Defeating the Empire of Forms

*William A. Schnader Professor, University of Pennsylvania Carey School of Law. Tara Martin-Chen, Abigail Kasdin, and J. Anes Sung provided extraordinary research assistance. Yonathan Arbel, Jane Baron, Samuel Becher, Bob Hillman, Jon Klick, Nate Oman, Gideon Parchomovsky, Guy Rub, Ari Shahdadi, Omri Ben-Shahar, and Tess Wilkinson-Ryan provided helpful comments, and I benefited from faculty workshops at Washington University School of Law, the University of Chicago Law School, and Yale Law School.Show More

For generations, contract scholars have waged a faint-hearted campaign against form contracts. It’s widely believed that adhesive forms are unread and chock-full of terms that courts will not, or should not, enforce. Most think that the market for contract terms is broken, for both employees and consumer adherents. And yet forms are so embedded in our economy that it’s hard to imagine modern commercial life without them. Scholars thus push calibrated, careful solutions that walk a deeply rutted path. Notwithstanding hundreds of proposals calling for their retrenchment, the empire of forms has continued to advance into new areas of social life: we now click to agree to more written contracts every few days than our grandparents did in their entire lives.

This Article argues that the swelling scope of the empire of forms is itself a social problem, and it demands both a new diagnosis and a structural reform. Forms are everywhere in our lives because we’ve brought them with us in our pockets, and on our devices. Contract law hasn’t changed to make forms more valuable; the cost of contracting has fallen to make them ever cheaper to distribute. This encourages their distribution even though they individually are less valuable to firms. All the while, cheap forms externalize too many harms and threaten important legal values which we should defend. What’s needed is a remedy that cuts off the supply of cheap forms at its source and returns us to a world with fewer written contracts. I offer that reform with a proposed state law: the statute of frauds flipped upside-down. It would make low-stakes written-form contracts, directed at either employees or consumers, simply unenforceable. I defend the statute against charges that it is worse medicine than the mass contracting disease it seeks to cure.

Introduction

Contract’s empire of forms, on a generations-long march, continues to conquer new territory. Not content with dominating the worlds of commercial law and finance, written contracts now govern the most common consumer and employment relationships. Everywhere we look, adhesive terms stare back: they control our lives at the market,¹ 1.See Uri Benoliel & Shmuel I. Becher, Termination Without Explanation Contracts, 2022 U. Ill. L. Rev. 1059, 1062 & n.14 (describing Amazon terms of use governing returns).Show More at school,² 2.See Serena Zhang, Students Are Expected to Follow the Campus Compact This Fall. Here’s What It Means, Daily Pennsylvanian (July 30, 2020, 1:04 AM), https://www.thedp.com/‌article/2020/07/campus-compact-explained-penn-fall-social-distanc‌ing [https://perma.cc/QD6E-2WQ2].Show More at work,³ 3.For a discussion of the role of arbitration agreements in employment contracts, see Alexander J.S. Colvin, An Empirical Study of Employment Arbitration: Case Outcomes and Processes, 8 J. Empirical Legal Stud. 1, 1 (2011).Show More on vacation,⁴ 4.See David A. Hoffman, Relational Contracts of Adhesion, 85 U. Chi. L. Rev. 1395, 1437–38 (2018) (describing Airbnb’s terms of use).Show More and online;⁵ 5.See Eric Goldman, Online User Account Termination and 47 U.S.C. § 230(c)(2), 2 U.C. Irvine L. Rev. 659, 659 (2012) (“An online provider’s termination of user accounts that facilitate user-generated content can be a major—and potentially even life-changing—event for users.” (footnote omitted)); see also Rory Van Loo, Federal Rules of Platform Procedure, 88 U. Chi. L. Rev. 829, 882 (2021) (discussing the necessity of online platforms having flexibility in their contracts with consumers).Show More they constrain our public law rights⁶ 6.See Alexandra Lahav, In Praise of Litigation 126–27 (2017).Show More and our private law duties;⁷ 7.When sued by a journalist who was banned from the platform for spreading misinformation about COVID, Twitter used its terms and conditions as part of its defense. Twitter’s motion to dismiss was denied. Berenson v. Twitter, Inc., No. 21-cv-09818, 2022 WL 1289049 (N.D. Cal. Apr. 29, 2022).Show More and they determine procedure we use to vindicate what’s left of both.⁸ 8.See generally David A. Hoffman, Whither Bespoke Procedure?, 2014 U. Ill. L. Rev. 389 (cataloguing growth in certain contract clauses controlling litigation).Show More Forms, assented to on our proliferating portable screens, have never been more dominant, nor perceived to be less morally legitimate.⁹ 9.See David A. Hoffman, From Promise to Form: How Contracting Online Changes Consumers, 91 N.Y.U. L. Rev. 1595, 1632 (2016) (describing age effects in views about morality of contracting).Show More

There’s a widely remarked consensus that there’s something rotten at the heart of form contracts. And yet the rise in the sheer number and subject matter of form contracts has received less comment than you’d expect. Commentators focus on the trees: contract font and length,¹⁰ 10.See Yonathan A. Arbel & Andrew Toler, ALL-CAPS, 17 J. Empirical Legal Stud. 862, 863 (2020) (discussing jurists’ emphasis on font).Show More readability,¹¹ 11.See Uri Benoliel & Shmuel I. Becher, The Duty to Read the Unreadable, 60 B.C. L. Rev. 2255, 2257 (2019) (testing readability of terms and finding them wanting).Show More firms’ monopoly power,¹² 12.Friedrich Kessler, Contracts of Adhesion—Some Thoughts About Freedom of Contract, 43 Colum. L. Rev. 629, 640 (1943).Show More and lack of meaningful assent.¹³ 13.See generally Margaret Jane Radin, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law (2013) (offering an extended critique of modern contract doctrine for permitting contractual obligation without real assent).Show More Above all, scholars bemoan bad terms. Each archetype form contract provision has developed its own (generally hostile) scholarly community: arbitration clauses,¹⁴ 14.See, e.g., Judith Resnik, Diffusing Disputes: The Public in the Private of Arbitration, the Private in the Courts, and the Erasure of Rights, 124 Yale L.J. 2804, 2804 (2015) (noting a connection between weak forms of consent and the expansion of arbitration’s theoretical reach and critiquing the subsequent loss of public law rights). But cf. Stephen J. Ware, The Case for Enforcing Adhesive Arbitration Agreements—With Particular Consideration of Class Actions and Arbitration Fees, 5 J. Am. Arb. 251, 254–57 (2006) (“[W]hatever lowers costs to businesses tends over time to lower prices to consumers.”); Alan Kaplinsky, Mark Levin & Daniel McKenna, Consumers Fare Better with Arbitration, Am. Banker (Dec. 23, 2014, 12:00 PM), https://www.americanbanker.com/opinion/consumers-fare-better-with-arbitration [https://perma.cc/VZP2-YQ2K] (arguing that arbitration benefits consumers and must be analyzed relative to the alternatives of court and class action litigation); Andrea Cann Chandrasekher & David Horton, Arbitration Nation: Data from Four Providers, 107 Calif. L. Rev. 1, 9 (2019) (finding repeat play effects for both plaintiffs and defendants).Show More class action waivers,¹⁵ 15.See J. Maria Glover, Beyond Unconscionability: Class Action Waivers and Mandatory Arbitration Agreements, 59 Vand. L. Rev. 1735, 1770 (2006).Show More damage limitations,¹⁶ 16.See, e.g., Debora L. Threedy, Liquidated and Limited Damages and the Revision of Article 2: An Opportunity to Rethink the U.C.C.’s Treatment of Agreed Remedies, 27 Idaho L. Rev. 427, 445 (1991) (discussing damage limitations).Show More stipulated remedies,¹⁷ 17.See Carliss Chatman, Twitter Wants to Force Musk to Buy It. But There’s a Hitch., Barron’s (July 30, 2022), https://www.barrons.com/articles/twitter-elon-musk-thirteenth-amendment-51659101363 [https://perma.cc/LD2Y-BBN4] (suggesting Thirteenth Amendment issues with specific performance).Show More choice of law,¹⁸ 18.See generally William J. Moon, Contracting out of Public Law, 55 Harv. J. Legis. 323 (2018) (discussing commercial contracts contracting out of legal regimes). But cf. Erin A. O’Hara & Larry E. Ribstein, From Politics to Efficiency in Choice of Law, 67 U. Chi. L. Rev. 1151, 1152–57 (2000) (arguing that choice of law clauses allow parties to mitigate the effects of inefficient substantive laws).Show More unilateral modification,¹⁹ 19.See Shmuel I. Becher & Uri Benoliel, Sneak in Contracts, 55 Ga. L. Rev. 657, 663 (2021) (suggesting that there are social costs to unilateral contract modification); Oren Bar-Gill & Kevin Davis, Empty Promises, 84 S. Cal. L. Rev. 1, 6 (2010) (articulating problems caused by unilateral modification clauses).Show More privacy policies,²⁰ 20.See Neil Richards & Woodrow Hartzog, The Pathologies of Digital Consent, 96 Wash. U. L. Rev. 1461, 1463 (2019) (criticizing notice-and-consent regime).Show More choice of forum,²¹ 21.See Tom Cummins, Shute: The Math Is Off, 8 J.L., Econ. & Pol’y 1, 1 (2011) (discussing the costs of choice of forum clauses).Show More social media behavioral controls,²² 22.See Benoliel & Becher, supra note 1, at 1061–62 (exploring termination of contracts in the context of social media).Show More nondisclosure clauses,²³ 23.See, e.g., David A. Hoffman & Erik Lampmann, Hushing Contracts, 97 Wash. U. L. Rev. 165, 220 (2019) (proposing a public policy defense to nondisclosure clauses).Show More and noncompetes.²⁴ 24.See, e.g., Orly Lobel, Knowledge Pays: Reversing Information Flows and the Future of Pay Equity, 120 Colum. L. Rev. 547, 557 (2020) (noting an increase in noncompete agreements); On Amir & Orly Lobel, How Noncompetes Stifle Performance, Harv. Bus. Rev., Jan.–Feb. 2014, at 26.Show More More rarely do scholars step back and consider the forest—what to do with the ballooning number of forms we must agree to simply to get through our lives.²⁵ 25.Cf. Omri Ben-Shahar & Carl E. Schneider, The Failure of Mandated Disclosure, 159 U. Pa. L. Rev. 647, 704–11 (2011) (using the hypothetical example of Chris Consumer to illustrate the omnipresence of disclosure a decade ago); Brett Frischmann & Evan Selinger, Re-Engineering Humanity 64 (2018) (coining the term “lollipop contracts” to describe contracts governing trivial affairs and suggesting that they exist only because transaction costs are low).Show More

Identifying, and solving, the many problems posed by mass contracting has preoccupied contract professors for the last hundred years, and it is this Article’s goal to take another whack at the thicket.²⁶ 26.The literature is vast. For examples of foundational works, see Nathan Isaacs, The Standardizing of Contracts, 27 Yale L.J. 34, 35 (1917); Karl N. Llewellyn, What Price Contract?—An Essay in Perspective, 40 Yale L.J. 704, 729–30 (1931); Kessler, supra note 12, at 629, 640; Karl N. Llewellyn, The Common Law Tradition: Deciding Appeals 370–71 (1960) (articulating reasonable expectations doctrine for the non-dickered fine print); W. David Slawson, Standard Form Contracts and Democratic Control of Lawmaking Power, 84 Harv. L. Rev. 529, 529 (1971). See also Ethan J. Leib, What Is the Relational Theory of Consumer Form Contract?, in Revisiting the Contracts Scholarship of Stewart Macaulay on the Empirical and the Lyrical 259, 259 (Jean Braucher, John Kidwell & William C. Whitford eds., 2013) (“One of the most puzzling and embarrassing facts about contract law and contracts scholarship in the United States is that neither has found a consistent way to treat the real contracts of our lives: standardized consumer form contracts.”).Show More It’s my premise that scholars have largely gotten the diagnosis wrong. Terms may sometimes be bad for adherents, and firms might well seek to opportunistically take slices of the pie that previously belonged to consumers and employees. But the real story of forms is, counterintuitively, how useless and wasteful their empire has become, for drafters and adherents alike. Written contracts have become omnipresent in our lives largely because technology has made legal assent too cheap to obtain.²⁷ 27.See, e.g., Nancy S. Kim, Contract’s Adaptation and the Online Bargain, 79 U. Cin. L. Rev. 1327, 1342 (2011) (“Given that digital terms are weightless, reproduction and distribution costs non-existent, and consumers highly unlikely to read online agreements, companies could add additional terms with no concomitant financial or reputational cost. Companies began using their online agreements to do more than contain costs and assess the risks of doing business.”).Show More In many cases, they are nearly zero-cost products, thrown into commerce without real thought about the benefits they bring firms, because technology made them an afterthought. Simply put, without our phones, iPads, and tablets, we wouldn’t see, or agree to, nearly so many written contracts: our swelling empire of forms is built on the portable screen.

It may seem obvious that the real foundation of contracts’ expanding empire is collapsing transaction costs.²⁸ 28.Cf. Lizette Alvarez & Jeri Clausing, Senate Passes Bill Allowing Online Contract-Signing, Pittsburgh Post-Gazette, June 17, 2000, at A-1, A-7 (“‘The bill revolutionizes the way consumers, industry and government conduct business over the Internet,’ said Sen. Spencer Abraham, R-Mich. . . . . ‘It is a tremendous cost-cutting tool because people and businesses can now enter contractual arrangements without having to drive across town, fly thousands of miles for a meeting or mail reams of paper back and forth.’”).Show More But that’s not the dominant account. Today’s scholarship looks at the hundreds of written contracts we each assent to in a year and assumes that they must benefit firms by enabling intentional exploitation. Scholars, having then suggested that contracting markets are evil, typically look to reform their content at the margins—focusing on improving mechanisms of consent, or invalidating certain clauses.²⁹ 29.One classic is Todd D. Rakoff, Contracts of Adhesion: An Essay in Reconstruction, 96 Harv. L. Rev. 1173, 1262 (1983) (arguing “invisible terms” in adhesion contracts should be presumptively unenforceable). I assume you think I am exaggerating above the line. But cf. Peter Linzer, Contract as Evil, 66 Hastings L.J. 971, 975 (2015).Show More But such marginal reforms have been notably ineffective at reducing the number of aversive terms in contracts. Even outright legislative bans of certain terms only depress their use, leaving consumers subject to being swayed by terms that would be unenforceable in court.³⁰ 30.See Meirav Furth-Matzkin, On the Unexpected Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market, 9 J. Legal Analysis 1, 24, 39 (2017) (cataloguing a sample of Boston leases and finding a large percentage of unenforceable terms which likely affected consumer behavior).Show More

Locating the problem in transaction costs, as I’ll show, motivates a distinct solution. Many firms use forms because it is nearly free to do so, expanding the use of contract into areas where it really has very little social value at all. This Article proposes a legislative response to this economic problem, which likely will strike you as more of a Swiftian modest proposal than it’s intended to be.³¹ 31.See Jonathan Swift, A Modest Proposal for Preventing the Children of Poor People in Ireland, from Being a Burden on Their Parents or Country, and for Making Them Beneficial to the Publick (1729).Show More Individual states could, and perhaps should, pass something like a reverse statute of frauds. The statute of frauds, as you may recall from your first-year contracts course, conditions enforceability on writing for deals of certain gravity of purpose—land, expensive goods, long-term service contracts, etc. I propose the converse: states should deny enforcement of a certain set of (mostly cheap) written contracts.

Under this reverse statute of frauds—which I’ll call the Statute Against Forms (or “SAF” for short)—for most goods and services contracts, there would be three legal regimes, tagged to deal value. At the lowest dollar amounts—say, $100 for goods and services contracts, or those paying less than $15 an hour—the only enforceable contracts would be oral ones. Then, for some class of contracts, including goods contracts between $100 and $500, the traditional floor for the statute of frauds, firms could either use written forms, or not, as they preferred. Finally, bigger contracts would be enforceable only when written, as has been the case for centuries.

The SAF would partially bring us back to the contracting world of 1980. Then, most of the products we bought regularly as consumers were governed by default rules of contract, not written forms.³² 32.There’s nothing necessarily simpler or more transparent about the default rule regime. See Omri Ben-Shahar, Regulation Through Boilerplate: An Apologia, 112 Mich. L. Rev. 883, 889 (2014) [hereinafter Ben-Shahar, Regulation Through Boilerplate] (“Regulation by boilerplates means that one web of terms collected from many sources of law (the legally supplied default provisions) is replaced with a fairly comprehensive but concise substitute (boilerplate). The boilerplate version appears more complicated, but this is a superficial veneer due to the fact that boilerplates reproduce the entire set of governing rules in print.”); see also Russell Korobkin, Bounded Rationality, Standard Form Contracts, and Unconscionability, 70 U. Chi. L. Rev. 1203, 1205 (2003) (explaining the alternative to form contracts is imposed legal defaults).Show More Employment law, too, was largely governed by unwritten defaults.³³ 33.See infra text accompanying notes 83–86; cf. Rachel Leiser Levy, Judicial Interpretation of Employee Handbooks: The Creation of a Common Law Information-Eliciting Penalty Default Rule, 72 U. Chi. L. Rev. 695, 701–02 (2005) (outlining the history of courts’ treatment of employee handbooks).Show More Nostalgia, like paranoia, isn’t always wrong: the past default contracting world was better for most of the people who operated in it. Not only did it avoid the tyranny of unread forms that has consumed contract scholarship of late, but the rare written contracts we saw had more moral weight and heft.³⁴ 34.There is evidence that younger citizens increasingly treat contracting itself as a sort of low-stakes joke, driven by increasing exposure to online forms. See Hoffman, supra note 9, at 1597–98. Eroding contracting’s symbolic power puts pressure on other doctrinal rules deeply embedded in contract law. Cf. Tess Wilkinson-Ryan, David Hoffman & Emily Campbell, Expecting Specific Performance 13 (Inst. for L. & Econ., Research Paper No. 23-05, 2023) (noting that expectation damages under-compensate by leaving out the cost of moral harm). The empire of forms thus poisons real negotiated agreements, overall increasing the need for state enforcement.Show More

The SAF also has a singular practical advantage over competing reform proposals. The Federal Arbitration Act has defeated policymakers’ attempts to regulate form contracts twice over.³⁵ 35.See 9 U.S.C. §§ 1–16, 201–208, 301–307.Show More First, it prohibits attempts to differentially police arbitration clauses, depriving states of the ability to argue that enforcement in public courts is necessary to vindicate particular rights. It also makes it difficult to develop common law defenses to particular contract terms, as increasing numbers of disputes happen in arbitral forums, which aren’t just private: they are ill-disposed to innovate around terms, or processes of formation.³⁶ 36.Cf. Samuel Issacharoff & Florencia Marotta-Wurgler, The Hollowed Out Common Law, 67 UCLA L. Rev. 600, 607–08 (2020) (illustrating the decline in state-made common law doctrine).Show More The SAF will avoid this two-pronged attack, as the growth of arbitration is primarily a phenomenon of increasing adoption of cheap contracts. Eliminate those written forms for certain kinds of goods and services, and more disputes will end up litigated in court. Thus, the SAF offers a practical legislative solution that states could use to reduce arbitration’s reach and revitalize public and private rights.

That said, I face a steep uphill climb in convincing you that we should simply eliminate whole classes of employee and consumer forms. A world without certain written contracts is potentially socially disruptive. It’s not necessarily better for all individual adherents. And notably, eliminating forms won’t generate more formal legal autonomy, since the defaults that law provides us are just as adhesive as those that we click to agree to.³⁷ 37.Ben-Shahar, Regulation Through Boilerplate, supra note 32, at 888–89.Show More But I’m going to try to convince you that omnipresent, cheap forms have cost us dearly.³⁸ 38.For a general account of externalities and non-parties in contract law, see Omri Ben-Shahar, David A. Hoffman & Cathy Hwang, Nonparty Interests in Contract Law, 171 U. Pa. L. Rev. 1095, 1110–12 (2023); see also Oren Bar-Gill & Elizabeth Warren, Making Credit Safer, 157 U. Pa. L. Rev. 1, 52, 56–57 (2008) (“[D]ata on credit card choice and use show that consumer mistakes cost hundreds of dollars a year per consumer. . . . The aggregate costs are staggering.”).Show More This presents a novel social problem on two levels.

Many form contracts we click to agree to today, on the margin, erode public goods, from safety to equality. They do so even where parties themselves arguably benefit from the form. In fact, perhaps it’s because adherents prefer to make contractual tradeoffs that this problem has proven so wicked.³⁹ 39.Cf. Salomé Viljoen, A Relational Theory of Data Governance, 131 Yale L.J. 573, 598–600 (2021) (noting the gap between individual and social values in privacy); Frischmann & Selinger, supra note 25, at 78 (noting that adherents are perfectly rational maximizers).Show More Externalities are rife even for terms that courts deem unenforceable, as people respond to the contracts they read, not the ones that would stand up in court.⁴⁰ 40.See Meirav Furth-Matzkin & Roseanna Sommers, Consumer Psychology and the Problem of Fine-Print Fraud, 72 Stan. L. Rev. 503, 504, 512 (2020) (discussing individuals’ unwillingness to challenge unenforceable terms); Dennis P. Stolle & Andrew J. Slain, Standard Form Contracts and Contract Schemas: A Preliminary Investigation of the Effects of Exculpatory Clauses on Consumers’ Propensity to Sue, 15 Behav. Sci. & L. 83, 91 (1997) (finding that exculpatory language deterred hypothetical willingness to sue).Show More Forms are full of clauses that exclude tort remedies, waive property standards, and cut back on public law remedies for antidiscrimination. When coupled with procedural devices that make it harder to vindicate such small-stakes individual harms in court, small-stakes forms off-load risk to the public.⁴¹ 41.See, e.g., Judith Resnik, supra note 14 (discussing the relationship between adhesion contracts and rights).Show More

But if it’s true that firms benefit from such sloughed-off social costs, the argument against all forms is hard to maintain. Why not just—as so many law professors have argued (and argued)⁴² 42.I even split up the preemption footnote into multiple parts and won’t refer to it again here, lest you feel dispirited about the possibility of reform.Show More—try harder to reduce the incidence of bad terms? Punitive damages for bad contracts! Bar sanctions for bad contract drafters! Private attorneys general, given bounties to hunt down unenforceable terms! Put aside the obvious problem that these solutions are fanciful⁴³ 43.Incentives matter, and toothy sanctions would marginally affect the likelihood of bad terms. But these solutions implicitly assume that cheap forms have positive social value. Perhaps strict liability is the right approach to this problem, not a negligence rule.Show More: they also beg the question. Rejecting cheap forms doesn’t turn on convincing you that terms and firms are bad but rather that the entire apparatus of form production has gone off the rails.⁴⁴ 44.To be clear, my argument is more attractive if you hold these beliefs, so I don’t try very hard to dissuade you either.Show More Contracts are so cheap to produce that they can be stuffed to the gills with bad terms, benefiting lawyer-agents, without materially improving firm wealth. In fact, I’ll argue that technology has so subsidized contract formation that it no longer is obvious that cheap forms have real benefits for drafters. Forms thus externalize diffuse harms without necessarily internalizing discrete benefits. The SAF would undo these systemic consequences at their root.

But even before diving into the details, the SAF may provoke a reaction in most readers: Are you serious? The idea of prohibiting contracts not based on their content,⁴⁵ 45.See U.C.C. § 2-302 (Am. L. Inst. & Unif. L. Comm’n 2023) (covering unconscionability rules).Show More the quality of assent, or party identity,⁴⁶ 46.See, e.g., 5 Williston on Contracts § 9:1 (4th ed.), Westlaw (database updated May 2023) [hereinafter Williston on Contracts] (describing capacity doctrines).Show More but rather because they are in writing runs against the main current of American contract law. Our law, developed by courts and legislatures alike, is pro-disclosure and pro-writing.⁴⁷ 47.See 9 Williston on Contracts, supra note 46, § 21:1 (describing the importance of written contracts in the rise of the statute of frauds).Show More And for good reason: written contracts are more easily and predictably litigated, they are said to reduce the incidence of fraud,⁴⁸ 48.Hackney v. Morelite Constr. D.C. Corp., 418 A.2d 1062, 1065–67 (D.C. 1980) (recounting the anti-fraud role of the statute of frauds).Show More permit firms to grow internally and yet maintain standard practices to outsiders,⁴⁹ 49.See Rakoff, supra note 29, at 1178 n.13 (stating that without standardized contracts, “the making of offsetting transactions, covering, and the entire apparatus of speculation on an exchange would be impossible or much more difficult”); Jason Scott Johnston, The Return of Bargain: An Economic Theory of How Standard-Form Contracts Enable Cooperative Negotiation Between Businesses and Consumers, 104 Mich. L. Rev. 857, 865 (2005) (highlighting corporations’ use of employee discretion in departing from formal contractual terms); Restatement (Second) of Contracts § 211 cmt. a (Am. L. Inst. 1981) (“Standardization of agreements serves many of the same functions as standardization of goods and services; both are essential to a system of mass production and distribution.”).Show More and allow shoppers and policymakers to compare terms (if they read them) and thus price and analyze legal rights.⁵⁰ 50.See infra text accompanying notes 66–68 (explaining the economics of boilerplate).Show More Depriving firms of the ability to contract in writing, even for small-stakes contracts, seems destined to lead to some very perverse outcomes indeed.

Consider the introduction to the argument section in a recent certiorari petition, which asked the Supreme Court to resolve a question about the preemptive scope of the Copyright Act in a way that favored contract over federal statute:

All across the internet, websites employ terms of service to impose conditions on visitors’ access to their services. The laws of every state protect such terms as binding contractual obligations. That contractual protection is essential for a vast swath of internet businesses. They invest enormous resources in activities, such as aggregating information from various sources, that provide extraordinary benefits to the public. And they offer the fruits of their labors to the public, often for free. For many of them, contract law is the only way to protect their investment from exploitation by others, including exploitation by immensely powerful internet giants like Google.⁵¹ 51.Petition for Writ of Certiorari at 1, ML Genius Holdings LLC v. Google LLC, 143 S. Ct. 2658 (2023) (No. 22-121), 2022 WL 3227953, at *1.Show More

It’s my goal to convince you that the normative claims in this passage, and the empirical data they appear to rest on, are overwrought at best. We don’t need written form contracts for smaller goods and services transactions, nor for low-wage jobs. Making them unenforceable will neither create chaos in large firms nor kill the internet or other forms of modern commerce. And, though the SAF has no precise precedent, it’s not invented whole cloth: we’ve experimented with regulation of forms before, without the sky falling. And, even if you aren’t fully persuaded, I hope to make you think differently about the value of forms and what the law can do to suppress them on the margin.

I’ll start by offering a summary of broadly shared complaints that modern scholars have lodged with our contracting regime. Then, in Part II, I present the solutions on offer, all incomplete, preempted, or resigned to failure. Part III provides the heart of my account about the relationship of technological change and transaction costs to the contracting world we live in, and what that means for current debates. Part IV describes, defends, and frets about the SAF.

1.  See Uri Benoliel & Shmuel I. Becher, Termination Without Explanation Contracts, 2022 U. Ill. L. Rev. 1059, 1062 & n.14 (describing Amazon terms of use governing returns). ↑
2.  See Serena Zhang, Students Are Expected to Follow the Campus Compact This Fall. Here’s What It Means, Daily Pennsylvanian (July 30, 2020, 1:04 AM), https://www.thedp.com/‌article/2020/07/campus-compact-explained-penn-fall-social-distanc‌ing [https://perma.cc/QD6E-2WQ2]. ↑
3.  For a discussion of the role of arbitration agreements in employment contracts, see Alexander J.S. Colvin, An Empirical Study of Employment Arbitration: Case Outcomes and Processes, 8 J. Empirical Legal Stud. 1, 1 (2011). ↑
4.  See David A. Hoffman, Relational Contracts of Adhesion, 85 U. Chi. L. Rev. 1395, 1437–38 (2018) (describing Airbnb’s terms of use). ↑
5.  See Eric Goldman, Online User Account Termination and 47 U.S.C. § 230(c)(2), 2 U.C. Irvine L. Rev. 659, 659 (2012) (“An online provider’s termination of user accounts that facilitate user-generated content can be a major—and potentially even life-changing—event for users.” (footnote omitted)); see also Rory Van Loo, Federal Rules of Platform Procedure, 88 U. Chi. L. Rev. 829, 882 (2021) (discussing the necessity of online platforms having flexibility in their contracts with consumers). ↑
6.  See Alexandra Lahav, In Praise of Litigation 126–27 (2017). ↑
7.  When sued by a journalist who was banned from the platform for spreading misinformation about COVID, Twitter used its terms and conditions as part of its defense. Twitter’s motion to dismiss was denied. Berenson v. Twitter, Inc., No. 21-cv-09818, 2022 WL 1289049 (N.D. Cal. Apr. 29, 2022). ↑
8.  See generally David A. Hoffman, Whither Bespoke Procedure?, 2014 U. Ill. L. Rev. 389 (cataloguing growth in certain contract clauses controlling litigation). ↑
9.  See David A. Hoffman, From Promise to Form: How Contracting Online Changes Consumers, 91 N.Y.U. L. Rev. 1595, 1632 (2016) (describing age effects in views about morality of contracting). ↑
10.  See Yonathan A. Arbel & Andrew Toler, ALL-CAPS, 17 J. Empirical Legal Stud. 862, 863 (2020) (discussing jurists’ emphasis on font). ↑
11.  See Uri Benoliel & Shmuel I. Becher, The Duty to Read the Unreadable, 60 B.C. L. Rev. 2255, 2257 (2019) (testing readability of terms and finding them wanting). ↑
12.  Friedrich Kessler, Contracts of Adhesion—Some Thoughts About Freedom of Contract, 43 Colum. L. Rev. 629, 640 (1943). ↑
13.  See generally Margaret Jane Radin, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law (2013) (offering an extended critique of modern contract doctrine for permitting contractual obligation without real assent). ↑
14.  See, e.g., Judith Resnik, Diffusing Disputes: The Public in the Private of Arbitration, the Private in the Courts, and the Erasure of Rights, 124 Yale L.J. 2804, 2804 (2015) (noting a connection between weak forms of consent and the expansion of arbitration’s theoretical reach and critiquing the subsequent loss of public law rights). But cf. Stephen J. Ware, The Case for Enforcing Adhesive Arbitration Agreements—With Particular Consideration of Class Actions and Arbitration Fees, 5 J. Am. Arb. 251, 254–57 (2006) (“[W]hatever lowers costs to businesses tends over time to lower prices to consumers.”); Alan Kaplinsky, Mark Levin & Daniel McKenna, Consumers Fare Better with Arbitration, Am. Banker (Dec. 23, 2014, 12:00 PM), https://www.americanbanker.com/opinion/consumers-fare-better-with-arbitration [https://perma.cc/VZP2-YQ2K] (arguing that arbitration benefits consumers and must be analyzed relative to the alternatives of court and class action litigation); Andrea Cann Chandrasekher & David Horton, Arbitration Nation: Data from Four Providers, 107 Calif. L. Rev. 1, 9 (2019) (finding repeat play effects for both plaintiffs and defendants). ↑
15.  See J. Maria Glover, Beyond Unconscionability: Class Action Waivers and Mandatory Arbitration Agreements, 59 Vand. L. Rev. 1735, 1770 (2006). ↑
16.  See, e.g., Debora L. Threedy, Liquidated and Limited Damages and the Revision of Article 2: An Opportunity to Rethink the U.C.C.’s Treatment of Agreed Remedies, 27 Idaho L. Rev. 427, 445 (1991) (discussing damage limitations). ↑
17.  See Carliss Chatman, Twitter Wants to Force Musk to Buy It. But There’s a Hitch., Barron’s (July 30, 2022), https://www.barrons.com/articles/twitter-elon-musk-thirteenth-amendment-51659101363 [https://perma.cc/LD2Y-BBN4] (suggesting Thirteenth Amendment issues with specific performance). ↑
18.  See generally William J. Moon, Contracting out of Public Law, 55 Harv. J. Legis. 323 (2018) (discussing commercial contracts contracting out of legal regimes). But cf. Erin A. O’Hara & Larry E. Ribstein, From Politics to Efficiency in Choice of Law, 67 U. Chi. L. Rev. 1151, 1152–57 (2000) (arguing that choice of law clauses allow parties to mitigate the effects of inefficient substantive laws). ↑
19.  See Shmuel I. Becher & Uri Benoliel, Sneak in Contracts, 55 Ga. L. Rev. 657, 663 (2021) (suggesting that there are social costs to unilateral contract modification); Oren Bar-Gill & Kevin Davis, Empty Promises, 84 S. Cal. L. Rev. 1, 6 (2010) (articulating problems caused by unilateral modification clauses). ↑
20.  See Neil Richards & Woodrow Hartzog, The Pathologies of Digital Consent, 96 Wash. U. L. Rev. 1461, 1463 (2019) (criticizing notice-and-consent regime). ↑
21.  See Tom Cummins, Shute: The Math Is Off, 8 J.L., Econ. & Pol’y 1, 1 (2011) (discussing the costs of choice of forum clauses). ↑
22.  See Benoliel & Becher, supra note 1, at 1061–62 (exploring termination of contracts in the context of social media). ↑
23.  See, e.g., David A. Hoffman & Erik Lampmann, Hushing Contracts, 97 Wash. U. L. Rev. 165, 220 (2019) (proposing a public policy defense to nondisclosure clauses). ↑
24.  See, e.g., Orly Lobel, Knowledge Pays: Reversing Information Flows and the Future of Pay Equity, 120 Colum. L. Rev. 547, 557 (2020) (noting an increase in noncompete agreements); On Amir & Orly Lobel, How Noncompetes Stifle Performance, Harv. Bus. Rev., Jan.–Feb. 2014, at 26. ↑
25.  Cf. Omri Ben-Shahar & Carl E. Schneider, The Failure of Mandated Disclosure, 159 U. Pa. L. Rev. 647, 704–11 (2011) (using the hypothetical example of Chris Consumer to illustrate the omnipresence of disclosure a decade ago); Brett Frischmann & Evan Selinger, Re-Engineering Humanity 64 (2018) (coining the term “lollipop contracts” to describe contracts governing trivial affairs and suggesting that they exist only because transaction costs are low). ↑
26.  The literature is vast. For examples of foundational works, see Nathan Isaacs, The Standardizing of Contracts, 27 Yale L.J. 34, 35 (1917); Karl N. Llewellyn, What Price Contract?—An Essay in Perspective, 40 Yale L.J. 704, 729–30 (1931); Kessler, supra note 12, at 629, 640; Karl N. Llewellyn, The Common Law Tradition: Deciding Appeals 370–71 (1960) (articulating reasonable expectations doctrine for the non-dickered fine print); W. David Slawson, Standard Form Contracts and Democratic Control of Lawmaking Power, 84 Harv. L. Rev. 529, 529 (1971). See also Ethan J. Leib, What Is the Relational Theory of Consumer Form Contract?, in Revisiting the Contracts Scholarship of Stewart Macaulay on the Empirical and the Lyrical 259, 259 (Jean Braucher, John Kidwell & William C. Whitford eds., 2013) (“One of the most puzzling and embarrassing facts about contract law and contracts scholarship in the United States is that neither has found a consistent way to treat the real contracts of our lives: standardized consumer form contracts.”). ↑
27.  See, e.g., Nancy S. Kim, Contract’s Adaptation and the Online Bargain, 79 U. Cin. L. Rev. 1327, 1342 (2011) (“Given that digital terms are weightless, reproduction and distribution costs non-existent, and consumers highly unlikely to read online agreements, companies could add additional terms with no concomitant financial or reputational cost. Companies began using their online agreements to do more than contain costs and assess the risks of doing business.”). ↑
28.  Cf. Lizette Alvarez & Jeri Clausing, Senate Passes Bill Allowing Online Contract-Signing, Pittsburgh Post-Gazette, June 17, 2000, at A-1, A-7 (“‘The bill revolutionizes the way consumers, industry and government conduct business over the Internet,’ said Sen. Spencer Abraham, R-Mich. . . . . ‘It is a tremendous cost-cutting tool because people and businesses can now enter contractual arrangements without having to drive across town, fly thousands of miles for a meeting or mail reams of paper back and forth.’”). ↑
29.  One classic is Todd D. Rakoff, Contracts of Adhesion: An Essay in Reconstruction, 96 Harv. L. Rev. 1173, 1262 (1983) (arguing “invisible terms” in adhesion contracts should be presumptively unenforceable). I assume you think I am exaggerating above the line. But cf. Peter Linzer, Contract as Evil, 66 Hastings L.J. 971, 975 (2015). ↑
30.  See Meirav Furth-Matzkin, On the Unexpected Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market, 9 J. Legal Analysis 1, 24, 39 (2017) (cataloguing a sample of Boston leases and finding a large percentage of unenforceable terms which likely affected consumer behavior). ↑
31.  See Jonathan Swift, A Modest Proposal for Preventing the Children of Poor People in Ireland, from Being a Burden on Their Parents or Country, and for Making Them Beneficial to the Publick (1729). ↑
32.  There’s nothing necessarily simpler or more transparent about the default rule regime. See Omri Ben-Shahar, Regulation Through Boilerplate: An Apologia, 112 Mich. L. Rev. 883, 889 (2014) [hereinafter Ben-Shahar, Regulation Through Boilerplate] (“Regulation by boilerplates means that one web of terms collected from many sources of law (the legally supplied default provisions) is replaced with a fairly comprehensive but concise substitute (boilerplate). The boilerplate version appears more complicated, but this is a superficial veneer due to the fact that boilerplates reproduce the entire set of governing rules in print.”); see also Russell Korobkin, Bounded Rationality, Standard Form Contracts, and Unconscionability, 70 U. Chi. L. Rev. 1203, 1205 (2003) (explaining the alternative to form contracts is imposed legal defaults). ↑
33.  See infra text accompanying notes 83–86; cf. Rachel Leiser Levy, Judicial Interpretation of Employee Handbooks: The Creation of a Common Law Information-Eliciting Penalty Default Rule, 72 U. Chi. L. Rev. 695, 701–02 (2005) (outlining the history of courts’ treatment of employee handbooks). ↑
34.  There is evidence that younger citizens increasingly treat contracting itself as a sort of low-stakes joke, driven by increasing exposure to online forms. See Hoffman, supra note 9, at 1597–98. Eroding contracting’s symbolic power puts pressure on other doctrinal rules deeply embedded in contract law. Cf. Tess Wilkinson-Ryan, David Hoffman & Emily Campbell, Expecting Specific Performance 13 (Inst. for L. & Econ., Research Paper No. 23-05, 2023) (noting that expectation damages under-compensate by leaving out the cost of moral harm). The empire of forms thus poisons real negotiated agreements, overall increasing the need for state enforcement. ↑
35.  See 9 U.S.C. §§ 1–16, 201–208, 301–307. ↑
36.  Cf. Samuel Issacharoff & Florencia Marotta-Wurgler, The Hollowed Out Common Law, 67 UCLA L. Rev. 600, 607–08 (2020) (illustrating the decline in state-made common law doctrine). ↑
37.  Ben-Shahar, Regulation Through Boilerplate, supra note 32, at 888–89. ↑
38.  For a general account of externalities and non-parties in contract law, see Omri Ben-Shahar, David A. Hoffman & Cathy Hwang, Nonparty Interests in Contract Law, 171 U. Pa. L. Rev. 1095, 1110–12 (2023); see also Oren Bar-Gill & Elizabeth Warren, Making Credit Safer, 157 U. Pa. L. Rev. 1, 52, 56–57 (2008) (“[D]ata on credit card choice and use show that consumer mistakes cost hundreds of dollars a year per consumer. . . . The aggregate costs are staggering.”). ↑
39.  Cf. Salomé Viljoen, A Relational Theory of Data Governance, 131 Yale L.J. 573, 598–600 (2021) (noting the gap between individual and social values in privacy); Frischmann & Selinger, supra note 25, at 78 (noting that adherents are perfectly rational maximizers). ↑
40.  See Meirav Furth-Matzkin & Roseanna Sommers, Consumer Psychology and the Problem of Fine-Print Fraud, 72 Stan. L. Rev. 503, 504, 512 (2020) (discussing individuals’ unwillingness to challenge unenforceable terms); Dennis P. Stolle & Andrew J. Slain, Standard Form Contracts and Contract Schemas: A Preliminary Investigation of the Effects of Exculpatory Clauses on Consumers’ Propensity to Sue, 15 Behav. Sci. & L. 83, 91 (1997) (finding that exculpatory language deterred hypothetical willingness to sue). ↑
41.  See, e.g., Judith Resnik, supra note 14 (discussing the relationship between adhesion contracts and rights). ↑
42.  I even split up the preemption footnote into multiple parts and won’t refer to it again here, lest you feel dispirited about the possibility of reform. ↑
43.  Incentives matter, and toothy sanctions would marginally affect the likelihood of bad terms. But these solutions implicitly assume that cheap forms have positive social value. Perhaps strict liability is the right approach to this problem, not a negligence rule. ↑
44.  To be clear, my argument is more attractive if you hold these beliefs, so I don’t try very hard to dissuade you either. ↑
45.  See U.C.C. § 2-302 (Am. L. Inst. & Unif. L. Comm’n 2023) (covering unconscionability rules). ↑
46.  See, e.g., 5 Williston on Contracts § 9:1 (4th ed.), Westlaw (database updated May 2023) [hereinafter Williston on Contracts] (describing capacity doctrines). ↑
47.  See 9 Williston on Contracts, supra note 46, § 21:1 (describing the importance of written contracts in the rise of the statute of frauds). ↑
48.  Hackney v. Morelite Constr. D.C. Corp., 418 A.2d 1062, 1065–67 (D.C. 1980) (recounting the anti-fraud role of the statute of frauds). ↑
49.  See Rakoff, supra note 29, at 1178 n.13 (stating that without standardized contracts, “the making of offsetting transactions, covering, and the entire apparatus of speculation on an exchange would be impossible or much more difficult”); Jason Scott Johnston, The Return of Bargain: An Economic Theory of How Standard-Form Contracts Enable Cooperative Negotiation Between Businesses and Consumers, 104 Mich. L. Rev. 857, 865 (2005) (highlighting corporations’ use of employee discretion in departing from formal contractual terms); Restatement (Second) of Contracts § 211 cmt. a (Am. L. Inst. 1981) (“Standardization of agreements serves many of the same functions as standardization of goods and services; both are essential to a system of mass production and distribution.”). ↑
50.  See infra text accompanying notes 66–68 (explaining the economics of boilerplate). ↑

51.  Petition for Writ of Certiorari at 1, ML Genius Holdings LLC v. Google LLC, 143 S. Ct. 2658 (2023) (No. 22-121), 2022 WL 3227953, at *1. ↑