Contract As Disclosure II (Or Why I Keep Signing That Same Stupid Liability Waiver)

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.  

Comments

[John Brown's Body]

Students applying for law school should have to sign a waiver agreeing that they are signing up for a program which likely sets them up for a personality-destroying 3 years under the thumb of petty tyrants calling themselves professors and deans. They should also have to sign a waiver acknowledging that the legal job market has collapsed, and the chances of getting a legal job are at best 50-50. If you think your profession (a thieves guild) is immune to market forces, you are wrong.

You will all soon see just how wrong you are.

[Jeff Matthews]

Not even close. That is an analysis which fails because it puts too much emphasis on an assumption that the language is part of the bargain. It's not.

The reason consumers sign this kind of language is because they are busy. They don't have time to sit and read all the fine print and think about it. They tend to catch some main parts of the "bad" points here and there when they take their 5-second glance down the list of "what's included" before they sign. And when they see this stuff, they are still too busy and focused on closing the deal and moving on - they have to go buy groceries, pick up the kids, get back to work, etc. It's time to move on. They aren't going to stop and haggle. They aren't going to kill the deal and try to find something else somewhere else which provides the thing they want but without the onerous terms. That would require them to spend an inordinate amount of time trying to find a toaster without a warranty that limits remedies to repair and replacement.