Unilateral Reordering in the Reel World

Abstract

This essay, written for a symposium on Larry Cunningham’s new book, Contracts in the Real World, proposes there is much to learn about contract law from how contract negotiation and modification are portrayed in the “reel world” of movies and television. While many examples of contract drafting in the reel world perpetuate the notion that contracts are negotiated on arm’s length, and reliable over time, in reality most consumer contracts are one-sided boilerplate affairs with terms that consumers can take or leave. Many boilerplate contracts now include unilateral reordering clauses that empower the drafter to change the deal as is sees fit.

While boilerplate is often defended as an efficient option for consumer contracts, recent representations of unilateral reordering in movies like The Empire Strikes Back and television shows like South Park help expose the inefficiency of unilateral reordering. Unilateral reordering clauses worsen problems with consumer consent and undermine the cost-saving rationale that undergirds many economic justifications for enforcing boilerplate. While a prophylactic bar against unilateral reordering clauses may be the most efficient correction, this essay proposes two other improvements to the status quo. First, we might consider a “two-price” rule, requiring sellers to offer two “versions” of the product – with and without a unilateral reordering clause – to help consumers price the cost of a unilateral reordering clause when the contract is formed. Second, we might impose a “perceived value” requirement that would treat as enforceable only those modifications made pursuant to a unilateral reordering clause that included some direct, perceptible benefit to the consumer.

Keywords: Change of Terms, Lawrence Cunningham, consideration, modification, boilerplate, contract law, consumer, law and economics, Star Wars, Darth Vader, South Park, Apple, iTunes

JEL Classification: K12, K10, D12, D18