New Scholarship from Nancy Kim!

Nancy Kim (right) has published Adhesive Terms and Reasonable Notice in the Seton Hall Law Review.   The article begins with some recent examples of how large corporations weaponize adhesive instruments like terms of service that they characterize as "contracts" in order to "establish and maintain their empires."  But Professor Kim argues that allowing the corporations to call at least some of these things contracts is like letting a robber characterize a mugging as a donation.  The state sanctions theft when it permits the enforcement of terms imposed on unsuspecting persons or small businesses in the absence of consent.

The article proceeds in three steps.  First, Professor Kim "deconstructs" contracts of adhesion, arguing that many of them are mere notices and not contracts at all.  She categorizes these instruments and assesses the degree to which they ought to be treated as evidencing contractual obligations.  Second, she argues that many adhesive instruments might be binding through tort or property law in more limited ways even if they are not binding contracts.  Finally, she offers some rules for proper notice sufficient to bind the counterparty to terms within a contract of adhesion.

Professor Kim points out that the "duty to read" arose in a context of negotiated contracts and is out of place in consumer contracts or other situations where it just is not reasonable to expect parties to read the terms of purported contracts.  Some courts have recognized as much and have imposed on parties that subject their customers or clients to adhesion contracts a requirement of reasonable notice of unexpected terms.  Nancy points out that reasonable notice requirements and the duty to read seem to have been borrowed from torts law.  But while reasonable notice provides a shield to the drafter under tort law, it operates as both sword and shield in contracts law.  Moreover, in tort law the question of reasonableness is put to the jury, while judges routinely make determinations regarding reasonable notice in contracts.   Too often judges' notions of what a reasonable consumer would notice in an online contract bears no relation to what actual consumers notice.

Professor Kim next argues that adhesive terms found in digital forms often are not contracts.  The problem is that such digital forms are often presented to people who have no intent to enter legal relations.  Absent such intent, they have no duty to read.  As a result, when adhesive terms are presented in a manner that is not obviously contractual in form, they may be effective as a notice, license, or under a quasi-contract theory, but they should not be treated as enforceable contract terms.  Nancy then provides a taxonomy of adhesive terms: notice, license, quasi contract, unilateral contract, bilateral contract, and waiver, indicating the purpose and legal enforceability of each type.

Although we call online terms, such as terms of service "contracts," they are not contracts; they are notices.  Reasonable notice, in order to be binding, must be something that should be almost impossible to avoid reading.  It must be conspicuous, concise and easily understood.  Professor Kim provides examples from the torts and property context in order to illustrate types of notice that are actually effective.  As Professor Kim illustrates (above and below), in other legal realms, we expect notice to be in large fonts and color-coded, often red or yellow, to give notice of potential violations, or green, to indicate permission.  There is a standard for digital notice called the "3 x 5 rule" -- either three lines of text with five words each or five lines of text with three words each.  So notice should come in (roughly) Haiku (or Tanka) or Limerick form.  

It is a fascinating proposal, the product of at least a decade of work toiling in the trenches of contracts of adhesion, now supplemented with knowledge from other doctrinal areas.  Her approach seems radical, but it is tethered to case law and supported by considerable cross-doctrinal legal reasoning.  This is recommended reading, and I hope the courts take notice.