The Controversy over the Restatement of Consumer Contracts

As some readers of this blog may be aware, the American Law Institute will be voting on whether to approve the Restatement of Consumer Contracts at its upcoming Annual Meeting on May 21. The proposed Restatement is controversial for several reasons and was the subject of a recent Yale Journal on Regulation symposium. Concerns have been raised by contractsprofs Gregory Klass, Adam Levitin and others (including yours truly) regarding the Reporters' methodology and interpretation of case law.  Of particular note, is this post written by the preeminent contracts law scholar Melvin Eisenberg. As Prof. Eisenberg points out, the doctrinal problems are glaring, harmful to consumers, and will make it even harder to explain contract law to 1Ls.

In addition to the doctrinal inconsistencies, the proposed Restatement ignores the problems created by form and digitization and does nothing to address the problems created by ubiquitous digital contracts. As Colin Marks's study showed, retailers often have different and more onerous terms for online purchases than when customers make those same purchases in-store.  

The law is still developing when it comes to digital contracts and there are signs that courts in some jurisdictions, such as California, are inclined to move the law in a more consumer-friendly direction. This Restatement would impede that evolution. Furthermore, this proposed Restatement would create a different set of rules when the contract is between two businesses and between a business and a consumer. The result in some cases is that the Restatement would subject a consumer to more stringent contract terms than a business would be subjected to under common law. While this might seem like good news for businesses, it actually is not. In many cases, due to the problem of “contract creep” which Ethan Leib and Tal Kastner discuss in their forthcoming Georgetown Law Journal article, courts are likely to end up applying the law of “consumer contracts” to all contracts, including those between businesses.  The result?  The proposed Restatement of Consumer Contracts would harm both consumers and businesses.  Instead of helping courts make sense of the evolving law, it would cement law that is incoherent and inconsistent.  Contractsprofs should be particularly concerned because it will make contract law that much more difficult to explain to 1Ls. The ALI plans to vote on the proposed Restatement of Consumer Contracts on May 21. All readers of this blog who are members are encouraged to attend and provide input.