Hidden Contracts

Abstract

Transparency is a promising means for enhancing democratic values, countering corruption, and reducing power abuse. Nonetheless, the potential of transparency in the domain of consumer contracts is untapped. This Article suggests utilizing the power of transparency to increase consumer access to justice, better distribute technological gains between businesses and consumers, and deter sellers from breaching their consumer contracts while exploiting consumers’ inferior position.

In doing so, this Article focuses on what we dub ‘Hidden Contracts.’ Part I conceptualizes the idea of hidden contracts. It first defines hidden contracts as consumer form contracts that firms unilaterally modify and subsequently remove from the public sphere, despite being binding on consumers. Thereafter, the Article delineates the considerable social costs of hidden contracts.

Given these social costs, Part II discusses our empirical study of hidden contracts. The results of this study indicate that leading firms that supply goods and services online to billions of consumers worldwide routinely employ hidden contracts to the detriment of consumers and society. Against this background, Part III proposes introducing a novel contract transparency duty. It further explains how to design this duty to counter firms’ incentive to employ hidden contracts. Next, Part IV tackles key objections to our proposal. Concluding remarks follow.

Keywords: access to justice; consumer activism; hidden contracts; inefficient breach; internet archives; reputational constraints; technological divide; transparency duty; unfair practices