Boilerplate Symposium IX A: Kim Krawiec on Contracts as Disclosure, Part I
Kimberly D. Krawiec is the Kathrine Robinson Everett Professor of Law at the Duke University School of Law.
Thanks to Jeremy for inviting me to review Peggy Radin’s newbook, Boilerplate. Peggy’s work on contestedcommodities has hugely influenced my thinking about taboo trades, and Isuspect that her work on boilerplate will prove similarly influential, so I’mgrateful for this opportunity for early engagement.
Let me start by explaining my contention that disclosure isa helpful parallel through which to view Peggy’s theories on the shortcomingsof boilerplate.
First, as Peggy definesboilerplate, we are talking about take it or leave it contracts. There is no dickering over terms, nonegotiation: if the consumer doesn’t like the offered contract, then the onlyremedy is to refuse to purchase the packaged product that includes some good orservice, along with the accompanying boilerplate. This “take it or leave it”nature of boilerplate does not necessarily harm consumers as a group, however, providedthat they have agreed to give up those rights in exchange for a lower purchaseprice.
This leads to the second relevantinsight from the disclosure comparison: there is a large literature regardingthe extent to which disclosure can protect (and harm) even consumers who areignorant of the disclosure, by impacting price. Third, and relatedly, there isa large literature regarding the conditions under which we cannot expect marketprices to accurately reflect all of the available information about a product. Fourth,and finally, Peggy does not propose more or better disclosure as the solutionto boilerplate, but instead proposes a substantive regulation of contract terms– what is often referred to within securities law as “merit regulation.” Meritregulation forms the basis of many state blue-sky laws, in contrast to federalsecurities law, which is historically disclosure based. Thus, at least some of the debates betweenboilerplate “autonomists” and “apologists,” to borrow OmriBen-Shahar’s phrasing, have also been addressed in the numerous debates,dating back at least to the 1930’s, on merit-based versus disclosure-basedsecurities regulation.
Peggy’s contention (to oversimplify, as is so frequentlynecessary in Blog World) is that we cannot infer from the widespreadpersistence of a particular boilerplate term that consumers have chosen itthrough their willingness to buy the product/service + boilerplate bundle at agiven price. Instead, we must treat itas a case of potential market failure. So,what might lead to this market failure? I want to illustrate one possibility – and highlight some unansweredquestions that I think Peggy and other boilerplate autonomists need to address– using the example of a fairly common exculpation clause used by tour groupoperators.
If you’ve taken almost any type of organized tour or activevacation and bothered to read the liability waiver that you were almostcertainly asked to sign, then you’ve seen an agreement similar to the one I’veincluded at right limiting the tour company’s liability for theirnegligence involving pretty much everything from a bad hotel room to your deathfrom falling into an active volcano. Suchwaivers are ubiquitous, varying only slightly in their particulars.
And I have signed one every year for over a decade. Why? Well,the simple answer is that I have no choice, given that I want to participate inorganized adventure travel and all tour companies have a similar waiver. But that’s too easy. The real question, as Peggy acknowledges, iswhy, if this is a term that consumers value, a competing adventure tour companyhas not arisen to offer a similar tour experience without the offendingboilerplate language, potentially at higher cost? I’ll venture an answer in my next post.
[Posted, on Kim Krawiec’s behalf, by JT]