Boilerplate's False Dichotomy

Abstract

The argument against enforcing boilerplate contracts (contracts that no one reads) seems clear. Indeed, if this were a court case we would say that the jury is in; the evidence against boilerplate is overwhelming. Yet the judge has yet to render judgment. Courts continue to enforce boilerplate terms, and even those scholars who have exposed boilerplate as an emperor with no clothes are reluctant to gaze upon its nakedness and condemn its use.

This reluctance originates in an assumption that pervades the boilerplate debate—namely, that courts and commentators alike view boilerplate as necessary to the modern transaction. When asked to set boilerplate aside, then, they confront a dichotomy: either enforce boilerplate terms or wreak havoc on the consumer economy. When the choice is so presented, it is no choice at all. Living with boilerplate is better than living without mass-market commerce. We would rather be naked than dead.

This Article shows that the dichotomy is false. First, the Article establishes that it is possible doctrinally to sever boilerplate from other terms of the consumer transaction, such that the transaction can still proceed. Second, it demonstrates that the resulting transaction is theoretically feasible. When default rules take boilerplate’s place, the result is either no significant economic disruption or economic disruption that shakes things up in a positive way. Finally, it shows that this approach is empirically viable. I use a case study of boilerplate contracts from a real-world consumer purchase to prove that there is a realistic third option: the boilerplate-free transaction.

Keywords: Contracts, Boilerplate, Form Contracts, Information Costs, Contracts of Adhesion, Consumer Protection, Law and Economics, Severability, Default Rules, Penalty Defaults, Licensing, Warranties, Arbitration, Class Actions

JEL Classification: K12, K42