Sneak in Contracts

Abstract

Consumer contracts are a pervasive legal tool that governs much of our daily activities. In spite of – or perhaps due to – their ubiquity, consumer contracts are routinely modified by businesses after being accepted by consumers. Common modifications include, for example, a change in fees, alteration of a dispute resolution clause, or a revision to the firm’s privacy policy. In fact, unilateral modifications can address virtually every aspect of a contract.

While the literature widely discusses the problem of ex ante consent to consumer contracts, it does not properly recognize the problem of ex post consent to unilateral modification. Yet, the practice of unilateral change in consumer form contracts comes with significant detriments and social costs. In spite of these costs, there are no systematic empirical studies exploring this phenomenon. The Article aims to fill this gap by empirically examining the frequency, the mechanics and the degree of transparency of unilateral change mechanisms in consumer contracts.

This Article examines 500 sign-in-wrap contracts of the most popular websites in the U.S. that use such agreements. We find that the vast majority of consumer contracts in our sample are "sneak in" contracts. That is, they allow firms a unilateral and broad discretion to covertly change consumers' rights and obligations after being accepted by consumers. The findings of this study raise concerns as to whether sneak in contracts are aligned with some of the prominent core values and principles of contract law, such as consent, promise, reliance, consideration, freedom, choice, empowerment and community. The study thus calls for the introduction of an underdeveloped principle in the law that governs the modification of consumer contracts: the principle of transparency. It then offers a set of concrete recommendations, which will allow policymakers and courts to exhibit a more developed, sound and effective approach to the problem of sneak in contracts.

Keywords: consumer contracts, modification clauses, sign-in-wrap contracts, empirical analysis, change-of-terms provisions, information asymmetry, informed consumers