The unbearable lightness of consent in contract law.

• Author: Leonhard, Chunlin

The consent concept has enjoyed a dominant position in contract law. Scholars have described it as "the master concept that defines the law of contracts in the United States." (1) That makes intuitive sense. Contracts are private agreements--a set of terms and conditions to which the parties have consented. Some have pointed out that the consent doctrine helps promote individual autonomy and freedom of contract, core values protected by contract law. Consent has served to legitimize and justify the government's choice of sides in a contractual relationship.

This Article queries whether consent alone is sufficient to justify the government's choice of sides in a private contractual relationship. This Article contributes to the current scholarly discussion oil the problematic aspects of consent and proposes an alternative way to evaluate when a court should use its coercive power to enforce a contract. This Article proposes that contract law abandon its consent-centric focus. The elasticity of the concept and its easy manipulability render it an improper basis for state intervention. Instead, courts should adopt a totality of circumstances standard to determine whether government should exercise its coercive power to favor one contractual party over the other.

CONTENTS INTRODUCTION I. UNDERSTANDING CONSENT A. The Appeal of Consent B. The Meaning of Consent II. CONSENT AND CONTRACT LAW A. Consent and Contract Formation B. Consent and Contract Defenses C. Consent and Contract Interpretation D. Current Contract Law's Enforcement of Contract Under Consent III. PROBLEMS WITH CONTRACT LAW'S CONSENT FOCUS A. The Motivational Complexity of Consent B. Marketplace Manipulation of Consent C. The Growing Disconnect Between Consent and Commercial Contract Practices D. Insufficiency of Current Contract Defenses E. Consent and Contract Law Goals IV. ALTERNATIVE TO A CONSENT-FOCUSED APPROACH A. The Totality-of-the-Circumstances Test in Other Contexts B. The Totality-of-the-Circumstances Test for Contract Enforcement CONCLUSION INTRODUCTION

"We use consent theory not as a map, not realizing that like any other map it's simpler than reality, but as a set of blinders or rose-colored glasses that make the world look clearer, less problematic, than it really is." (2)

The consent concept (3) has enjoyed a dominant position in contract law. (4) Scholars have described it as "the master concept that defines the law of contracts in the United States." (5) That makes intuitive sense. Contracts are private agreements--a set of terms and conditions to which the parties have consented. (6) Some have pointed out that the consent doctrine helps promote individual autonomy and freedom of contract, core values to which contract law is committed. (7) After all, individual autonomy and freedom would not mean much if an individual's consent did not matter. Consent has morally justified and legitimized government intervention in private contractual relationships. (8)

This Article does not question the role of consent as the basis for a moral obligation to keep one's promise. (9) It queries whether the government should primarily rely oil consent to justify its decision to side with one private party over another. Contract law's consent focus is increasingly problematic due to multiple factors. To begin with, consent is an amorphous, difficult-to-define concept that is made increasingly more difficult by the marketplace manipulations of human decision making biases. (10) Is it consent simply because someone signed an agreement? Is it consent if a person signed an agreement without having all the information or without understanding the available information? Is it consent if someone signed an agreement, but unbeknownst to her, the agreement was carefully designed to induce her to sign the agreement? (11)

With the advent of the "age of persuasion," (12) defining consent and ascertaining its existence have become even more difficult, if not impossible. Behavioral studies during the last few decades have provided a more in-depth understanding of human decision-making processes, including predictable biases. (13) Relying on those insights, powerful commercial forces have deliberately manipulated people's decisions. (14) Those unprecedented marketplace phenomena have raised some thorny issues for contract law. These days, voluntary consent may not exist even when all of the traditional indicia of consent exist. People could have signed an agreement and intended to enter into certain transactions and yet there might not be actual "consent." An outward manifestation of consent does not necessarily equal the knowledge required for meaningful consent.

An example of such marketplace manipulation is the subprime mortgage transactions that caused the current financial crisis. Studies showed that lenders deliberately designed mortgage products so that they appeared more affordable to borrowers than they actually were. (15) When the borrowers signed the mortgage agreements, does their "consent" justify the government's choice to side with the lenders? Courts have generally answered the question affirmatively in the litigation arising out of subprime mortgage crisis. (16)

Because of the ease with which "consent" can be manipulated, contract law's consent focus will inevitably lead the courts to use the coercive power of the state to favor the more powerful party in an economic relationship. (17) The party with more bargaining power, resources, and better access to information is in a better position to manipulate.

Some scholars have identified the problems with contract law's commitment to consent. (18) Some have identified defects related to consent in the area of standard form contracts (19) and cyberspace contracts. (20) Professor Radin, in her article Humans, Computers and Binding Commitments, raised some thoughtful questions about the consent-based approach. (21) She examined commercial practices in online computer contracting and queried whether "the move online exacerbate[s] the disjuncture between the consent-based picture and the reality of transactions." (22)

So far, contract law has addressed the defects related to consent through a patchwork of contract defenses and doctrines such as unconscionability. (23) Courts' analyses of contract law issues have generally not deviated from the consent-centric approach. (24) Continued reliance on consent will lead to a deeper disconnect between contract law and marketplace realities. (25) This Article suggests an alternative approach that attempts to untether the contract law analysis from the traditional consent focus. (26)

To provide a context for the discussion, Part I of this Article draws on the findings of behavioral studies to explain why our society seems to be so enthralled by the consent concept. It also attempts to clarify the meaning of consent. Part II examines contract law doctrines designed to ascertain the existence of consent and those doctrines' limitations. Part III of the Article identifies some problems with relying on the consent doctrine as a lynchpin for enforcement. Finally, Part IV of this Article proposes that courts apply a totality of circumstances standard to determine on whose behalf the government should exercise its coercive power in a contractual relationship.

1. UNDERSTANDING CONSENT

   Why are we so enthralled by the consent concept? What explains its iconic status in contract law? What exactly does consent mean? What kind of consent reflects the core values of individual autonomy and freedom of contract? This Part offers some thoughts on these questions.

   1. The Appeal of Consent

      The consent concept has strong emotional appeal in our society because we as a society pride ourselves on individual autonomy and freedom. (27) The concept belongs to the basket of core ideas that underlie the American Dream. (28) The central idea of the American Dream is that we are in control of our own destiny. It has been described as "the creed of the rugged individualist--a belief that anyone who works hard can succeed.... As free agents in a free society, we would all have equal access to economic opportunity." (29)

      The consent concept is thus consonant with the ideal image that we would like to have. (30) It gives us a comforting narrative about ourselves. Humans have a strong need for coherence. (31) We are free and independent and we control our own destiny. (32) We are free to agree or not to agree, to consent or not to consent because we alone can define our relationships with others. (33) Respect for consent means respect for our individualism and autonomy. (34)

      Contract law naturally embraces the consent concept as the lynchpin for enforcement of promises. This is an easy story to tell and sell. (35) Indeed, one could argue that the danger of the consent concept (and its ability to do mischief) lies in its strong appeal and coherence. Because of its appeal, there is no ready constituent to expose its potential to do mischief. There is little political will to save people from themselves.

      The alternative narrative, which unfortunately more closely resembles reality, is a more difficult story, as behavioral economists have shown. (36) We are not really free. (37) We have multiple obligations to family, friends, superiors, and various affiliated groups. (38) Our choices can be easily swayed. (39) We often make decisions not based on best evidence and we are distracted by secondary considerations. (40) Our flaws are so predictable that we can be easily manipulated. (41) When we agree to do certain things, it may be due to multiple reasons that may not reflect our free will. (42) Our decisions may reflect our environment and other external factors. (43) In reality, we make very few decisions free of outside influences. (44)

      Faced with the ideal and the real, we embrace the ideal wholeheartedly. Indeed any challenge to the consent doctrine could risk being viewed as advocating for...