Dave Hoffman on Readability, Poorly Drafted Arbitration Clauses & the Irrelevance of Non-Competes

This will be a short post, intended simply to encourage people to check out Dave Hoffman’s Substack, Contracts’ Empire . His most recent post (for now — by the time this goes up, there may be a new one) covers three new articles. Professor Hoffman (below) does us a great service by calling our attention to this work. The works reviewed are empirical in nature, and Professor Hoffman has the empirical chops to provide excellent guidance on their importance. I will limit myself to a few quick comments

Professor Hoffman’s takeaway from Yonathan Arbel, The Readability of Contracts: Big Data Analysis, 21 J. Emp. Stud. 927 (2024), is that consumer contracts actually aren’t that hard to read. Professor Arbel (below) has crunched the numbers, and he finds that such contracts are not getting longer and are not particularly challenging. I am pleased with the latter finding, as it accords with my take on the plain-language movement, that the problem with contracts is not unnecessary obscurity, as noted most recently here, but their length and lack of bargaining power. And yet, there remains the problem that consumers do not know what they are agreeing to when they check boxes or sign form contracts without reading them (see, for example, Roseanna Sommers’ piece here, Andrea Boyack’s piece discussed here, and Jeff Sovern, Elayne E. Greenberg, Paul F. Kirgis & Yuxiang Liu’s Whimsy Little Contracts). I have noticed that online contracts now increasingly include hyperlinks to related agreements, multiplying the length and complexity of the agreements. It is not clear to me (after a quick perusal of Professor Arbel’s article) that he accounts for hyperlinks. Professor Hoffman offers his own solution to the empire of forms here. Someone should write a Substack about that.

Professor Hoffman next addresses David Horton, Forced Arbitration in the Fortune 500, Minnesota Law Review (forthcoming 2025). The big surprise here from Professor Horton (below) is that arbitration clauses, even those written by sophisticated parties, are badly drafted, often in ways that betray the interests of the drafters. Close readers of the Blog may find this unsurprising, given the scholarship we have discussed here, here, and here, most of which are authored or co-authored by Mitu Gulati, or are in conversation with him.

Finally, Professor Hoffman, discusses Takuya Hiraiwa, Michael Lipsitz, and Evan Starr, Do Firms Value Court Enforceability of Noncompete Agreements? A Revealed Preference Approach, Rev. Econ. Stat. 1 (2004). The key takeaway here is that firms don’t really care that much about non-competes, at least in the context of employees who earn somewhere around the $100,000 threshold.