ABSTRACT
This chapter is about the distributive impact of boilerplate contracts. Specifically, this chapter scrutinizes the role that Consumer Unfriendly Terms (hereinafter ‘the CUTs’) play in the distribution of wealth and risk in consumer society, including e-commerce. It nuances the view dominant in some sectors of legal scholarship, according to which it is the least affluent consumers who benefit from the lack of regulation of standard terms (as the prices are lower, and more people can afford the product). The chapter argues that such an account ignores the fact that the poorest consumers – unlike the affluent middle class – often do not have the ability to internalize future damages, should an accident occur.
Consequently, regulation of boilerplate contracts, guaranteeing consumers a right (and the factual ability) to seek damages (by, eg, voiding clauses excluding liability for torts or class action waivers) could be seen as a mandatory, collective ‘insurance’, where all consumers chip in a little for the benefit of the future injured party. The current situation in the American contract law, ie, the validity and enforceability of the CUTs, works in the opposite direction – we all pay a slightly lower price while accepting that once someone gets injured – and someone will get injured – their chances of taking a dispute to court and being compensated are lower than if the default rules were not contractually modified. The problem is that, for some, this will be just a minor nuisance, while for others, it might be a life-ruining event ….
Pałka, Przemysław, Distributive Consequences of Regulating Boilerplate: Between Price Effects and Socialization of Risk (December 30, 2022) in The Inframarginal Revolution: Markets as Wealth Distributors (Ramsi A Woodcock, ed, Cambridge University Press, 2023).
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