There have been three excellent posts on the JOTWELL contracts page since last we checked in there. Taking them in reverse order:
Nancy Kim (left) has a post, Click to Agree That Terms of Use Are Incomprehensible, which reviews Tim Samples, Katherine Ireland, and Caroline Kraczon, Berkeley Tech. L. J. __ (forthcoming 2023), available at SSRN, an interdisciplinary study of 196 agreements for 75 smartphone-based social platforms. Key takeaways: these TOUs operate on a massive scale, effecting billions of users; the platforms are attention-surveillance business platforms that “deploy addictive interfaces (also known as ‘dark patterns’) to maximize user engagement,” these platforms mediate almost every aspect of our daily lives, and the TOUs play a vital role in digital governance. And then here’s the best part, the TOUs are incomprehensible, which means that our classical doctrinal approaches to contractual assent, intent and reasonable expectation do not accurately describe what happens when we click “I agree.”
In February, David Hoffman (right) published Waivers Are Some Crazy Stuff, reviewing Keith Hylton, Waivers (2022), available at SSRN. When you are done worrying about TOUs, you can start worrying about waivers, which are not exactly contracts, as they are unilateral and require no consideration, they are easily created and often easily reversed, they are subject to varying rules across jurisdictions, and they are ubiquitous. Professor Hylton provides an economic analysis of the law of waivers, acknowledging the concerns sounding in consumer protections about boilerplate waivers but argues that waivers are nonetheless welfare-enhancing and result from consumer choices about the goods and services they purchase even if consumers do not know what they have waived. Professor Hoffman recommends Professor Hylton’s work because it is relevant to a general defense of boilerplate contracting, and it is short and relatively free from economics jargon.
Finally, in January, Daniel Barnhizer (left) posted Perceptions and Reality, reviewing J.J. Prescott and Evan Starr, Subjective Beliefs about Contract Enforceability __ J. Legal Stud. __ forthcoming 2023, available at SSRN. As presented by Professor Barnhizer, the article is an application of Roscoe Pound’s observation of the divergence form law on the books and law in action, addressing the divergence between parties’ perceptions of contract enforceability and legal doctrine. The article proposes ways to bridge that divide in the realm of employment agreements. The authors note at the start that non-compete clauses abound and influence mobility in states where they are unenforceable. According to the authors, 70% of employees in such states believe incorrectly that the non-compete clauses are enforceable. But educational outreach may affect their willingness to switch jobs notwithstanding the unenforceable non-competes.
So, to summarize these state of the world based on these three articles: terms of service and other boilerplate contracts, which might include waivers, are ubiquitous, powerful, and bind consumers who have not read and could not understand their terms. They shape real-world behavior regardless of their enforceability. But economic theory suggests that they may just reflect our preferences and are generally welfare-enhancing.
