Torts - Cases, Principles, and Institutions Fifth Edition, 2016a

Witt & Tani, TCPI 5. Plaintiffs’ Conduct
The basic point is that if both sides have good information, it makes no difference
that consumers can’t haggle in particular transactions, and it makes no difference
that the sellers’ lawyers draft the contracts. The profit motive will induce them to
provide any legal duty consumers will pay for. Consumers exercise power in the
market not through their conduct during individual transactions, but through the
mechanism of demand, backed by dollars. They can control according to their
desires what is offered for sale even if each of them is individually powerless in
every single transaction. . . .
Id. It follows for Kennedy that unequal bargaining power cannot be an explanation of particular
substantive terms in consumer contracts. There should thus be no need for courts to impose
compulsory duties in such contexts:
Id.
[U]nder our assumptions the compulsory term must be worth less to buyers than it
costs sellers (or sellers would provide it without compulsion), [yet] it is also true
that the term will almost certainly be worth something. Buyers would, in a free
market, pay more for the commodity with the duties attached than for the
commodity alone . . . .
4. Poverty. What arguments (if any) remain against enforcing the terms of the contract
struck between Dalury and S-K-I? Professor Kennedy does note at least one limit on his analysis:
[D]emand, of course, is limited by income. If buyers had a lot more income, they
might well demand all the duties the decision maker is now requiring them to
purchase. Buyers as a group may regard a transaction without these duties as a
moral horror. They may buy only with deep regret, believing that they have a right
to the commodity-plus-the-duty rather than just the commodity. They may believe
that a just society would allocate them enough purchasing power so that it was open
to them to buy the commodity-plus-the-duty without having to sacrifice some other
good they regard as a necessity. In all these senses, it is true that consumers lack
the bargaining power to make the sellers provide the duty. Consumers are too poor,
given the other things they want to do or have to do with their money, to induce
sellers to provide something that, under the free contract model, sellers don’t have
to provide unless the price is right.
Kennedy, Distributive and Paternalist Motives, supra. If Kennedy is right that poverty rather
than unequal bargaining power explains the substantive terms of consumer contracts, what is the
implication for adjudication? Should pro-consumer terms be compulsory, as the Dalury court
concluded? Or are compulsory terms counterproductive from the perspective of the poor
consumer’s welfare?
5. Arbitration. One striking feature of the world of tort waivers is that consumers are
typically not asked to agree to arbitrate tort claims. They are more typically asked to waive those
claims altogether. Why would that be? Note that some medical care providers such as Kaiser
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