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Abstract:
The growing popularity of e-commerce transactions revives the perennial question of consumer contract law: should non-salient provisions of consumer standard form contracts be enforced? With the focus presently on an ex-ante analysis, scholars debate whether consumers can and should read standardized terms at the time of contracting.

In today's information age, such a focus might be misguided. The online realm furnishes various tools, so-called Web 2.0 applications, which encourage the flow of information from experienced to prospective consumers. The article, therefore, reframes the analysis of online consumer contracts while taking into account this new flow of information. In doing so, we draw out several typical ways in which such information flows in the online realm, while addressing the role of search engines, blogs, message boards and social networks. The article also accounts for the major challenges to the success of such information flow: the motivations of both information providers and receivers, and the accreditation of the data which might be compromised both unintentionally and maliciously.

After applying the key law and economics and behavioral law and economics insights pertaining to consumer contracts to the new dynamic created by the online environment, we conclude that this online information flow will strengthen market forces' ability to generate a fair and balanced contractual equilibrium. We accordingly provide new policy recommendations that are better tailored to deal with online consumer contracts and thus limit the need for legal intervention in the market for consumer contract terms.

Contract Law, e-commerce, Law and economics, Behavioral law and economics, Blogs, blogosphere, Social networks, Information overload, Information flow, Consumer standard form contracts, Web 2.0, Asymmetric information, Online consumer contracts

Abstract:
The interdisciplinary contribution to the field of consumer standard form contracts is dominated by economics. Prominent law and economics scholars argue that economic analysis of consumer contracts leads to the conclusion that, by and large, there is no need to intervene in the market for contract terms as long as these contracts are offered in competitive markets. Yet, this Article seeks to demonstrate that the model which is employed to justify this anti-intervention approach is seriously flawed. Accordingly, relying on such a model can lead policy makers to reach unjust decisions.

In light of the inadequacy of market forces to reach equilibrium where efficient consumer form contracts are being drafted, it becomes clear that some intervention in the market for consumer contract terms is necessary. However, this inference should not imply that current main paths - regulation by legislatures and judicial control over the substance of consumer form contracts - provide cost-effective avenues. Unfortunately, as this Article illustrates, sometimes they are, but more often they are not.

Thus, this Article establishes that current approaches to consumer contracts do not provide a satisfactory solution to the problems that such contracts pose to traditional contract law. The immediate result of this failure is that sellers frequently incorporate inefficient and unjust contract terms in their form contracts. Consumers, therefore, are left without adequate protection.

Consumer contracts, asymmetric information, law and economics, marginal consumers, consumer law

Abstract:
Consumer contracts diverge from the traditional paradigm of contract law in various conspicuous ways. They are pre-drafted by one party; they cannot be altered or negotiated; they are executed between unfamiliar contracting parties unequal in their market power and sophistication; they are offered frequently by agents who act on behalf of the seller; and promisees (i.e., consumers) do not read or understand them. Consumer contracts are thus useful in modern markets of mass production, but they cast doubt on some fundamental notions of contract law.

To reframe the long-lasting debate over consumer contracts this Article develops a superior legal regime whereby sellers can obtain certification of a form contract by an independent third-party. Such approval may be viewed as a quality certification, akin to a Good Housekeeping Seal of Approval, for standard form contracts.

The many impediments to the design of such a project notwithstanding, its overall advantages are promising. The tension between the duty to read contracts and the common practice of signing consumer contracts without reading will be better reconciled. The adverse consequences of asymmetric information possessed by typical sellers and consumers will be obviated. This regime will also minimize sellers' ability to manipulate consumers' bounded rationality; increase social welfare by reducing transaction costs; diminish socially undesirable litigation over standardized contracts; make a notable step towards minimizing the alleged anomaly that punitive damage awards create in consumer contract cases; and promote market participants' autonomy by advancing trust between the contracting parties.

Consumer form contracts, appproval, contract law

Abstract:
Asymmetric information is a serious threat to the market of consumer standard form contracts. Yet, legislatures, courts, and market-forces do not provide an adequate solution to this threat. This Article argues that a considerable part of this failure is due to the fact that important and relevant social science insights regarding consumers' behavior is widely overlooked. This gap results in the prevalence of unfair or inefficient consumer form contract provisions. More profoundly, it entails that current approaches towards consumer contracts are fundamentally flawed and bound to reach erratic and sometimes unjust conclusions.

Cognitive biases and consumers' actual behavioral patterns should have an important role - descriptively and normatively - in the law of consumer contracts. This Article explains how psychological phenomena contribute (i) to consumers' tendency not to read form contracts even when by doing so they fail to maximize their utility; (ii) to consumers' inability to evaluate correctly contract terms once they do read them; and as a result (iii) to sellers' capability of manipulating consumers.

The end point of this discussion is twofold: First, it seeks to expand our understanding regarding the inadequacy of current approaches to consumer contracts and the harm that consumers are exposed to when actual behavioral patterns are ignored. Secondly, it provides policy makers with better insights as to the way in which contract law should design the alternative approach to consumer contracts.

Consumer standard form contracts, behavioral law and economics, law and economics

Abstract:
This essay examines intended consumer behavior in common contracting contexts. The first study in this essay focuses on the intent of consumers to read form contracts in four different scenarios. The second examines the extent to which prevalent rational-economic factors influence potential consumers in their intent to read form contracts. Our findings support some of the common assumptions found in the literature and contradict others. The findings from the first questionnaire support the assumption that most consumers do not read most of the contracts in their entirety at the time of contracting. However, they do not support the assumption found in some literature that a substantial minority of consumers read their contracts and thus might discipline sellers. The results also show that many more consumers indicate a tendency to read contracts after the fact. The findings of the second questionnaire show that at the time of contracting, the most prevalent rational-economic reasons for reading the contact are cost, length of contract and the prospects of influencing or changing contract terms. Cost and the chance to influence or change contract terms are also detrimental factors in consumers' intention to read form contracts after the fact, as is the opportunity to learn new things about their rights and obligations under the contract. Quite surprisingly, however, legal jargon, print density and font size are not key factors in consumers' decisions on whether to read their contracts. All these findings can serve policy makers and courts in better designing the law that governs consumer form contracts.

consumer contracts, consumer contracting behavior