Actual Agreement, Shared Meaning Analysis, and the Invalidation of Boilerplate: A Response to Professors Kar and Radin.

Author:Feldman, Steven W.
 
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"While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract." (1) TABLE OF CONTENTS ABSTRACT 711 INTRODUCTION 713 I. OVERVIEW OF "PSEUDO-CONTRACT AND SHARED MEANING ANALYSIS" 716 A. Pseudo-Contract and the Assimilationists 716 B. Shared Meaning Analysis 718 C. The Authors and Neo-Gricean Linguistics 719 D. The Aims of Shared Meaning Analysis 721 II. THE USE OF LINGUISTICS IN CONTRACT INTERPRETATION 721 A. Linguistics and Contract Interpretation: A Controversial 722 Relationship B. Shared Meaning Analysis as Evidence at Trial 724 III. BOILERPLATE, STANDARD FORM CONTRACTS, AND ADHESION CONTRACTS: 726 DEFINITIONAL ISSUES A. The Overly Broad Definition of Boilerplate 726 B. The Benefits and Detriments of Boilerplate 728 IV. ASSIMILATIONIST CONTRACT THEORY AND BOILERPLATE: HAS THE LAW 733 KEPT PACE WITH TWENTY FIRST CENTURY COMMUNICATIONS TECHNOLOGY? A. Specht v. Netscape Communications Corp 734 B. ProCD, Inc. v. Zeidenberg 736 C. Boilerplate and Computer Technology 739 V. ACTUAL AGREEMENT, SHARED MEANING ANALYSIS, AND CONTRACT 740 INTERPRETATION A. The Goals and Components of Shared Meaning Analysis 741 B. Cooperation and Good Faith during Contract Formation 743 C. The Restatement (Second) and 'Common Meaning' of the 746 Parties D. The Courts and "Common Meaning" of the Parties 748 E. The Competing Standards of Contractual Assent: The 749 Subjectiv and Objective Theories 1. The Objective Theory Further Explained 751 2. When Consumers Click "I Agree"--An Ambiguous Action? 752 3. The Policy of the Objective Theory 753 F. The Subjective Theory Compared 756 G. How Much Sharing is Needed for Shared Meaning? 757 H. The Ramifications of Shared Meaning Analysis 759 VI. SHARED MEANING ANALYSIS AND FREEDOM OF CONTRACT 761 A. General Principles of Freedom of Contract 761 B. Freedom of Contract and Boilerplate 763 VII. A PARTY'S DUTY TO READ AND UNDERSTAND CONTRACTS 765 VIII. PRECEDENTS CHALLENGING THE USE OF BOILERPLATE 769 A. Freedom of Contract 769 B. Cases Contesting Mutual Assent 770 C. Explaining Mutual Assent when Actual Agreement is Missing 774 D. Resolution of the Conflicting Decisions 775 CONCLUSION 777 INTRODUCTION

Analyzing a difficult subject that "pervades" contract law and that is "vital" to the national economy, (2) scholars have produced scores of articles about the legal and societal aspects of boilerplate contract terms. (3) Professors Robin Bradley Kar and Margaret Jane Radin contributed to the conversation with their February 2019 article in the Harvard Law Review, Pseudo-Contract And Shared Meaning Analysis. (4) The authors argued that, notwithstanding its physical presence in the document (or on a computer screen), (5) boilerplate without actual agreement lacks contractual force. (6) The authors claimed that the widespread use of pseudo-contracts and their "fake terms" invited "burgeoning forms of [consumer] deception." (7) To Kar and Radin, the prevalence of boilerplate has so undermined mutual assent that it has jeopardized the legitimacy of contract itself. (8)

The authors advocated the technique of shared meaning analysis as a solution to the challenges presented by boilerplate contracts. By referring to "shared meaning," Kar and Radin proposed that courts enforce "[t]he meaning that parties produce and agree to during contract formation that is most consistent with the presupposition that both were using language cooperatively to form a contract." (9) The authors' legal theory for addressing unenforceable boilerplate was not reformation, where the moving party seeks a contract adjustment to ameliorate a mistake or fraud, (10) nor was it severance, where a party seeks to remove illegal terms--such as those that offend public policy. (11) Instead, the authors contended that much boilerplate should be judicially excised from the contract because it is usually outside the bounds of the parties' actual agreement. (12)

The authors declared that shared meaning analysis has a strong foundation in the traditional principles of contract interpretation, but that it also operates in a more refined way. (13) Kar and Radin believe that their "[d]efinition of shared meaning captures the most important considerations that have guided courts and helped them to discern the common meaning of the parties for centuries..." (14) In the authors' opinion, linguistics has much to offer in solving difficult matters of contract interpretation. (15) Kar and Radin argued, "Contract ... has in many instances become pseudo-contract--a system of private obligations with expanding contents that are created unilaterally by one party." (16) Thus, the authors urged courts to adopt shared meaning analysis in place of the current judicial norms of contractual interpretation. (17)

I respectfully suggest that Kar and Radin's article is doctrinally and normatively unpersuasive, (18) most notably regarding its suggested approach to the use of linguistics. (19) Because the authors have made a largely doctrinal argument in support of shared meaning analysis, I have made a largely doctrinal response opposing the validity of their reform. (20) Their proposal raises many other concerns as discussed below.

While no thoughtful proposal on contract doctrine should be rejected out of hand, my chief concern is any new approach must be rooted in the fundamental doctrines of contract law to have a fair chance of adoption. As will be shown, the traditional principles of contract as consistently implemented by the great majority of courts lend no support for the authors' suggestion that the law for "centuries" has comported with actual agreement and shared meaning analysis. (21)

The authors' proposed concept also clashes with the essential precepts of contract including the objective standard of contract, freedom of contract, and the duty to read and understand a contract. The likely practical ramifications of this empirically untested proposal--which is designed to delete numerous boilerplate contract terms--would be the roiling of markets by precluding buyers and sellers from maintaining confidence in their agreements. The inevitable consequence of Kar and Radin's sea change would be to undermine the two goals of contract, which are first, enforcing the contract accepted by the parties and second, ensuring the stability, certainty, and predictability of contract. For all these reasons, I recommend that courts and legislatures reject shared meaning analysis. The current system provides more effective measures in safeguarding private ordering.

This Article proceeds as follows. Part II summarizes the authors' extensive and detailed argument. Part III disputes Kar and Radin's reliance on linguistics as a valid aid to contract interpretation. Part IV discusses the authors' definition and classification of standardized contracts and explains the benefits and detriments for the commercial system. Part V addresses whether contract law has kept pace with twenty first century communications technology. Part VI considers the authors' argument about the centrality of "actual agreement" and "shared meaning analysis" for contract interpretation. This Part is the heart of the Article and covers the goals and components of shared meaning analysis: cooperation and good faith during contract formation; the Restatement (Second) of Contracts and the "common meaning" of the parties; the courts and "common meaning" of the parties; the competing standards of mutual assent; the objective and subjective theories; how much sharing is needed for shared meaning; and the ramifications of shared meaning analysis. Part VII covers shared meaning analysis and freedom of contract. Part VIII considers shared meaning analysis and a party's duty to read a contract. Part IX addresses the precedents challenging the use of boilerplate in contrast to the majority view. Based on the first principles of contract formation and interpretation, the majority view better reconciles the conflicting precedents in favor of the current system.

  1. OVERVIEW OF "PSEUDO-CONTRACT AND SHARED MEANING ANALYSIS"

    A detailed overview of Kar and Radin's eighty-five-page article will aid the discussion. Subtopics in this part include: Pseudo Contract and the Assimilationists, Shared Meaning Analysis, The Authors and Neo-Gricean Linguistics, and The Aims of Shared Meaning Analysis.

    1. Pseudo-Contract and the Assimilationists

      Kar and Radin first argued that an incremental but relentless "paradigm slip" has occurred where the widespread use of boilerplate over the last few decades has adversely transformed the nature of contracting. (22) The authors contended that, in terms of sufficiency to bind consumers, contract law has inappropriately moved from consent to assent, then from assent to fictive/hypothetical assent, and lastly from hypothetical assent to the purchaser's fictional or constructive notice. (23)

      Kar and Radin argued, "Lacking any sound reason to replace contract, we must seek better methods of evaluating boilerplate text so as to bring contract law back into coherence with its core concepts, principles, and justifications." (24) The result of this doctrinal tipping point is "pseudo-contract"--an oppressive regime of boilerplate with only limited defenses to enforcement, such as unconscionability, duress, and illegality. (25) Otherwise, the authors argued that sellers have free rein to impose upon consumers highly detailed and heavily one-sided contract terms. (26) Indeed, Kar and Radin emphasized that the seller fully knows and expects that the typical consumer will sign (or click) without reading the copious terms or having a subjective understanding of the transaction. (27)

      Kar and Radin believe pseudo-contract distorts core contract law concepts, such as "assent," "agreement," and "interpretation." (28) This distortion now allows businesses to create legal obligations unilaterally without obtaining any actual...

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