The second half of my review of Peggy Radin’s new book on boilerplate has now been posted over at ContractsProf. (Part I is here.) In this second post, I use the example of the boilerplate at top right to analyze some of Peggy’s explanations for market failure in the case of boilerplate and dismiss most of them as inapplicable to this particular example, at least based on my own experiences over the years with these sorts of waivers and the people who sign them. These are people who, in my experience, are more than capable of understanding the short and rather simple waivers at issue here, they do read the boilerplate and frequently discuss it with each other, and though they may underestimate some risks, they may overestimate others. In short, these people are like me – in fact, they are me, and we sign these waivers year in and year out. Why?
As I explain over at ContractsProf, one possibility is that Peggy has correctly identified a case of market failure. This is not because these consumers are intimidated by contracts or fail to read or understand them, but because the multi-factor evaluation in which consumers must engage to fully assess the price-product-contract package is a complex task of the type that most of us are not very good at. But I am not sure that this concession bodes well for Peggy’s proposed solution. Because if this multi-factor evaluation is a complex task for consumers, it is a complex task for lawmakers as well.
Which brings us to another possibility for why consumers such as me keep signing these onerous boilerplate contracts. As I explain in the post:
If calculating the optimal trade-offs among price and the numerous other elements of the product/service + boilerplate adventure tour package is decisionally complex for experienced consumers of travel services, then it is difficult for courts and lawmakers as well. Perhaps the legislature was right in crafting a default rule placing liability for negligence on the tour operator, in the hopes of creating incentives for such tour operators to exercise care before putting their clients at risk. And perhaps consumers are mistaken in signing away those rights, thus “deleting” rights thoughtfully granted by the legislature. Peggy places a high value on democratically-generated rules such as these, and demonstrates more faith in such democratic processes than in market ones.
Perhaps she is right. But, perhaps, the legislature simply got this one wrong. Perhaps consumers believe that there are cheaper and more effective mechanisms for differentiating trustworthy and careful adventure tour operators from untrustworthy and negligent ones. Perhaps consumers have quite rationally concluded that firm reputation; their own repeated positive experiences with a particular operator; the prior impressions of friends, neighbors, and other experienced travelers; and third parties, such as travel insurance companies, all have helped them to choose a tour operator whose risk of negligent operation is – if not fully controllable – at least tolerable, given the price paid.
Read the whole thing here.