Vol 7 No 1 - Roger Williams University School of Law

Vol 7 No 1 - Roger Williams University School of Law Vol 7 No 1 - Roger Williams University School of Law

13.07.2015 Views

principles articulated in several international instruments. Forexample, a directive of the European Union deems aspresumptively unfair a term “irrevocably binding the consumer toterms with which he had no real opportunity of becomingacquainted before the conclusion of the contract.”71 Also deemedunfair are terms enabling the supplier to alter the terms of thecontract unilaterally without a valid reason specified in thecontract.72In addition, UCITA for the first expressly validates postpaymentdisclosure of terms—“pay now, terms later”73—underwhat is known as the “rolling contract” theory of contractformation. While it may not always be possible to disclose (ormake available) all applicable terms prior to the creation of abinding agreement (as in the case of a telephone purchase order),that is not the case with respect to online transactions whereinformation can be made readily accessible. Indeed, one can arguethat the Internet is the quintessential marketplace: a place wherethe notional or theoretical fully-informed party to a transactioncan be more closely approximated than in physical markets; anenvironment capable of providing the information that buyersneed to make informed shopping decisions.74 Rather thanrecognizing the ability of the media to resolve informationaldistribution issues, however, UCITA condones the delay ofdisclosure of terms until a consumer is committed to the deal, nomatter how important the terms.75 This is contrary to theapproach in the European Union, where prior disclosure of terms71. Council Directive 93/13/EEC of 5 Apr. 1993 on Unfair Terms of ConsumerContracts, 1993 O.J. (L 095) 29, Annex 1(i).72. Id. at Annex 1(j).73. Maureen A. O’Rourke, Progressing Towards a Uniform Commercial Code forElectronic Commerce or Racing Towards Nonuniformity?, 14 Berkeley Tech. L.J. 635,651 (1999).74. See id. at 652 (“Would it not be consistent . . . to draft legal rules that enhancethe market’s efficiency by providing more information to customers, correcting forinformation asymmetries that might otherwise exist and distort marketperformance?”); see also Jean Braucher, Delayed Disclosure in Consumer E-Commerceas an Unfair and Deceptive Practice, 46 Wayne L. Rev. 1805 (2000) (arguing thatmarketing to consumers online and failing to make pre-transaction disclosuresamounts, like other bait and switch practices, to unfair and deceptive practices inviolation of the Federal Trade Commission Act and states’ little FTC acts).75. See Braucher, supra note 65. UCITA does, however, contain a “safe harbor” toencourage posting. UCITA § 211.

is mandated in certain instances.76 As stated in Guidelines of theOrganisation for Economic Co-Operation and Development:“Businesses engaged in electronic commerce should providesufficient information about the terms, conditions and costsassociated with a transaction to enable consumers to make aninformed decision about whether to enter into the transaction.”77The easier it is to find or imply assent to the terms of acontract, the greater the pressure becomes to impose a method toprevent unfair or overreaching terms in the resultingagreements.78 The question of whether to enforce shrink-wrap orclick-wrap licenses is related to a second problem: whattechniques are there for policing unfair or overreaching termsincluded in the license by the licensor?79 To the extent that theseclick-wrap agreements are adhesion contracts, the user or licenseeeffectively has no choice but to accept the objectionable term orreject the entire transaction. To the extent the user has alreadypurchased a product and then finds additional terms (either undera rolling contract theory or because the licensor changes the termsafter the conclusion of the contract), the licensee may find itselfbound by terms it had no ability to negotiate.Repeated attempts in the Article 2 revision process to dealwith unfair terms in adhesion contracts were constantly objected76. Council Directive 97/7/EC of 20 May 1997 on the Protection of Consumers inRespect of Distance Contracts, 1997 O.J. (L 144) 19. A basic purpose of the directive isconsumer protection through prior information, written confirmations, right ofwithdrawal, performance, payment by card, and prevention of inertia selling.77. Organisation for Economic Co-Operation and Development, ConsumerProtection in the Context of Electronic Commerce Guidelines, § III(C) (Dec. 9, 1999)[hereinafter OECD], available athttp://www.oecd.org/oecd/pages/home/displaygeneral/0,3380,EN-document-0-nodirectorate-no-24-320-0,FF.html.78. The concept of contractual free choice and assent often sound good to thebusinessperson:However, contract law has a darker side as well. Cyberspace is not anegalitarian society with equal chances for every ‘netizen.’ In a world totallyruled by contract, weaker parties risk being subjugated and fundamentalfreedoms may be jeopardized. Freedom of contract may become contractualcoercion, especially when dominant undertakings abuse their market powerto impose contractual rules on powerless consumers, as if they were publicauthorities.P. Bernt Hugenholtz, Copyright, Contract and the Code: What Will Remain of thePublic Domain, 26 Brook. J. Int’l L. 77, 79 (2000).79. See John J.A. Burke, Contract as Commodity: A Nonfiction Approach, 24Seton Hall Legis. J. 285 (2000) (surveying the policing approaches available tostandard form contracts and recommending a regulatory response).

is mandated in certain instances.76 As stated in Guidelines <strong>of</strong> theOrganisation for Economic Co-Operation and Development:“Businesses engaged in electronic commerce should providesufficient information about the terms, conditions and costsassociated with a transaction to enable consumers to make aninformed decision about whether to enter into the transaction.”77The easier it is to find or imply assent to the terms <strong>of</strong> acontract, the greater the pressure becomes to impose a method toprevent unfair or overreaching terms in the resultingagreements.78 The question <strong>of</strong> whether to enforce shrink-wrap orclick-wrap licenses is related to a second problem: whattechniques are there for policing unfair or overreaching termsincluded in the license by the licensor?79 To the extent that theseclick-wrap agreements are adhesion contracts, the user or licenseeeffectively has no choice but to accept the objectionable term orreject the entire transaction. To the extent the user has alreadypurchased a product and then finds additional terms (either undera rolling contract theory or because the licensor changes the termsafter the conclusion <strong>of</strong> the contract), the licensee may find itselfbound by terms it had no ability to negotiate.Repeated attempts in the Article 2 revision process to dealwith unfair terms in adhesion contracts were constantly objected76. Council Directive 97/7/EC <strong>of</strong> 20 May 1997 on the Protection <strong>of</strong> Consumers inRespect <strong>of</strong> Distance Contracts, 1997 O.J. (L 144) 19. A basic purpose <strong>of</strong> the directive isconsumer protection through prior information, written confirmations, right <strong>of</strong>withdrawal, performance, payment by card, and prevention <strong>of</strong> inertia selling.77. Organisation for Economic Co-Operation and Development, ConsumerProtection in the Context <strong>of</strong> Electronic Commerce Guidelines, § III(C) (Dec. 9, 1999)[hereinafter OECD], available athttp://www.oecd.org/oecd/pages/home/displaygeneral/0,3380,EN-document-0-nodirectorate-no-24-320-0,FF.html.78. The concept <strong>of</strong> contractual free choice and assent <strong>of</strong>ten sound good to thebusinessperson:However, contract law has a darker side as well. Cyberspace is not anegalitarian society with equal chances for every ‘netizen.’ In a world totallyruled by contract, weaker parties risk being subjugated and fundamentalfreedoms may be jeopardized. Freedom <strong>of</strong> contract may become contractualcoercion, especially when dominant undertakings abuse their market powerto impose contractual rules on powerless consumers, as if they were publicauthorities.P. Bernt Hugenholtz, Copyright, Contract and the Code: What Will Remain <strong>of</strong> thePublic Domain, 26 Brook. J. Int’l L. 77, 79 (2000).79. See John J.A. Burke, Contract as Commodity: A <strong>No</strong>nfiction Approach, 24Seton Hall Legis. J. 285 (2000) (surveying the policing approaches available tostandard form contracts and recommending a regulatory response).

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