Rolling Contracts

Abstract

"Rolling contracts" are one method of presenting standard forms to contracting parties, including consumers, who are the focus of this paper. In a rolling contract, a purchaser orders goods and pays for them before seeing most of the terms, which come later in or on the packaging of the goods. The purchaser can return the goods for a limited time period.

This paper addresses the controversy over whether the new terms are part of the contract and enforceable against the purchaser. Although most analysts focus on when the contract is formed, this paper urges that this analysis yields little fruit. In fact, it is rather curious why analysts believe so much should turn on the question of whether the seller makes the terms available before or after contract formation when these writers also believe that purchasers do not read their forms either way. Instead, courts should focus on whether the new terms are conscionable. Because sending terms with the goods is not uncommon, and similar to many other terms-after-payment transactions, and because the purchaser has the opportunity to return the goods if the terms are undesirable, rolling contracts rarely should be procedurally unconscionable. On the other hand, courts should carefully peruse the terms to police them for substantive unconscionability.

Keywords: Rolling contracts, unconscionability, standard forms, standard terms

JEL Classification: K12