Misplaced misrepresentations: why "misrepresentation of age" statutes must be reinterpreted as they apply to children's online contracts.

• Author: Sargent, Michelle A.

The information age revolutionized the relationship between individuals and the internet. Today, children are the targets of online advertisements that lure them into accepting terms of service, thus entering into online agreements. While children may feel comfortable navigating websites, they are psychologically predisposed to be unsophisticated and impulsive actors online. Children lack the digital literacy to understand the implications of accepting website terms of service.

Meanwhile, several states have misrepresentation-of-age statutes that prevent children from using the infancy doctrine to disaffirm online contracts because, in accepting the terms of service, children often represent that they are old enough to enter into the agreement. This Note argues that the heightened vulnerability of children online requires a reconsideration of the application of misrepresentation-of-age statutes to children's online contracts. To adequately balance the policy interests in protecting children against misrepresentation statutes' goal of preventing unknowing adults from being taken advantage of in the marketplace, this Note recommends that judges undertake a fact-speciJic, contextual inquiry of the online contract formation process.

TABLE OF CONTENTS INTRODUCTION I. THE INFANCY DOCTRINE IN THE MODERN CONTRACT ERA A. Nonnegotiable Contracts and Oppressive Terms B. The Effects of Nonnegotiable and Oppressive Terms on Children II. THE INTERACTION OF CHILDREN AND ONLINE CONTENT A. Children's Digital Literacy B. Children's Susceptibility to Online Advertising III. MISREPRESENTATION-OF-AGE STATUTES AS AN OUTDATED DEFENSE A. Misrepresentation-of-Age Statutes in the Online Forum B. Deconstructing Arguments Against the Doctrine 1. Inadequacy of Age-Verification Techniques 2. Bounded Rationality in an Unbounded World IV. LEGISLATIVE REVIEW OR JUDICIAL RESOLUTION A. Legislative Potential B. Judicial Proposal CONCLUSION INTRODUCTION

"That's the duty of the old ... to be anxious on behalf of the young. And the duty of the young is to scorn the anxiety of the old." (1)

This maxim could reflect the relationship between adults and children at any time throughout our history. Yet, in the modern digital era, some argue that children are technologically savvy, sophisticated consumers whose "no-accountability shield ... allow[s] them to wreak havoc on the electronic commerce system with little or no legal consequences." (2)

"No-accountability shield" refers to the infancy doctrine. Under the infancy doctrine, a child's contract is voidable, (3) meaning that the transaction is per se valid, but a child can disaffirm the contract and avoid its legal obligations. (4) Children (5) lack the capacity to contract (6) because they lack the ability to manifest the assent to a bargain required to incur contractual liability. (7) The long-accepted rationale behind the doctrine reflects society's general interest in protecting children: "It was thought that the minor was immature in both mind and experience; therefore, he should be protected from his own bad judgment as well as from adults who would take advantage of him." (8) In essence, children cannot properly evaluate the benefits and risks of a contract and so are vulnerable to adults with more knowledge and bargaining power taking advantage of them in the marketplace. (9) This notion that children are not fully capable of understanding the legal significance of their actions, and therefore should not be held responsible according to the same standards as adults, is mirrored elsewhere in the law. (10)

Judicial and legislative exceptions and defenses have gradually qualified the infancy doctrine. (11) Some of these exceptions, such as contracts for necessaries, contracts entered into by emancipated minors, and contracts for employment, reflect the reality that, in certain instances, children may actually need to enter into binding contracts. (12) Others, most notably the misrepresentation-of-age (13) and retained-benefit defenses, (14) seek to provide adults who contract with children some protection when children try to disaffirm their contracts. (15)

The myriad of exceptions and the uncertainty of their application in the modern contract era have left the infancy doctrine on ambiguous ground, especially with regard to the internet. (16) The result has been a resurgence of legal scholarship analyzing the doctrine's relevance. One side argues that the sophisticated nature of commercial transactions, the commercial value and proportion of children who are online consumers, and the technological competence of children warrants abandoning the infancy doctrine. (17) The other side contends that in an online environment, where the "processes of online contracting" rely on boilerplate terms of service and where the willingness of online service providers ("OSPs") to advertise to and contract with children "encourage[s] thoughtless and impulsive behavior," the infancy doctrine is more relevant than ever. (18)

In spite of this resurgence in scholarship, there has only been cursory analysis of how online contracting affects the misrepresentation-of-age defense. (19) At common law, if an adult contracted with a child believing the child to be of age--either because the child was engaged in business, misrepresented his age, or appeared to be of age--the child still retained the ability to disaffirm the contract. (20) Five states, however, have promulgated misrepresentation-of-age statutes that move in the opposite direction. (21) These statutes prevent a child from disaffirming a contract if the contracting adult had reason to believe that the contracting child had the capacity to contract because the child misrepresented his age. (22) Commentators have generally seen the policy underlying these statutes as protecting innocent adults who children deceive into believing that they are contracting with other adults. (23)

Nevertheless, online agreements frequently contain hidden language by which the accepting party represents that he has the capacity to contract. As a result, children seamlessly enter into contracts in which they implicitly misrepresent their age and thus lose the ability to void the contracts. In doing so, children risk binding themselves to oppressive terms in the form of forum selection clauses, warranty waivers, and dispute resolution procedures; they may also inadvertently grant licenses to their intellectual property, as well as authorize websites to track their usage and preferences so that the websites can display targeted content. This is in addition to the obvious potential for children to spend money and incur debts that may fall on unsuspecting parents or damage their credit. (24)

This Note argues that state statutes preventing children from disaffirming contracts when they misrepresent their age should be reinterpreted with respect to children's online contracts. These statutes universally preceded the advent of online transactions and therefore fail to account for the increased vulnerability of children online. In particular, these statutes do not deal with the problem of inadvertent misrepresentations in online contracts, and they were promulgated without the benefits of recent studies about the effects of online advertising and digital media on children.

Part I examines modern trends in doctrinal contract law, emphasizing the proliferation of nonnegotiable boilerplate, the lessening of requirements for assent, and the broadening of judicial tolerance of oppressive contract terms. This Part argues that the world of clickwrap, (25) browsewrap, (26) and e commerce (27) agreements increases children's vulnerability in contracting, and so the infancy doctrine remains an important tool to protect them. Part II contends that children's impaired digital literacy, especially impediments to their online decisionmaking and text-comprehension, as well as their susceptibility to online advertisements and marketing, make children especially vulnerable to unwittingly entering into contracts online. Part III argues that misrepresentation-of-age statutes are, therefore, incongruent with children's online contracts because (1) online advertisements and hidden representations add weight to the infancy doctrine's policy interests in protecting children, (2) there are strong commercial incentives for websites to enter into contracts with children, and (3) children should not be held responsible for irrational online decisions just because adults are held accountable. Finally, Part IV discusses the potential for legislative solutions that adapt misrepresentation-of-age statutes to reflect the modern online world and asserts that, in the short term, judicial reinterpretation of the language of misrepresentation-of-age statutes may be more effective.

1. THE INFANCY DOCTRINE IN THE MODERN CONTRACT ERA

   For the last two decades, there has been an explosion of literature discussing the modern contract era, its weakening requirements for assent, and its tolerance for increasingly oppressive terms, as well as the legal, sociological, and economic justifications for and criticisms of this transformation. (28) Traditionally, contract formation was seen as a "meeting of the minds"--two individuals voluntarily entering into an agreement with full knowledge of the terms. (29) In the modern era, this concept is mostly a fiction. On the internet in particular, users frequently enter into clickwrap and browsewrap agreements without understanding or appreciating their legal significance.

   The purpose of this Part is not to critique all arguments about modern contract theory or their application to online contracts but rather to provide sufficient background to contextualize the vulnerability of children in this new era. Section I.A examines the nonnegotiable nature of contracts and the proliferation of oppressive terms as well as courts' reinforcement of these developments. Section I.B then...