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Wednesday, January 16, 2019

How Do We Read and What Do We Understand of Digital Consumer Contracts?

Click-wrap contracts permit companies to contract with millions of customers, consumers, online users, and gig workers without negotiating with each party and without even verifying the contract was read. Uri Benoliel and Samuel Becher (who is also my recent coauthor on a different consumer law piece Poor Consumer(s) Law: The Case of High-Cost Credit and Payday Loans) have a new article on consumer contracts called The Duty to Read the Unreadable, in which they do very interesting empirical work to test whether consumer contracts are written in a way that dissuades consumers from actually reading them. They apply linguistic readability tests to the 500 most popular American websites that use online click-wrap agreements. The findings are striking, albeit perhaps not so surprising given everything we know about market power, consumer agreements, and contracts of adhesion: according to the article, effectively reading the contracts requires over 14.5 years of education.  They conclude that "lacking a clear and strong incentive to draft readable agreements, firms utilize unreadable texts as their contracts. By insisting on applying the duty to read in these cases, courts undermine notions of both fairness and efficiency." Really interesting for any scholar of contract law, consumer policy and digital deals.

Posted by Orly Lobel on January 16, 2019 at 06:34 PM | Permalink

Comments

You might find some of Adam Levitin's thoughts on consumer contracts and their unreadability interesting. Newish post at Credit Slips: https://www.creditslips.org/creditslips/2019/01/the-implication-of-reasonable-consumers-not-reading-contracts-of-adhesion.html

Posted by: Matthew Bruckner | Jan 17, 2019 11:31:11 AM

Important post indeed.Just worth to note:

In other states in the world,such contracts, are regulated and well inspected.One can find even,special tribunals,for confirming and dealing with such contracts,all for the sake of protecting the public. Here for example,in the Israeli state :

Standard Contracts Law, 1982

https://www.israelinsurancelaw.com/standard-contracts-law-1982/

Also, the issue is not really the amount of years of education.For,even if one would understand the complexity of the language,the point is the future potential implications or consequences of what is stipulated.In that one, even legal experts,even great sharks,can easily fall. For,life complicates the law, not vice versa.And I shall maybe later illustrate it clearly.

Thanks

Posted by: El roam | Jan 17, 2019 7:15:13 AM

Even those of us with more than 14.5 years of education find reading words on a smartphone screen a different experience than reading words on paper. Companies such as Facebook have spent tens of millions researching how to make text more readable on a small screen, and they've been surprisingly successful. They decline to apply their knowledge to the click-wrap contracts.

Posted by: arthur | Jan 16, 2019 10:06:36 PM

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