The Duty to Make Contracts Understandable

Abstract

So what if consumers can't understand contracts? They don't read contracts. They can't negotiate contracts. All their contracts have the same unfair terms. And nowadays businesses use algorithms, artificial intelligence, and social scientists to craft individualized contracts that hack consumer's minds. Choice is an illusion. Consumer understanding is a pipedream. Even so, contracts should still be understandable. The opportunity to understand a contract is essential to contract formation's integrity. While much contract literature focuses on how nonnegotiable contracts cause consumers to make bad deals, this Article challenges the concession that a deal has been made. Contract formation requires consumers have an opportunity to read the contract, which in turn requires consumers have an opportunity to understand what they read. Even if consumers do not exercise this opportunity, and even if exercising that opportunity only reveals how unfair the contract is, this opportunity must exist. The Article proposes the Uniform Law Commission pass a statute requiring consumer contracts to be understandable to the average intended consumer. Such a law benefits sellers and consumers alike, removes the biggest and oldest impediment to contract innovation (lawyers), incentivizes using machines and science to improve contracts, and might just save transactional lawyers from having their jobs poached by technology. I. Why Consumer Understanding Matters to Contract Law .

Keywords: consumer contracts, contracts of adhesion, contracts, plain language, plain English, duty to read, smart readers, legal design, understandable, comprehensible, readable, readability, artificial intelligence