A Negotiated Instrument: Proposing a Safer Contract for Consumers (and Not Just a Smarter One)

• Publication year: 2022

A Negotiated Instrument: Proposing a Safer Contract for Consumers (And Not Just a Smarter One)

Michael S. Lewis
msl@rathlaw.com

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A NEGOTIATED INSTRUMENT: PROPOSING A SAFER CONTRACT FOR CONSUMERS (AND NOT JUST A SMARTER ONE)

By Michael S. Lewis^*

Abstract

In this Article, I propose a new standard for determining what constitutes assent, as a matter of contract formation, within the domain of electronic consumer contracting. The threshold test should reject the "take-it-or-leave-it" arrangement dominant in the marketplace and reified by recent proposals before the American Law Institute ("ALI") under the moniker "blanket assent." The new standard should reject blanket assent in favor of a default rule that would require any electronic form proposing contract terms to permit at least a minimal amount of negotiation around terms seeking waiver of rights from consumers. I propose this rule as a more acceptable behavioral proxy in determining whether the manifestation of the mutual assent standard applicable to all contracts performed by competent contracting parties is met. Requiring negotiation and negotiability from electronic forms will go further than the current "click-through" baseline to cure the current problem of consumer incapacity widely recognized (though not widely named) in the consumer marketplace. It is that disturbingly debased status that defines the plight of the consumer in the modern consumer contracting domain (a point I make in a related, earlier piece). This Article argues that technology has advanced to such an extent that the absence of greater negotiability

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can no longer be defended with regard to electronic forms. As an example of this technology, I use the life of a wager from the online sports gaming business to make this point. Given what this gaming technology demonstrates, we are now able to see how technology may facilitate ever greater consumer interface around pricing, risk-taking, risk-prediction, and active choice in relation to qualitative events, features, and outcomes online. Using this technology, in conjunction with contract law and tort law norms, this Article argues that a recent decision by the Massachusetts Supreme Judicial Court analyzing Uber's electronic form should demand more from sellers than the "click-through" option the court appears to set, as a baseline, for accomplishing assent with regard to electronic consumer contracting formation.

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CONTENTS

Abstract................................................................................403

Introduction.........................................................................406

I. Returning to First Principles........................................415

II. The Massachusetts Supreme Judicial Court's Recent Efforts to Restore Intelligibility to Contract Law. ..........................................................................................421

III. The Negotiable Instrument : A Safer Contract for Consumers in a Liberal Democracy than Which Kauders Secures............................................................430

A. What Emerging Gaming Technology Demonstrates About the Possibility for Greater Consumer Engagement................................................................430
B. How Emerging Technology Can Serve as a Benchmark for Restoring Intelligibility to the Law of Consumer Contracts....................................................................447

Conclusion............................................................................453

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Introduction

A few months before the 2020 COVID-19 pandemic crushed us all, I went into my primary care doctor's office to have my annual physical. Checking in, I sat down across from an administrator who asked the standard questions that I have come to expect when going to this practice. My insurance had not changed. My date of birth recedes from sight with each coming day, while remaining tethered to the same starting point. My wife is, remarkably, still married to me, and her phone number remains the same.

Having survived that gauntlet, I prepared to stand up and walk to the general waiting area to have my name called by one of the practice's begowned employees before being weighed and measured, per usual. But the hospital added a step. The kind administrator flipped over a screen she had been reviewing and said, in a tone more perfunctory than demanding, "Please review and sign this at the lower righthand corner."

The interaction posed a basic test. I had just written a draft of a law review article challenging default claims regarding adult capacity to contract in very similar situations.¹ In the article, my critique of contemporary consumer contracts was that the form she was about to present to me was not really a "contract" because adults are not capable of rendering them so in most situations, including the one at hand.² I argued that adults do not engage or understand these sorts of documents and their contents, and, even if they did, they could not bargain for a better deal to protect important interests that they should, rationally, seek to protect.³ I further argued that adults have been, and

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are being, infantilized by this state of affairs in commercial life and should be able to access defenses commensurate with their degraded status as a means of protection and as a means of reestablishing agency.⁴

In advancing this argument, I relied upon what I viewed as a sharper, stronger, and more realistic conceptualization of capacity provided by leading scholars in the area, Martha Nussbaum and Amartya Sen, a Nobel prize winning economist.⁵ This conception acknowledged that capacity is a function both of one's internal capabilities and the potential that a person may deploy those capabilities to shape their experience.⁶

Having set out to solve a problem in the area of consumer contracts, I decided that I was obliged to test out my sense of things in my own situation at the doctor's office. After all, where better to attain capability than in a setting designed to provide for my health and well-being? Where better to strike out for adults everywhere and do something I had never done before as a consumer? I would try to reclaim my capacity. I would not just sign away my rights, unthinkingly, to go from intake to physical to a blueprint for my own personal health and well-being. I would read the contract. I would ask questions about it. And I would try to alter it through negotiation that I deemed promoted my overall best interests.

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The "contract" that the healthcare provider presented to me had a number of paragraphs, which spanned three pages.⁷ Some of the paragraphs included procedural authorizations.⁸ Some related to healthcare privacy and reaffirmed that I had this privacy.⁹ These proposed terms seemed unobjectionable to me. The final paragraph, though, was alarming. It essentially stated that the doctor's office was part of a larger healthcare system that employs independent third parties from time to time. It further stated: "I understand and acknowledge that [the hospital] cannot be held . . . liable for the conduct of these providers."¹⁰

A recent memory immediately popped into my head. At another local hospital, an employee contaminated needles and spread Hepatitis C through the patient population.¹¹ The employee, "employed as a [healthcare] technician at [the other hospital] in 2011 . . . [,] devised a scheme to divert and steal . . . Fentanyl for personal use and abuse."¹² Indeed, the employee admitted:

[H]e would surreptitiously take syringes of Fentanyl prepared for patients, inject himself with the drug and refill the syringes with saline, causing the syringes to become tainted with his infected blood. He then replaced the tainted syringes for use on unsuspecting patients. Consequently, instead of receiving the prescribed dose of Fentanyl together with its intended anesthetic effect, patients actually received saline that was tainted with the same strain of Hepatitis C

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carried by [the employee].¹³

This sort of conduct by hospital employees is not unique to New Hampshire.¹⁴ Reflecting on this and the contract form that I had been presented with, it seemed to me that hospitals and hospital systems would have even more control over dangerous employees than the independent contractors that the contract appeared to worry about. But those third parties may not be subject to the same oversight, based on my understanding of the differences between contractors and employees.¹⁵

I looked up at the somewhat surprised, increasingly impatient intake administrator, who was waiting for me to sign the contract and move along, and the following dialogue ensued:

I said, "Well, I'm fine with the first few paragraphs, but I don't like the last one, the one that seems to ask me to waive rights with regard to people who work for you. Can we strike it?"

she blanched a little at this, becoming just a little more rigid, and responded, "No. You have to sign or you have to decline. "

"Who are these third-party independent contractors? Do you know them? Do they work here? Are they good at what they do?"

"I don't know. It's just a form."

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"Ok. Is there someone you can call to find out?"

"No."

"No one?"

"No."

"Can I pay extra to have this paragraph stricken?"

"No. You can either sign or decline."

"Is there someone you can call to check on that?"

"No."

"But I may want the stuff in the first two paragraphs. If I don't sign this, will you still see me?"

"Yes."

"Ok. I guess I'll decline. Do you know if my healthcare privacy is still protected if I don't sign?"

"I don't."

And so, I declined to sign. Instead, I had my physical, but I did so by taking risks around healthcare privacy that other patients could contract to augment. I did not and could not do that because I did not want to give up rights against the hospital for the negligence of third parties that the hospital hired that I...