We Must End "Rule By Contract"
When was the last time you closely read the fine print on a wireless contract, credit card account, or mobile app? Probably never. Yet, we enter into agreements every day. Contracts are impossible to avoid. As consumers, workers, and business owners, we are subject to a dense web of contracts that grant us—or (more often) deprive us of—rights. When purchasing health insurance, opening a checking account, or starting a job, we accept terms that are presented to us by a corporation. Some of these terms are things we might expect to see and are likely to be prominently presented—for example, the monthly premium for health coverage. But others are far more insidious. And we assent to many of these restrictions for things as simple as using a free app or clicking through to a webpage, and as serious as forfeiting our right to switch jobs, to seek legal recourse in court, or be free from arbitrary decision-making. Due to disparities in power and our limited time and capacity to review pages of font size nine, we typically do not agree to these contracts in any meaningful sense of the word, but, as legal scholar Margaret Jane Radin has written, merely acquiesce to them. In other words, the fine print dominates us all.
Yet, for the last century, and especially in recent decades, legal doctrine and education have painted a picture quainter than the domination model. The contract is characterized as a realm of freedom and choice, as if we all approached transactions with the power possessed by large and sophisticated corporations. Judges routinely decide cases based on the assumption that a critical mass of consumers, workers, and small firms review terms and shop around for a better deal. Take for instance Judge Frank Easterbrook, the prominent federal appellate judge and leading proponent of making policy based on neoclassical economic theory. Articulating the prevailing view of contract, Judge Easterbrook has described contractual terms as only one feature of a product, akin to its price or quality. Accordingly, he cautioned, courts should avoid depriving consumers of the right to choose the fine print that works best for them. The underlying belief there is that firms compete against each other on every level—including on contractual terms—to win over customers or workers.
With these assumptions as their foundation, courts generally resolve disputes by defaulting to the contracts between the corporation and the customer, or the employer and the worker. Rarely do they decline to enforce them, even under the most unfair of circumstances. In a case concerning a defective computer ordered by phone, Judge Easterbrook theorized how we can protect ourselves against contractual overreach even when we can’t see the terms in advance:
Shoppers have three principal ways to discover these things. First, they can ask the vendor to send a copy before deciding whether to buy. . . . Concealment would be bad for business, scaring some customers away and leading to excess returns from others. Second, shoppers can consult public sources (computer magazines, the websites of vendors) that may contain this information. Third, they may inspect the documents after the product’s delivery. . . . By keeping the computer beyond 30 days, the plaintiffs accepted Gateway’s offer, including the arbitration clause.