Personalizing Mandatory Rules in Contract Law

27 Pages Posted: 11 Jun 2018 Last revised: 23 Aug 2018

Omri Ben-Shahar

University of Chicago Law School

Ariel Porat

Tel Aviv University; University of Chicago - Law School

Date Written: May 23, 2018

Abstract

Mandatory rules provide people minimum contractual protection they might otherwise fail to secure. Because people vary in the degree of protection they need and the cost of protection they can afford, one-size-fits-all rules are too weak for some and too strong for others. This article examines the case for personalized mandatory protections. With the increasing availability of information about consumers, the law may soon be able to tailor mandatory protection that that vary with each individual's characteristics. We show that personalization increases the overall contractual surplus and prompts more people to enter into contracts. It eliminates cross-subsidies within a class of contractors, but mostly in a way that benefits the class. The article examines the case for conjoined price personalization to reflect the varying protections people receive. It also explores potential distortions, pitfalls, and practical problems arising from personalized mandatory rules and prices, and discusses the fairness of this regime.

Keywords: Mandatory Rules, Personalization, Big Data, Consumer Protection

Suggested Citation

Ben-Shahar, Omri and Porat, Ariel, Personalizing Mandatory Rules in Contract Law (May 23, 2018). University of Chicago Law Review, Forthcoming; University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 855; U of Chicago, Public Law Working Paper No. 680. Available at SSRN: https://ssrn.com/abstract=3184095

Omri Ben-Shahar (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

Ariel Porat

Tel Aviv University ( email )

Ramat Aviv
Tel Aviv 69978, IL
Israel
972-3-6408283 (Phone)
972-3-6407260 (Fax)

HOME PAGE: http://english.tau.ac.il/profile/porata

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

HOME PAGE: http://www.law.uchicago.edu/faculty/porat

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