 209) that, as a matter of policy, the law disallows parties from using tort law to alter or avoid their contractual obligations. In re Consolidated Vista Hills Retaining Wall Litigation, 893 P.2d 438, 446 (N.M. 1995). “A contractual obligation, by itself, does not create a tort duty.” Jones v. Hyatt Ins. Agency, Inc., 741 A.2d 1099, 1106 (Md. 1999). The reasons stem from the substantive differences between tort and contract. Tort actions stem from the breach of duties imposed as a matter of public policy whereas contract actions stem from the breach of duties imposed by mutual consent. E.g., Goldstein v. Elk Lighting, Inc., 2013 WL 790765 at *3 (M.D. Pa. 2013). This standard preserves the “important” boundary between tort and contract. See Ashall Homes Ltd. v. ROK Entertainment Group Inc., 992 A.2d 1239, 1253 (Del. Ch. 2010); Deli v. University of Minnesota, 578 N.W.2d 779, 782 (Minn. Ct. App. 1998).
Radin also never discusses the established line of authority that the gist or gravamen of the cause of action is determinative for deciding whether the action lies in contract or tort. 1A C.J.S. Actions § 136 (2013). Put another way, the prevailing test for tort liability when the parties have a contract is whether the wrongdoer also breaches an independent duty to the injured party owed separately from the contract. Textron Fin. Corp. v. Nationwide Mut. Ins. Co., 684 N.E.2d 1261, 1270 (Ohio Ct. App. 1996). Thus, where the defendant has harmed the person or property of the plaintiff, but where these parties also have a contract, the contract must be collateral to support a tort liability. Goldstein, 2013 WL 790765 at *3.
With the proposed cause of action in tort for intentional deprivation of basic legal rights, the contract is not collateral. The supposed tort liability arises solely from the contractual relationship between the parties and the alleged duties breached are grounded in the contract itself. Id. at **3-4. Another important consequence of Radin’s aggressive merger of contract and tort is that the consumer suing in tort would be entitled to seek extensive relief not generally available under contract, namely, expanded consequential damages along with punitive and emotional distress damages. (See Radin, p. 206). Courts should not allow plaintiffs to obtain such a windfall. See also Kailin v. Armstrong, 643 N.W.2d 132, 144 n.19 (Wis. Ct. App. 2002) (“If a [contracting party] is permitted to sue in tort when a transaction does not work out as expected, that party is in effect rewriting the agreement to obtain a benefit that was not part of the bargain.”). Granting plaintiffs greater common law rights and remedies against defendants is the exception, and not the rule, in the current conservative judicial climate.
Regarding the distinction between tort and contract, Radin merely comments that (1) she disagrees with the above standard, (2) several torts, such as fraud or misrepresentation, constitute an independent duty from the contract, (3) the line between tort and contract is not hard and fast, and (4) an abusive boilerplate contract is only a “purported contract” (even though no court subscribes to this last assertion) (Radin, pp. 9-11, 14-15, 197-209). While she has a point that a defendant’s tortious conduct may arise in contract cases, Radin’s proposed new tort of intentional deprivation of basic legal rights consistently disregards the fundamental principle that contracts, by themselves, do not create duties in tort.
Radin: Tort law has a developed infrastructure for dealing with mass torts whereas contract law has no such infrastructure for dealing with mass contracts. (Radin, p. 198)
Response: Radin overlooks that courts routinely certify class actions involving consumers claims on form contracts. See, e.g., Sacred Heart Health Systems, Inc. v. Humana Military Healthcare, 601 F.3d 1159, 1171 (11th Cir. 2010) (“It is the form contract, executed under like conditions by all class members, that best facilitates class treatment”); Dupler v. Costco Wholesale Corp., 249 F.R.D. 29, 37 (E.D.N.Y.2008) (collecting cases for the proposition that class certification is typically appropriate in cases involving form contracts). Because contract law is just as adaptable as tort law in accommodating collective lawsuits, Radin’s critique is not persuasive.
Radin: Unfair boilerplate contracts qualify as a defective product under the law of product liability. (Radin, pp. 101, 198)
Response: Under the law of product liability, a “product” is “tangible personal property distributed commercially for use or consumption.” Restatement (Third) of Torts: Products Liability, § 19(a) (1998). A written contract does not meet this definition; it is only a document that memorializes an intangible, which is the agreement of the parties. Although a document delivers the information, the plaintiff's grievance in such case is with the content of the document, not with the tangible medium itself. See id. at cmt. d.
Even if a contract with unfair boilerplate were a “product” for the above purposes, it is not “defective” as a basis for tort liability. “A product is defective when, at the time of sale or distribution, it contains a manufacturing defect, is defective in design, or is defective because of inadequate instructions or warnings.” Restatement (Third) of Torts: Prod. Liab. § 2 (1998). See also Birmingham v. Fodor's Travel Publications, Inc., 833 P.2d 70, 76, 79 (Haw. 1992)(no cause of action in product liability for defective ideas) . Abusive contract boilerplate is not defective under the Restatement definition. Because Radin’s new tort cannot meet these important pre-requisites of product liability law—“product” and “defect”—her proposal must be found wanting.
Radin: Abusive boilerplate terms support the proposed intentional tort of deprivation of basic legal rights because they improperly deprive consumers of numerous rights granted by the polity, for example (1) waivers of the right to a jury trial with a substitution of mandatory arbitration, (Radin, pp. 16, 108, 131), and (2) imposition of overly inclusive exculpatory clauses for seller negligence. (Radin, pp. xiv, 138-140, 184-85).
Response: Radin is correct that many boilerplate contracts broadly favor the seller in the cited areas. On the first point, what Radin leaves out is that a contractual jury trial waiver must be knowing and voluntary; therefore, it is strictly construed. Debra T. Landis, Annot., Contractual jury trial waivers in federal civil cases, 92 A.L.R. Fed. 688 (1989). See also United States v. Cal. Mobile Home Park Mgmt. Co., 107 F.3d 1374, 1378 (9th Cir.1997)(noting the “strong presumption” against the waiver of this fundamental right).
Courts assessing these jury trial waivers focus on the conspicuousness of the provision, the parties' relative bargaining power, the sophistication of the party challenging the waiver, and whether the terms of the contract were negotiable. Martorella v. Deutsche Bank Nat. Trust Co., 2013 WL 1136444 at *2 (S.D. Fla. 2013)(citing decisions). No single factor is conclusive and the court is not bound by the number of factors that have been satisfied. Rather, the court asks whether, in light of all the circumstances, is the waiver unconscionable, contrary to public policy, or simply unfair. Martorella, 2013 WL 1136444 at *2 (citing cases). Two circuits even hold that agreements to resolve disputes by bench trials are enforceable only if extra evidence of negotiation or consent supports that clause. See National Equipment Rental, Ltd. v. Hendrix, 565 F.2d 255, 257-58 (2d Cir.1977); K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 755-57 (6th Cir.1985). Based on the above guidelines, courts are not as unduly disposed toward approving contractual jury waivers as Radin would have the reader believe. (See Radin, pp. xiv, 131).
On the second point, Radin contends that broad exculpatory clauses for seller negligence should be outlawed unless consumers are given a choice to tradeoff rights for a lower price. (Radin, pp. 184-85). Radin fails to point out that contracts exonerating one party from acts of future negligence are disfavored and strictly construed against the benefiting party. Additionally, the courts say that clear, unambiguous, unmistakable, and conspicuous language is required to release a party from his or her future negligence. There must be “no doubt” that a reasonable person agreeing to an exculpatory clause actually understands what future claims he or she is waiving. Indeed, the word “negligence” must be clearly stated in a release of future negligence. E.g., Guthrie v. Hidden Valley Golf and Ski, Inc., --- S.W.3d ---, 2013 WL 2181247 at *4 (Mo. Ct. App. 2013); see also Aviation Eng'g Co. v. Bd. of Clark Cnty. Comm'rs, 794 P.2d 710, 712–13 (Nev.1990). Another important consideration in some jurisdictions is that “[e]ach party must be a free bargaining agent to the agreement so that the contract is not one of adhesion.” Topp Copy Products, Inc. v. Singletary, 626 A.2d 98, 99 (Pa. 1993). As can be seen, the actual state of the law on exculpatory clauses differs materially from the law Radin depicts on the supposed inadequate judicial oversight of these provisions.
Radin: The persons who draw up and deploy offensive boilerplate are parties to the tort of intentional deprivation of basic legal rights and specifically intend adverse effects. (Radin, p. 215)
Response: Radin would automatically impute the supposed bad intent of the drafter of abusive boilerplate to the seller of goods or services who uses those boilerplate contracts. Radin does not appreciate that the alleged bad intent of the drafter and the seller using those forms is a factual question and that such persons do not necessarily act in concert. See Jordan v. Wilson, 5 So. 2d 442, 451 (Miss. Ct. App. 2008)(intent in law of torts is a question of fact). In many cases, the proof would undoubtedly show that the drafter, the seller, or both act in good faith as they seek to advance what are perceived to be valid business interests.
In the end, Radin’s proposal to transform abusive mass market boilerplate contracts into a fount of tort liability in favor of the consumer is actually counterproductive. Her proposal can have adverse consequences for the same individuals that Radin strives mightily to protect. The expanded liability of sellers arising from Radin’s suggested reforms would only cause price increases to account for this added seller legal exposure, all to the detriment of consumers and to the general economy with a corresponding likely reduction in sales activity. In Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273, 282 (7th Cir. 1992), the court observed:
The idea that favoring one side or the other in a class of contract disputes can redistribute wealth is one of the most persistent illusions of judicial power. It comes from failing to consider the full consequences of legal decisions. Courts deciding contract cases cannot durably shift the balance of advantages to the weaker side of the market; they can only make contracts more costly to that side in the future, because [the other side] will demand compensation for bearing onerous terms.
For all the above reasons, I respectfully contend that Radin’s radical expansion of tort law into the realm of contract is without merit.
[Posted, on Steven Feldman's behalf, by JT]
June 12, 2013 in Books, Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack
June 11, 2013
Weekly Top Tens from the Social Science Research Council
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)
April 12, 2013 to June 11, 2013
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 215 | The Hague Principles on Choice of Law for International Contracts: Some Preliminary Comments Symeon C. Symeonides, Willamette University - College of Law, |
| 2 | 205 | Regulation Through Boilerplate: An Apologia Omri Ben-Shahar, University of Chicago Law School |
| 3 | 121 | Contract Law in Europe and the United States: Legal Unification in the Civil Law and the Common Law Hein D. Koetz, Max Planck Institute for Comparative and International Private Law |
| 4 | 118 | Preemption Without Borders: The Modern Conflation of Tort and Contract Liabilities Max N. Helveston, DePaul University - College of Law |
| 5 | 113 | On the Applicability of the Common European Sales Law to Some Models of Cloud Computing Services Chris Reed, Clarice Castro, Ruy de Queiroz, Universidade Federal de Pernambuco, Queen Mary University of London, School of Law, Centro de Informática - Univ Federal de Pernambuco |
| 6 | 108 | Damages versus Specific Performance: Lessons from Commercial Contracts Theodore Eisenberg, Geoffrey P. Miller, Cornell University - Law School, New York University (NYU) - School of Law |
| 7 | 92 | Lochner, Liberty of Contract and Paternalism: Revising the Revisionists? Harry G. Hutchison, George Mason University - School of Law |
| 8 | 91 | Arbitrating 'Arbitrability' Alan Scott Rau, University of Texas at Austin School of Law |
| 9 | 80 | Shame, Regret, and Contract Design Eric A. Zacks, Wayne State University Law School |
| 10 | 80 | The Information Privacy Law of Web Applications and Cloud Computing Sebastian Zimmeck, Columbia University - Department of Computer Science |
[JT]
June 11, 2013 in Recent Scholarship | Permalink | TrackBack
Dean Irma S. Russell, A Review of A Manual of Style for Contract Drafting
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]
June 11, 2013 in Books, Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack
June 10, 2013
Daniel Barnhizer Reviews Ken Adams' Manual of Style for Contract Drafting (3d ed.)
Daniel D. Barnhizer is Professor of Law & The Bradford Stone Faculty Scholar, Michigan State University College of Law.
Kenneth Adams’ third edition to the Manual of Style for Contract Drafting[1] (“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.
Introduction
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.
Audience
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.[2]
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.
Content
Contract
Drafting is comprehensive and ambitious
in scope. The range of topics covers the significant contract drafting issues
likely to be encountered in appropriate length and detail. Importantly, the
book recognizes that for many attorneys and professionals who will use this
style manual, the principles of good contract drafting cannot be reduced to a
short list of rules to which the struggling drafter may refer in order to turn
a poorly written instrument into a thing of beauty. Rather, the text is a
teaching text. Experienced drafters already familiar with good drafting
techniques may use the book to help clarify difficult provisions and terms on
an ad hoc basis.
But for the vast majority of users who still draft from samples passed through generations of law firm lawyers, the Adams’s Contract Drafting will only reach its full potential if they actually read the book. My students—and many practitioners, based on some of the clauses I have seen out in the wild—often have difficulty with drafting general release clauses, for example. Attempting to use the book for a quick check on how to draft a general release clause will be fruitless. Contract Drafting contains excellent advice that applies to the different phrases useful to drafting such a clause, such as use of common terms from such releases including “arising out of or relating to” and “from the beginning of time.”[3] But if a practitioner is facing a clause such as the one I inherited from one of my supervisors early in my career, these are merely helpful Band-Aids:
[Party B] discharges and acquits [Party A], their subsidiaries, affiliates, successors and any persons or entities taking through them, of and from any and all claims, liabilities, and choses in action of any kind whatsoever, whether known or unknown and whether asserted or not, arising out of or relating to the [current action] from the beginning of time to the date of these presents, including the [current action].
Reforming that riot of legalese and opacity requires not a Band-Aid but major surgery. To get to the point where the drafter can effectively spot the problems inherent in such provisions and efficiently rewrite the term without breaking the bank requires training and practice. Contract Drafting provides the basis for the training as long as the reader is willing to put in the time necessary to assimilate its lessons.
Taking a simple example from Chapter 1, “The Characteristics of Optimal Contract Language,” ¶¶ 1.42-1.54 address the need to “Limit the Use of Strings.”[4] A beginning drafter or even an experienced drafter who lacks systematic training in modern contract drafting and legal writing principles likely will not even be able to recognize “strings” – redundant series of synonymous terms such as “goods and chattels,” “sell, convey, assign, transfer, and deliver,” and “indemnify and hold harmless,” – much less know that they are in most cases unnecessary and potentially ambiguous.
Likewise, Chapter 3,
“Categories of Contract Language,” does a masterful job of distinguishing
between different types of contract language that inexperienced drafters will
likely have not encountered. Just as Wesley Newcomb Hohfeld’s taxonomy of jural
correlatives created real structure and meaning in theoretical and judicial
analysis by systematically distinguishing legal relations such as rights and
duties, privileges and no-rights, liabilities and powers, and immunities and
disabilities,[5] in
my experience many students and even experienced drafters fail to maintain
distinctions between different types of contract language. Adams’s Chapter 3
walks the reader through each of the categories of contract language –
Agreement, Performance, Obligation, Discretion, Prohibition, Policy,
Conditions, Declarations, Belief, Intention, and Recommendation – and clarifies
through rules and examples how and when each category is appropriately used.[6]
Later chapters address more specific contracting issues that a drafter might refer to on a one-off basis. Chapter 6, for instance, deals with the proper use of defined terms. Chapters 8 and 9 address the commonly used terms “Reasonable Efforts,” “Material,” and “Material Adverse Change.” Chapter 10 explains proper techniques for referring to time in a contract. But even these more specific sections deserve the 30 minutes of attention it would take to read through each and assimilate Adams’s systematic and detailed treatment of their subjects so that the drafter will recognize the issues when they arise.[7]
Fortunately, despite that appreciating the full value of the book requires assimilating the text, Adams’s style is highly readable. Adams writing is explicative and does not merely set forth a list of rules with bare admonitions for the drafter. For example, in the section on limiting the use of redundant phrases, Adams advises the drafter against needlessly redundant language such as “goods and chattels,” or “sell, convey, assign, transfer, and deliver.”[8] But Adams also identifies the situations in which a drafter may legitimately choose to retain terms with subtly different meanings or accepted legal phrases. Importantly, Adams explains the arbitrary origins of such redundancies both in reference to medieval English practices that incorporated identical legal terms from English, French, and Latin and in connection with the “rhythmical appeal” of these terms. By explaining how such redundancies developed, Adams reemphasizes the rule in a manner that is memorable and provides comfort to an unsure contract drafter considering a departure from a form.[9]
Within each chapter, the organization is excellent and logically approaches the subject matter so that the reader may efficiently begin incorporating the principles of contract drafting immediately after encountering them. Adams also judiciously salts his explanations with clear and concise examples of both proper and problematic contract usages. Chapter 12, for example, dealing with syntactical ambiguity, provides series of permutations of contract terms in which modifiers and commas are moved within the term to effectively demonstrate the sources and resolution of ambiguities. And throughout the book Adams includes specific judicial decisions relating to the contract drafting at issue to demonstrate his principles and to impeach many traditional justifications for bad drafting practices.[10]
Finally, the “before,” “before with footnotes,” and “after” versions of a sample executive golden parachute contract in Appendices 1-A, 1-B, and 1-C clearly show the value of the book and the potential benefits of adopting Adams’s principles of contract drafting.[11] The “before” version is a dense, confusing, potentially ambiguous, and definitely unclear example of a typical termination agreement that is consistent with similar agreements I have seen in my own practice. The “before with footnotes” version in Appendix 1-B is worth its weight in gold as Adams systematically lists the individual shortcomings in the before contract. This version convicted me of several of my own contract drafting sins, and should clearly demonstrate to any reader the need for rigorous and consistent application of a manual of style for contract drafting. The final version—“after”—shows what the contract could look like if drafted according to the principles laid out in Contract Drafting. These three versions provide invaluable demonstrations of the benefits of the book and for students and colleagues make a convincing argument in favor of adopting and learning a style manual.
Using Contract Drafting
In developing this review, I considered several of the contract drafting issues that had come up in my own classes and past drafting practice. Adams’s treatment of each issue was correct and complete. Had I been addressing those concerns from scratch in the drafting stage, Adams’s treatment would have informed the beginning drafting student, the sales officer, and the transactional lawyer alike.
For example, my students often struggle with when and how to use “time is of the essence” clauses. The index contains an entry for “time is of the essence” clauses.[12] Adams’s substantive treatment begins with the basic rule: “time is of the essence clauses” are necessary in some contexts because “courts tend to hold that late performance isn’t grounds for termination unless the purpose of the contract or the circumstances surrounding it indicate that the parties intended for that to be the case.”[13] The remainder of the discussion on this issue addresses pitfalls relating to improper use of the clause. These include the inclusion of general statements that fail to link the clause to a specific performance for which time is truly essential, failure to identify the consequences of untimeliness, failure to recognize that the term may be inconsistent with other terms in the contract, and failure to recognize that some jurisdictions may refuse to enforce such clauses for trivial breaches after substantial performance. Finally, after exploring general usage and the pitfalls awaiting the unwary drafter, Adams provides an alternative drafting convention – with an example – that would deliver the precise meaning that most drafters would be seeking in using such clauses.[14]
Organization
The overall organization of the book is the only problematic area, albeit one that should be relatively innocuous to a regular user. In attempting to find treatments of particular contracting issues during my first read of the book, I found it frustrating to navigate different sections and the organization was not intuitive. Chapters 1 (“The Characteristics of Optimal Contract Language”), 3 (“Categories of Contract Language”), 4, (“Layout”), 7 (“Sources of Uncertainty in Contract Language”), 11 (“Ambiguity of the Part Versus the Whole”), 12 (“Syntactic Ambiguity”), and 16 (“Typography”) address what I consider “strategic” contract drafting issues that apply generally to the process of drafting the contract as a whole. Chapter 17 also likely fits in this category as it contains a short treatment of general writing principles applicable to drafting, although the material in this chapter seems better suited for inclusion in Chapter 1.
Interspersed within those strategic treatments are chapters on various “tactical” issues. Chapters 2 and 5 respectively concern specific terms and elements of the front and back matter of the contract like identification of the parties, recitals, and signature blocks. As noted above, Chapters 8 and 9 discuss specific contract terms—“Reasonable Efforts” and “‘Material’ and ‘Material Adverse Change’” clauses. Chapter 13 provides a lengthy list of problematic usages in this regard, similar to that found in other style manuals such as chapters 11 and 12 of Bryan Garner’s well-known general legal style manual “The Redbook.”[15] Chapter 14 and Chapter 15 describe drafting provisions relating to numbers and formulas and drafting conventions.
The organization of the book will be a problem only for the reader who picks up the book looking for a single specific answer to a specific type of contract question. Those answers are there and the book will often be of assistance to such questions. But as noted above, the reader will benefit from the book far more after spending the time to read it cover to cover and assimilating the principles Adams explicates. Once the reader has familiarity with the structure and with the contents of the book, the organization issue will be de minimis.
Final Thoughts
Contract Drafting has nearly everything I could ask for in a style manual. Kenneth Adams’s coverage of the field is comprehensive. All of the substantive material is presented in a highly-readable form that teaches good drafting through rules followed by detailed explanations and examples. Indeed, a skilled contract drafting instructor could build an entire semester-long course out of this text and a small number of actual contracts or case studies. Preparation for this review alone gave me substantial food for thought and showed areas where my own drafting practices can be improved significantly. For the student, this is a perfect book.
It is also an extraordinarily useful book for the practitioner. The book can, however, only deliver its full potential if the practitioner recognizes the need for a short-term trade of otherwise billable hours (or free time) for long-term professional development. The short-term costs are not insubstantial—my initial reading of the book in preparation for this review took approximately twelve hours, although much of that was note taking. Afterwards, drafters will incur additional time and transaction costs in redrafting contracts previously seen as “good enough” because they cut and pasted terms that had “worked” or been tested in past contracts. It will take time to reach the point that the bank of new contract forms contains sufficient well-drafted terms and the principles from Contract Drafting become sufficiently second nature that the practitioner will begin to profit from the investment.
In the final analysis, though, the investment is not optional. The economics of the legal market are changing rapidly. As Richard Susskind’s The End of Lawyers suggests, the winners in the new legal marketplace will be those who can offer high-quality mass-produced services that look like “bespoke” or custom-made work.[16] Kenneth Adams himself has founded a contract assembly firm, Koncision Contract Automation, that uses computer algorithms to build contracts using the principles described in Contract Drafting based upon a detailed questionnaire that permits clients to develop sophisticated and high-quality contracts that address their needs at a mass-production level price schedule.[17]
It is unlikely that contract and other document automation firms such as Koncision or form banks like LegalZoom.com will entirely replace contract drafting by individual practitioners or firms, but it is certain that clients will continue to demand more and better contracts for less. Lawyers engage in cut-and-paste contract drafting because it is fast and cheap (at least for them) on the front end. But as legal markets becomes more transparent, sophisticated consumers will notice the back-end costs associated with poorly-drafted contracts and be able to associate those costs with the lawyers, firms, and contracting practices that caused them. Contract drafting practitioners and other professionals who do not move beyond contract language and techniques of the last century will become non-competitive for drafting business in these new legal markets. Contract Drafting provides a great basis for developing modern contract drafting skills and practices.
[Posted, on Daniel Barnhizer's behalf, by JT]
[1] Kenneth A. Adams, A Manual of Style for Contract Drafting (3d ed. 2013) [hereinafter “Contract Drafting”].
[2] Id. at xxix.
[3] Id. at 250, 280.
[4] Id. at 6.
[5] See Wesley Newcomb Hohfeld, Fundamental Legal Conceptions As Applied in Judicial Reasoning and Other Legal Essays (Walter Wheeler Cook, ed.) (1923).
[6] See Contract Drafting, supra note 1 at 37-98.
[7] Of all the chapters in Contract Drafting, only Chapter 13, “Selected Usages,” is specifically adapted for immediate and occasional reference. This section arranges common contract terms, such as “force and effect,” “incorporated by reference,” “mutatis mutandis,” and “provided that,” alphabetically for easy reference and provides detailed explanations regarding whether and how drafters should employ those terms. See id. at 247-360.
[8] Id. at 6.
[9] See id. at 6.
[10] See, e.g., Contract Drafting, supra, note 1, at 87 (Aspect Systems, Inc. v. Lam Research Corp., No. CV 06-1620-PHX-NVW, 2008 WL 2705154, at *9 (D. Ariz. June 26, 2008) (case law does not support the proposition that there is any difference in remedy for a “representation” in a contract than for a “warranty”)), 154 (listing cases addressing lexical ambiguity), and 246 (Telenor Mobile Communications AS v. Storm LLC, 587 F. Supp. 2d 594, 605-08 (S.D.N.Y. 2008) (syntactical ambiguity arising from lack of a serial comma)).
[11] Contract Drafting, supra, note 1, at 425-450.
[12] Id. at 474.
[13] Id. at 348.
[14] Contract Drafting, supra, note 1 at 348-49.
[15] Bryan A. Garner, The Redbook: A Manual of Legal Style 183 - 318 (2d ed.) (2002).
[16] See generally Richard Susskind, The End of Lawyers? Rethinking the Nature of Legal Services (2008).
[17] See “Why Koncision?,” available at http://www.koncision.com/why-koncision/advantages/.
June 10, 2013 in Books, Commentary, Recent Scholarship | Permalink | Comments (2) | TrackBack
June 07, 2013
Coming Next Week: Two Guest Posts on Kenneth Adams' Contracts Drafting Style Manual
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.
[JT]
June 7, 2013 in About this Blog, Books, Recent Scholarship, Weblogs | Permalink | Comments (0) | TrackBack
June 05, 2013
New in Print, Including Three (Count 'em!) New Books from Larry DiMatteo
Larry DiMatteo, of the University of Florida's Levin College of Law, has three new books to crow about:
Global Challenge of International Sales Law
Larry A. DiMatteo, Editor
Cambridge University Press
2013
Contributors
Camilla Andersen Franco Ferrari Ingeborg Schwenzer Lisa Spagnolo
Bruno Zeller Ulrich Magnus Harry M. Flechtner Stefan Kröll
Jan Ramberg Burghard Piltz Vikki Rogers Pilar Perales Viscasillas
Ulrich Schroeter Wolfgang Faber Sieg Eiselen Jan Smits
Ole Lando Sonja Kruisinga Petra Butler Corinne Widmer Lüchinger Hossam
El-Saghir Milena Djordjević Tidas Kilmas Javier Solana Álvarez
Luca Castellani André Janssen Matthias Spilker Marie Stefanini Newman
Morton Fogt Aneta Spaic Martin Davies Sylvaine –Peruzzetto
Sörren Kiene Edoardo Ferrante Francesco Mazzotta Vladimir Pavić
Yehuda Adar Marco Torsello Olaf Meyer Qi Zhou
Helena Haapio Claire Germain Li Wei Larry DiMatteo
Commercial Contract Law: Transatlantic Perspectives
Larry A. DiMatteo, Qi Zhou & Séverine Saintier, Editors
Cambridge University Press 2013
Contributors
Roger Brownsword David Campbell Roger Halson Hector MacQueen
Jean Braucher Chuck Knapp Juliet Kostritsky Peter Alces
Martin Hogg Djakhongir Saidov Mel Kenny Richard Austen-Baker
T.T. Arvind Curtis Bridgeman Tom Joo Nancy Kim
Zoe Ollerenshaw James Devenney David Capper Larry A. DiMatteo
Séverine Saintier Qi Zhou
&
International Contracting:
Law & Practice
Third Edition
Larry A. DiMatteo, Author
Wolters/Kluwer 2013
In addition, we have the following new articles out in print:
George A. Bermann, Arbitration in the Roberts Supreme Court, 27 Am. U. Int'l L. Rev. 893 (2012)
Bernardo M. Cremades, Good Faith in International Arbitration. 27 Am. U. Int'l L. Rev. 761 (2012)
Yves Derains, The Arbitrator's Deliberation, 27 Am. U. Int'l L. Rev. 911 (2012)
Paul Friedland and Paul Brumpton, Rabid Redux: The Second Wave of Abusive ICSID Annulments, 27 Am. U. Int'l L. Rev. 727 (2012)
Judge Dominique Hascher, Independence and Impartiality of Arbitrators: 3 Issues, 27 Am. U. Int'l L. Rev. 789 (2012)
Pierre Mayer, The Extension of the Arbitration Clause to Non-Signatories -- The Irreconcilable Positions of French and English Courts, 27 Am. U. Int'l L. Rev. 831 (2012)
William W. Park, The Politics of Class Action Arbitration: Jurisdictional Legitimacy and Vindication of Contract Rights. 27 Am. U. Int'l L. Rev. 837 (2012)
Anjanette H. Raymond, It Is Time the Law Begins to Protect Consumers from Significantly One-Sided Arbitration Clauses within Contracts of Adhesion, 91 Neb. L. Rev. 666 (2013)
Jingzhou Tao, Salient Issues in Arbitration in China. 27 Am. U. Int'l L. Rev. 807 (2012)
June 5, 2013 in Recent Scholarship | Permalink | TrackBack
June 04, 2013
Weekly Top Tens from the Social Science Research Council
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal
April 4, 2013 to June 3, 2013
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 206 | Can an Arbitrator Conduct Independent Legal Research? If Not, Why Not? Paul Bennett Marrow, New York Law School |
| 2 | 204 | The Hague Principles on Choice of Law for International Contracts: Some Preliminary Comments Symeon C. Symeonides, Willamette University - College of Law |
| 3 | 203 | Private Equity Firms as Gatekeepers Elisabeth de Fontenay, Harvard Law School |
| 4 | 200 | Regulation Through Boilerplate: An Apologia Omri Ben-Shahar, University of Chicago Law School |
| 5 | 128 | Discretion D. Gordon Smith, Jordan C. Lee, Brigham Young University - J. Reuben Clark Law School , Brigham Young University - J. Reuben Clark Law School |
| 6 | 114 | Contract Law in Europe and the United States: Legal Unification in the Civil Law and the Common Law Hein D. Koetz, Max Planck Institute for Comparative and International Private Law |
| 7 | 114 | Preemption Without Borders: The Modern Conflation of Tort and Contract Liabilities Max N. Helveston, DePaul University - College of Law |
| 8 | 110 | Customary Law: An Introduction Lisa Bernstein, Francesco Parisi, University of Chicago Law School, University of Minnesota - Law School |
| 9 | 108 | Merchant Law in a Modern Economy Lisa Esther Bernstein, University of Chicago - Law School |
| 10 | 107 | On the Applicability of the Common European Sales Law to Some Models of Cloud Computing Services Chris Reed, Clarice Castro, Ruy de Queiroz, Universidade Federal de Pernambuco, Queen Mary University of London, School of Law, Centro de Informática - Univ Federal de Pernambuco |
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)
April 5, 2013 to June 4, 2013
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 205 | The Hague Principles on Choice of Law for International Contracts: Some Preliminary Comments Symeon C. Symeonides, Willamette University - College of Law |
| 2 | 202 | Regulation Through Boilerplate: An Apologia Omri Ben-Shahar, University of Chicago Law School |
| 3 | 131 | Discretion D. Gordon Smith, Jordan C. Lee, Brigham Young University - J. Reuben Clark Law School , Brigham Young University - J. Reuben Clark Law School |
| 4 | 116 | Contract Law in Europe and the United States: Legal Unification in the Civil Law and the Common Law Hein D. Koetz, Max Planck Institute for Comparative and International Private Law |
| 5 | 116 | Preemption Without Borders: The Modern Conflation of Tort and Contract Liabilities Max N. Helveston, DePaul University - College of Law |
| 6 | 107 | Damages versus Specific Performance: Lessons from Commercial Contracts Theodore Eisenberg, Geoffrey P. Miller, Cornell University - Law School, New York University (NYU) - School of Law |
| 7 | 107 | On the Applicability of the Common European Sales Law to Some Models of Cloud Computing Services Chris Reed, Clarice Castro, Ruy de Queiroz, Universidade Federal de Pernambuco, Queen Mary University of London, School of Law, Centro de Informática - Univ Federal de Pernambuco |
| 8 | 92 | Lochner, Liberty of Contract and Paternalism: Revising the Revisionists? Harry G. Hutchison, George Mason University - School of Law |
| 9 | 85 | Arbitrating 'Arbitrability' Alan Scott Rau, University of Texas at Austin School of Law |
| 10 | 78 |
Shame, Regret, and Contract Design |
[JT]
June 4, 2013 in Recent Scholarship | Permalink | TrackBack
June 03, 2013
Boilerplate Symposium Conclusion (for now): Peggy Radin Responds to Week Three
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:
I love the quote
from Cole v. Goodwin!
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.
To your last paragraph, I say "Hear, hear." To your penultimate paragraph I say, let's support Theresa Amato and her colleagues, and let's join the ALI and speak up.
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.
[JT]
June 3, 2013 in Books, Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack
Radin Meets Readers (and a Packed Audience) at Law & Society Annual Meeting
[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]
June 3, 2013 in Books, Commentary, Conferences, Recent Scholarship | Permalink | Comments (0) | TrackBack
May 29, 2013
Boilerplate Symposium Part XVI: Guy Rub on Market Solutions to the Boilerplate Problem
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]
May 29, 2013 in Books, Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack
Boilerplate Symposium Part XV: Cheryl Preston on Boilerplate and the Role of Courts
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]May 29, 2013 in Books, Commentary, Famous Cases, Recent Scholarship | Permalink | Comments (0) | TrackBack
May 28, 2013
Weekly Top Tens from the Social Science Research Council
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal
March 29, 2013 to May 28, 2013
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 203 | Private Equity Firms as Gatekeepers Elisabeth de Fontenay, Harvard Law School |
| 2 | 203 | Can an Arbitrator Conduct Independent Legal Research? If Not, Why Not? Paul Bennett Marrow, New York Law School |
| 3 | 188 | The Hague Principles on Choice of Law for International Contracts: Some Preliminary Comments Symeon C. Symeonides, Willamette University - College of Law |
| 4 | 174 | Regulation Through Boilerplate: An Apologia Omri Ben-Shahar, University of Chicago Law School |
| 5 | 131 | Promise, Contract, Personal Autonomy, and the Freedom to Change One's Mind Dori Kimel, University of Oxford - Faculty of Law |
| 6 | 114 | Discretion D. Gordon Smith, Jordan C. Lee, Brigham Young University - J. Reuben Clark Law School , Brigham Young University - J. Reuben Clark Law School |
| 7 | 109 | Contract Law in Europe and the United States: Legal Unification in the Civil Law and the Common Law Hein D. Koetz, Max Planck Institute for Comparative and International Private Law |
| 8 | 109 | Preemption Without Borders: The Modern Conflation of Tort and Contract Liabilities Max N. Helveston, DePaul University - College of Law |
| 9 | 103 | Merchant Law in a Modern Economy Lisa Esther Bernstein, University of Chicago - Law School |
| 10 | 103 | On the Applicability of the Common European Sales Law to Some Models of Cloud Computing Services Chris Reed, Clarice Castro, Ruy de Queiroz, Universidade Federal de Pernambuco, Queen Mary University of London, School of Law, Centro de Informática - Univ Federal de Pernambuco |
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)
March 29, 2013 to May 28, 2013
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 188 | The Hague Principles on Choice of Law for International Contracts: Some Preliminary Comments Symeon C. Symeonides, Willamette University - College of Law |
| 2 | 174 | Regulation Through Boilerplate: An Apologia Omri Ben-Shahar, University of Chicago Law School |
| 3 | 131 | Promise, Contract, Personal Autonomy, and the Freedom to Change One's Mind Dori Kimel, University of Oxford - Faculty of Law |
| 4 | 114 | Discretion D. Gordon Smith, Jordan C. Lee, Brigham Young University - J. Reuben Clark Law School , Brigham Young University - J. Reuben Clark Law School |
| 5 | 109 | Contract Law in Europe and the United States: Legal Unification in the Civil Law and the Common Law Hein D. Koetz, Max Planck Institute for Comparative and International Private Law |
| 6 | 109 | Preemption Without Borders: The Modern Conflation of Tort and Contract Liabilities Max N. Helveston, DePaul University - College of Law |
| 7 | 103 | On the Applicability of the Common European Sales Law to Some Models of Cloud Computing Services Chris Reed, Clarice Castro, Ruy de Queiroz, Universidade Federal de Pernambuco, Queen Mary University of London, School of Law, Centro de Informática - Univ Federal de Pernambuco |
| 8 | 101 | Damages versus Specific Performance: Lessons from Commercial Contracts Theodore Eisenberg, Geoffrey P. Miller, Cornell University - Law School, New York University (NYU) - School of Law |
| 9 | 90 | Lochner, Liberty of Contract and Paternalism: Revising the Revisionists? Harry G. Hutchison, George Mason University - School of Law |
| 10 | 82 | Arbitrating 'Arbitrability' Alan Scott Rau, University of Texas at Austin School of Law |
[JT]
May 28, 2013 in Recent Scholarship | Permalink | TrackBack
Boilerplate Symposium Part XIV: Peter Linzer, That Was No Contract: That Was My Lunch
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.
Peter Linzer is a Professor of Law at the University of Houston Law Center.
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]
May 28, 2013 in Books, Commentary, Famous Cases, Recent Scholarship | Permalink | Comments (0) | TrackBack
Boilerplate Symposium Part XIII: Charles Calleros on the Reasonable Expectations of Consumers
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]
May 28, 2013 in Books, Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack
May 27, 2013
Boilerplate Symposium Part XII: Jean Braucher on the Common Law of Contracts as Residual Law
This is the twelfth in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
Jean Braucher is the Roger C. Henderson Professor of
Law at the University of Arizona.
Peggy Radin in Boilerplate gives a rich, comprehensive account of contract law and theory as applied to standard form terms. For anyone inclined to focus on the common law of contract as the primary way to think about the problem of nasty form terms, this book is an obvious go-to source.
My critique may seem odd for a contracts blog, but here goes: I don’t think the common law of contracts is the right place to focus when thinking about unfair deals, except as a history lesson to understand the origins of regulation that is now more rigorous. Emphasis on the common law tends to put a “freedom of contract” ideological spin on problems that are already regulated otherwise and in more effective ways, based on more sophisticated theory. Radin includes perspectives other than those of standard contract theory, so my objection is a subtle one about emphasis.
We live in the age of the regulatory state and administrative agencies. The theory and practice of this type of regulation are now at the core of the law governing contracts, with judge-made common law playing a minor, residual role. Most important types of contracts are regulated by more than common law. Radin devotes her last chapter to regulatory solutions to overreaching in boilerplate, so she has certainly not missed that regulation matters, but she gives primacy of place to the common law of contracts and its theory. Contracts scholars often do this, but we need to change if we are to theorize about current reality and not give law students the misimpression that the common law provides a nearly complete system of law for contracts, only touched up around the edges with a little regulation. In the 21st century, and after an economic collapse brought on by mass exploitation by contracts, we should be spending less time on offer and acceptance or even unconscionability and more on the vast existing statutory and administrative regulation of the substance of contracts.
Consumer contracts illustrate well the point that statutes,
often administratively applied, dominate the law applied to contracts. In her
discussion of boilerplate, Radin features many consumer contract examples—Part I
of the book is headed “Boilerplate, Consumers’ Rights, and the Rule of Law.”
Consumer contracts are governed by thousands of federal, state, and local consumer
protection statutes that provide stronger remedies than those of the common
law. Some statutes are very specific and
others use general standards. When consumers’ lawyers draft complaints, they
put common law causes of action at the end, after statutory theories; statutory
remedies often could be better implemented (judges sometimes undermine them),
but they are already way better than those of contract law. Public enforcement
is also more powerful. When the Federal Trade Commission and state attorneys
general bring enforcement actions against unfairness and deception, they don’t
have to worry about arbitration and forum clauses or class action prohibitions. They aren’t parties to the contract.
So, when thinking about problematic consumer contracts today, two key points bear emphasis: (1) the common law of contracts is typically not the best or first resort for protection of consumers and is therefore residual law, and (2) the Dodd-Frank Act recently gave consumer protection law a huge shot in the arm by creating a new regulatory power to address exploitation of consumer misperceptions in credit contracts. Consumer misperceptions are not limited to form terms but also come into play with salient terms such as price (a point also made by Oren Bar-Gill in his comment for this symposium).
Dodd-Frank created the Consumer Financial Protection Bureau (CFPB) and gave it broad power to regulate not just unfair and deceptive acts and practices (as federal and state statutory law has long done for many consumer contracts) but also abusive consumer credit contracts. (And, by the way, as Radin notes at the end of her book, CFPB also is required to study mandatory pre-dispute arbitration and has power to decide whether it serves consumer interests and regulate if not.)
The powerful behavioral economics theory for the CFPB’s anti-abuse power is likely to suffuse consumer law over time. For a fuller discussion, see my paper Form and Substance in Consumer Financial Protection. This theory, backed up by extensive research by many empirical scholars, is that consumers not only make systematic misperceptions, but also that businesses are forced by competition for investors to study and exploit the patterns of these misperceptions to maximize their returns. Regulation is thus essential both to free businesses from a race to the bottom so that they can be straightforward with their consumer customers and to empower vulnerable consumers to get deals they understand.
The CFPB does not use common law methodology. It addresses exploitative practices through the responsive regulation tool of examination of financial institutions, backed up by enforcement actions. CFPB examiners now pour through the records of financial institutions and consumer complaints for evidence that consumers don’t understand credit products with complex tricks and traps. The power to regulate abusive practices is not limited to those set in boilerplate; it also applies even if the exploitation is in plain sight but consumers do not understand their credit products, including how they will use them. When we think about abuses in consumer contracts, we should start with the theory underlying the CFPB’s new power, not with stale ideas about consent or choice.
Contracts teachers as well as law reformers, such as the American Law Institute in its newly-launched Restatement Third of the Law of Consumer Contracts, should not forget that consumer protection law is the central and most powerful part of the law governing consumer contracts. ALI’s project description shows that it understands that consumer law is heavily statutory and administrative, but the question remains whether ALI will embrace our vast, popular statutory and administrative law of consumer protection or inaccurately try to treat it as incidental to the common law.
Similar points to these concerning consumer contracts could of course be made about the regulation of many other types of contract. The general point is that the law of contracts is much broader than contract law, and the common law is not the primary way to address overreaching in contracts, whether in boilerplate or not. Radin ends in agreement with this policy direction, but her focus on theory underlying common law rather than the theory of regulation makes the analytical journey more difficult than it needs to be. Contract theory needs updating to embrace regulatory theory as part of its core and not as an afterthought or add-on.
Some acknowledgments: Nearly everything worth saying about consumer contracts was said long ago, and much of the above is inspired by earlier work of others. In 1933, based on lectures given in 1928-29, Karl Llewellyn wrote in The Case Law System in America (in German, only published in English in 1989; see at 67-68 for the discussion in the English translation) that case law is inadequate to address the enormous problem of consumer protection. See also Arthur Leff, Unconscionability and the Crowd—Consumers and the Common Law Tradition, 31 U. Pitt L. Rev. 349 (1970) (arguing that common law litigation will not root out unfairness and that administrative regulation is necessary to deal effectively with consumer contracts), and Stewart Macaulay, Bambi Meets Gozilla: Reflections on Contract Scholarship and Teaching vs. State Unfair and Deceptive Trade Practices and Consumer Protection Statutes, 26 Hous. L. Rev. 575 (1989) (noting that consumer protection regulation is more powerful than contract law in providing remedies and that contracts teaching should introduce that key point).
[Posted, on Jean Braucher's behalf, by JT]May 27, 2013 in Books, Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack
Boilerplate Symposium Part XI: Aditi Bagchi on Boilerplate Waivers
This is the eleventh in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
Aditi Bagchi is an Associate Professor at the Fordham University School of Law.
Professor Radin’s Boilerplate is a pragmatist repudiation of an important social and legal phenomenon. That practice has a number of features: (1) waivers of rights and liability contained in boilerplate are often unknown to the individuals who grant those waivers (2) consumers need to waive common law and statutory rights in order to purchase a wide range of goods and services, many of which are regarded as essential to ordinary American life (3) the waivers in boilerplate govern so many contractual relationships that some rights otherwise granted by law are effectively eliminated for large portions of the consumer population.
Much of the literature on boilerplate focuses on the first feature of boilerplate, above. Radin has an argument about normative degradation and the poor quality of consent to boilerplate. But I think the most important contribution of the book is to highlight features (2) and (3).
The fact that consumers need to waive many rights, including the right to compensation for harm incurred by the negligence of others and the right to pursue legal remedies in courts or by way of class actions, is not important because it renders their consent ineffective. (I would argue it does not.) The fact of necessity is important because it explains feature (3) and suggests that the mass “rights deletion” that Radin observes does not necessarily reflect consumers’ collective preferences.
Whether consumers prefer contracts with or without boilerplate,
i.e., whether they are prepared to pay to preserve some rights now usually
waived in consumer contracts, depends on the decision mechanism by which that
preference is expressed. Because many
rights that private individuals have against one another are default rights
that individuals are free to alienate, we effectively use the market to sort
consumer preferences. The result is that
individual consumers decide whether, on the margin, the value they might derive
from a legal right is worth the money they save from giving it up, or whether
it is worth the value of the good or service to which that waiver is
attached.
The deep question that Radin raises in her discussion of democratic degradation is whether markets are indeed the right way to decide the scope of some legal rights. Especially where the frequency or distribution of a right in society has important cumulative effects on legal culture or social practice, we might wish to remove certain rights from the marketplace and decide through collectivized decision-making (i.e., legislative action or inaction) the scope of rights that govern certain private interactions. One of her most compelling examples is the case of copyrights that individuals frequently waive. She persuasively observes that we may have a collective interest in the wide diffusion of copyrights that is underserved by the separate decisions of millions of individuals to waive their copyrights at a small price.
More generally, we need to think about what proportion of our private rights (rights held against other private individuals) should depend on our market power. The idea of a “social wage” refers to the proportion of our material resources that depends on our status as citizens -- as opposed to our market wage, which is the proportion of our income that turns on our performance in the marketplace. Countries differ in their social wage level. For example, countries with national health care or generous unemployment benefits make your material situation somewhat less dependent on your labor market position than in countries without public health care or generous unemployment benefits. The United States has a low social wage as compared to other developed countries of comparable wealth. We probably also have a “low private rights” regime, inasmuch as individuals vary (more than elsewhere) in their ability to preserve legal rights depending on their ability to pay for them. I imagine that whether this outcome is acceptable turns significantly on the particular right at issue. For example, we might reject a regime under which service providers exercise greater caution to avoid bodily injury when dealing with some consumers than with others. Yet we might be comfortable with a regime in which some proportion of the population relies primarily on arbitration for redress. We can thank Radin for highlighting these important social choices.
[Posted, on Aditi Bagchi's behalf, by JT]
May 27, 2013 in Books, Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack
