Standard form contracts should be fair, accessible, and understandable for consumers.
For many decades, contract law has placed the obligation on the consumer to understand contract terms through a "duty to read" the terms of the transaction. Unless courts find "fraud" or "duress," or the terms of the contract to be "unconscionable" most contracts are enforced as written under the theory that the consumer has agreed to the terms.
For several decades now, government regulators also have used "disclosure" and even "more disclosure" as the primary tool of monitoring business activities, under a theory that if businesses tell consumers in their fine print, businesses can do as they please, and consumers can read for themselves if they agree or not to the terms of any transaction, and choose to enter or walk away from the deal. But unfair and deceptive policies and practices, some would say fraud, can be and are buried in the fine print.
Many scholars argue that it is not rational for consumers to read the fine print, or for courts to expect them to. Others point out that in the United States, nearly 100 million people simply cannot read, or cannot read past a fourth grade level, much less all the legalese jargon in fine print. Others contend that even those able to read do not, as it is not rational to spend time reading the fine print, and even those able to read and understand, still may not make rational decisions given the format or presentation of the factors in the materials and the consumer's own biases in decision-making.
The following are some potential solutions or partial solutions to begin to address some of the problems with the use of fine print standard form contracts, though reasonable people may disagree with one or more of the suggestions or their efficacy.
- First: Contracts should be transparent and accessible. This means, at bare minimum, that standard form contracts must be disclosed prior to the consumer transaction; if a consumer will not read it, perhaps a third party, such as the press or a consumer advocacy organization, will read it for its fairness and be able to compare it to other sellers' contracts in the industry;
- Second: Disclosures should be clear and simple, not pages upon pages of illegible and incomprehensible fine print; they must be easy to read and understand; businesses should endeavor to do this themselves, and if they don't, legislators and regulators at the state or federal level should require it;
- Third: The public and private sectors should test these disclosures in real life situations to make sure consumers can understand the terms in a timely manner before the point of sale;
- Fourth: Consumers need to pay attention to the contents of contracts, to prevent against fraud and deception, and to demand accessible, fair contracts;
- Fifth: Regulators responsible for regulating industries in which standard form business-to-consumer contracts are used must require copies of the contracts used in the industries they regulate to be submitted to the governement agencies and be easily obtainable from government databases, if not from the industries themselves;
- Sixth: Regulators must do more to remove unfair and deceptive practices in business-to-consumer standard form contracts. More disclosure alone of bad practices is not a sufficient answer to the problem, though better disclosure may be a step toward eliminating harmful provisions and practices;
- Seventh: Certain provisions should be banned from contracts or not enforced by the courts, including the seller's unilateral modification of terms, forced arbitration and waiver of the right to a jury trial;
- Eighth: The private and public sectors need to teach consumers how to understand the importance of fair contract terms, and to pursue empirical research about the effect of terms and disclosures;
- Ninth: The media needs to report about businesses that are doing the right thing by consumers by making their contracts accessible and fair;
- Finally, Courts should consider changing the presumption of enforceability of harmful terms not knowingly agreed to but buried in the fine print in standard form contracts between business and individual consumers.
Citizen Works, a 501 (c) (3) nonprofit organization, and a number of volunteers and seasoned allies who contribute content, have incubated the Fair Contracts Project at Faircontracts.org to educate the public about unfair terms to consumers in the fine print of standard form contracts and some potential solutions. We work to make standard form contracts fair, accessible, and understandable. Please help us in this effort. Thank you!