A Negotiated Instrument: Proposing a Safer Contract for Consumers (And Not Just a Smarter One)

Abstract

In this piece, I propose a new standard for determining what constitutes assent, as a matter of contract formation, within the domain of electronic consumer contracting. In my formulation, the threshold test should reject the “take-it-or-leave-it” arrangement dominant in the marketplace and reified by recent proposals before the American Law Institute (“ALI”) under the moniker “blanket assent.” It should do so in favor of a default rule that would require any electronic form proposing contract terms to permit at least a minimal amount of negotiation around terms seeking waiver of rights from consumers. It proposes this rule as a more acceptable behavioral proxy in determining whether the manifestation of mutual assent standard applicable to all contracts performed by competent contracting parties is met, as a matter of contract law. Requiring negotiation and negotiability from forms will go further than the current “click-through” baseline does to cure the current problem of consumer incapacity widely recognized (though not widely named) in the consumer marketplace. It is that disturbingly debased status that defines the plight of the consumer in the modern consumer contracting domain (a point I make in a related, earlier piece). I argue that technology has advanced to such an extent that the absence of greater negotiability can no longer be defended with regard to electronic forms. I use, as an example of this technology, the life of a wager from the online sports gaming business to make the point. Given what this gaming technology demonstrates, we are now able to see how technology may facilitate ever greater consumer interface around pricing, risk taking, risk prediction, and active choice, in relation to qualitative events, features and outcomes, online. I use this technology, in conjunction with contract law, and norms from tort law, to argue that a recent decision by the Massachusetts Supreme Judicial Court analyzing Uber’s electronic form, should demand more from sellers than the “click-through” option the Court appears to set, as a baseline, for accomplishing assent with regard to electronic consumer contracting formation.

Keywords: Contracts, Capacity, Assent, Gaming, Technology, Blanket Assent, Consumer Contracts, Negotiation, Consumer Protection

JEL Classification: K12