The Faulty Foundation of the Draft Restatement of Consumer Contracts

Abstract

Professor Gregory Klass’s replication study of the Draft Restatement of the Law of Consumer Contract’s empirical analysis of privacy policies found troubling and pervasive problems with the Reporters’ coding of cases. We extended Professor Klass’s study with a replication of the coding of the two largest datasets supporting the Draft Restatement, those on the enforceability of unilateral contract modifications and those on the enforceability of clickwrap assent. For the replication, we reviewed 186 cases blind to the Reporters’ coding.

We found that nearly two-thirds of the cases in the unilateral modification dataset were irrelevant to the hypothesis tested by the Reporters. The irrelevant cases included business-to-business cases, vacated and reversed decisions, a duplicate decision, and cases determined on statutory grounds specific to credit card agreements. The remaining relevant cases were atypical, almost entirely involving enforcement of arbitration clauses, express contractual clauses permitting unilateral modifications, or credit card agreements.

Likewise, we found that nearly half of the cases in the clickwrap assent dataset were irrelevant to the Reporters’ tested hypothesis. The irrelevant cases included business-to-business cases, another duplicate decision, and cases with neither contracts nor clickwrap agreements. The overwhelming majority of the relevant cases involved the sui generis contexts of enforcement of arbitration clauses or forum selection clauses. Among such cases, we also found a materially higher rate of non-enforcement of clickwrap agreements than the Reporters found.

Based on our attempt to replicate the Reporters’ coding, we lack confidence that the Draft Restatement correctly and accurately “restates” the law of consumer contracts.