Flytraps, Scarecrows, and the Transparency Paradox

Abstract

The vast majority of contracts today contain “boilerplate”—standard form contractual language prepared in advance and designed to be used over and over again. In practice, such boilerplate provisions are often written in such a way that few consumers can understand them. Therefore, courts and legislatures have developed various mechanisms to protect consumers against vague boilerplate provisions. For example, under the contra proferentem doctrine, ambiguous contractual provisions are interpreted against the drafter. In this Article, however, I argue that the existing law on boilerplate contracts fundamentally misunderstands the dangers inherent in vague boilerplate provisions. Moreover, I show that relatively modest changes to existing legal doctrines would go a long way in improving the protection of consumers.

Keywords: boilerplate contracts, informational asymmetry, unconscionability, deterrence, lemon markets

JEL Classification: K12, K22, D82, K0, K40