I am in Montreal at the Association of American Law Schools (AALS) Mid-Year Meeting. This year the topic is Exploring the Boundaries of Contract Law. These sessions are being held at the same time as an AALS Conference on Commercial Law at the Crossroads. This morning we are welcomed by Bill Hines, the AALS President followed by an introduction by Robert Hillman of Cornell and Dan Keating of Wash U. Both are on the planning committee for the conferences.
I have never live-blogged a conference before, so I may lose interest and stop. The question is whether the readers of this blog lose interest in a conference on contract law before I lose interest in blogging about it. Because I could not access the wireless network in the meeting room, I am uploading this post from my hotel room during the break. For this reason I do not have time to correct any typos or add links.
We start with a joint session between the contracts and commercial law groups. Bob Hillman-–a contracts professor–starts by saying he did not realize he was going to be addressing the commercial law group when he wrote his introduction, so he welcomes those of use who teach the first and second most interesting courses in the curriculum. I agree that contracts is a wonderful course to teach. It is chocked full of classic cases with wonderful fact patterns—pregnant cows, carbolic smoke balls, hairy hands—hard but discernable rules of law, and the challenge to theoretically understand them. It invokes important moral issues such as whether surrogacy contracts should be enforced, and whether the specific enforcement of labor contracts amount to slavery.
Now Dan Keating is doing his welcome. He mentions that the last time we had such a meeting on contracts was 15 years ago. He remembers rubbing shoulders with the greats, like E. Allan Farnsworth who, sadly, died this year. For me, Allan was not only an intellectual giant, he was a charismatic person whose absence at this conference will be missed.
The first panel is on “Modern Adhesion Contracts: Clickwrap, Browsewrap and Shrinkwrap.” The panelists are Bill Whitford (Wisconsin), Clay Gillette (NYU) and Juliet Moringiello (Widener). I have known both Bill and Clay for many years, so I am particularly interested in hearing what Juliet has to say, as I have never heard her speak before. [Click show to read rest of post.]
Bill Whitford’s talk is about the ProCD v. Zeidenberg (86 F.2d 1447 (7th Cir. 1996). This case involved the enforceability of a shrink wrap agreement that limited the use of the Pro-CD database to noncommercial uses. Pro-CD made a program in which you could look up anyone’s phone number and address in the US. This was a valuable program to have before lookup services on the internet. I bought one myself. ProCD priced the program very low for personal use and much higher for those who would use it commercially. Zeidenberg bought the program for the low price and used the program commercially. When sued by ProCD, he questioned the existence of his assent to the form terms in the contract that was included in the box. In an opinion by Frank Easterbrook, the 7th Circuit found that the form terms were enforceable. (At least these are the facts as I recall them. Whitford did not summarize the case as he assumed we all knew it.)
Whitford’s claim is that the decision on ProCD is “judicial activism.” He considers “judicial activism” to be law-making by judges and he starts by saying that sometimes it is proper and other times not so the issue is when there ought to be activism and when there should not be. He starts with the claim (assumption) that contract law rules should ordinarily be made by legislatures. But often there is legislative inertia against acting. His claim is that the goal of judicial action ought to be to get legislatures to act to address a problem. As the problems of “delayed term” transactions was already being addressed by the legislature, there was no need for the courts to get involved. Because it gave business a victory in ProCD, it had the effect of moving business to oppose new legislation to handle the problem rather than support legislation so it had the effect of shutting down the legislative process, What it should have been doing was protect the one-shot players (consumers) from repeat players (businesses). Here it did the reverse. My reaction: So “activism” is OK if it spurs legislation that assists consumers, and not when it serves to assist business (and thereby block consumer protection legislation). Got it.
Clay Gillette is up now discussing form contracts. He questions the underlying assumption that unregulated markets will necessarily exploit consumers by using one-sided form contracts. He notes that the inability of business to distinguish between those who read form contracts (like the buyers from NYU) from nonreaders (like him), will lead them to give more favorable terms to him so as not to lose the business of NYU.
On the other hand, readers of form contracts may not share the same interest as nonreaders, so the terms they get won’t serve the interests of nonreading buyers. For example a large buyer might have enough economic clout to get after-warranty service not included in the form terms when an individual buyer would be out of luck. Even if there are pro-seller terms, however, does not mean that contracts are pro-seller on balance. The real issue is whether the contract as a whole is on balance pro-seller. What matters for fairness is that the contract as a whole be sufficiently balanced.
He also notes that proseller contracts allow sellers to give breaks to deservingbuyers–the way businesses give refunds to deserving consumers when reserving the right not to, while being empowered to deny refunds to customers who they think are abusing the process in some way. This was a point made by Lisa Bernstein of the University of Chicago (and my former collegue at BU) is her contracts scholarship.
His plea is not to say that standard form contracts are good or bad, but to be more sensitive and to exactly who is really benefitted or harmed by form contracts. With respect to the form contracts in which the terms come later, he notes a study that in an industry in which some offer their terms in advance and others offer them later, the “terms later” contracts are no more pro-seller than those in which the terms were supplied earlier.
He closes by asking whether courts are in a good position to tell the difference between good terms and bad terms, much less good overall contracts from bad ones. If they cannot, then we should be wary of courts intervening to alter the terms of a contract–even form contracts. Note that Gillette’s use of judicial activism differs from Whitford’s. For him judicial activism is interfering with individual contractual agreements, For Whitford, it was interfering with the legislative process.
Juliet Moringiello is next and she is using a powerpoint presentation. She is focussing her talk on teaching form contracts. That was apparently supposed to be what the panel was supposed to be about, but both Whitford and Gillette’s talks were more about the merits of form contracts.
Moringiello uses the teaching of on-line form contracts as illustrating the objective theory of contracts. This is the theory by which people are held to be bound by what other reasonably believed they meant, as opposed to what they subjectively may have intended. (Think the difference between original public meaning and the original intentions of the framers.)
She is now illustrating how a “click wrap” agreement works by using slides of a transaction on USAir website. She is showing how the USAir website makes you click that you agree to its terms before letting you finish the transaction. She is now illustrating “browse wrap” agreement on a hotel reservations website. At the bottom of the page is a link to a different page that contains the terms of use of the site and that says that by using the site you are agreeing to the terms. Unlike the USAir website, there is not need to affirmatively indicate your assent before purporting to enter into a binding agreement. She then goes on to very cursorily describe how courts treat clickwrap v. browsewrap agreements. Apart from the slides she uses, there is not too much that is helpful here for teaching this material.
As someone who teaches contracts, I found all three presentations to be remarkably superficial. To be sure, each discussed insights that we do and should teach our students, but all this should have been old news to an audience consisting of contracts professors. (This is all covered, for example, in the latest edition of my contracts casebook so any professor using the casebook would be well aware of these issues.) Although all three presentations were engaging, and each presented a view worth considering, so far at least anyone familiar with the basic contract theory literature would have learned nothing new. Perhaps this is a conference for professors not so familiar, but why would such unengaged professors come all the way to Montreal during the summer. And had anyone been unfamiliar with these ideas would have had a hard time grasping the very brief summary of these ideas in these presentations.
In short, all that was said was thoughtful, but too truncated for anyone completely unfamiliar with them and also too superficial for anyone who is already familiar with the underlying positions they summarize.
During a brief interaction among speakers, Clay questions the use of “judicial activism” to describe when courts are enforcing the parties agreement. He also questions the theory that judges should adopt rules that operate as a check on organized interests. He notes that consumer groups are pretty organized and it is hard to see that their interests were not represented in the political process governing form contracts. He thinks that courts should focus on enforcing contracts rather than putting the thumb on the scale of the legislative process.
All this makes me wonder about the value of these sorts of academic conferences. While undoubtedly beneficial for networking with others in your field. Yet even in this program with excellent speakers on an interesting topic, I think little is accomplished. Hopefully, however, this summary of the session will be of interest to nonlegal readers who are unfamiliar with these sorts of issues of contract law. And for law students, you have a better idea of where some of your professors are this week.
Now it’s time for discussion from the floor. Mark Lemley of Stanford asks the panel what is left of assent under the cases allowing the enforcement of click wrap and especially browsewrap agreements. Juliette agrees entirely with browsewrap agreements. (I tend to agree as well that there is a difference between clickwrap and browsewrap agreements. The formality of being made to click assent is significant, even if one is assenting to standard form contracts. With browsewrap agreements, no such formality exists.)
Peggy Radin, also of Stanford, says she preaches damage control by telling people that the ProCD case is not the law everywhere in the US. She also distinguishes the case from situations where when there is no price discrimination between consumer and commercial uses, a factor that Judge Easterbrook emphasizes in his opinion in ProCD.
Jean Braucher, of the University of Arizona, make a point concerning another form contract case, Hill v. Gateway, in which the 7th Circuit upheld the enforceability of a form contract shipped with a computer ordered over the phone. Jean notes that Gateway now charges a 15% restocking fee for returning the computer if you reject the terms in the form contact included in the box when you buy it. What is left of assent? Left-contracts professors have made the rolling contract a big issue. For professors who style themselves to be “antiformalists” they put an amazing weight on the offer-acceptance model of mutual assent in objecting to the terms later approach.
Next up is a panel on Contract and Intellectual Property.
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