Boilerplate: the Good, the Bad and the Ugly

“All these waivers are essentially saying the same thing – even if the law makes me legally responsible as the service provider, I will not be responsible”

It is now a very familiar scenario, faced every day by thousands of people who are acquiring online goods and services around the world – a pop-up window that shows up at the very end of a purchasing or installation process, asking the customer to agree to a long list of terms and conditions. These are known as adhesion contracts, also referred to in the United States as boilerplate. Online boilerplate binds consumers to the terms of use regarding particular software or a website. However, the same principle applies if one signs a waiver when taking a child to a camp, or if one sends a parent to a nursing home. “All these waivers are essentially saying the same thing – even if the law makes me legally responsible as the service provider, I will not be responsible,” Professor Radin explains.  “They are trying to use contract to delete the legal remedies of the consumer.”

Professor Margaret Jane Radin, Faculty of Law Distinguished Research Scholar at the University of Toronto, has focused her recent research on boilerplate and its proliferation in the internet age. “These so-called “contracts of adhesion” are called boilerplate because they contain unchangeable terms. If you are online and you simply click on ‘I Agree’, you are bound to them,” Professor Radin explains. “Or so the firm’s lawyers hope, and so many American courts are willing to rule.”

Boilerplate takes away the right of people to legal remedies. In traditional law, if the company is negligent and the individual gets hurt, he or she can sue. However, if an individual signs a waiver saying that the company is not liable for its own negligence, suing the company becomes impossible. “In the US this trend has gone very far, somewhat less far in Canada, although one British Columbia case has sided with the company against the consumer. In the US there are even clauses saying that companies can modify the customer’s contract as much as they want, while the reverse cannot be done,” Professor Radin adds.

In 2013, Professor Radin published a book on the topic, entitled Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law (Princeton University Press, 2013). Since then she has written several other papers, expanding on the theme. Among her recent writings on this topic are Access to Justice and Abuses of Contract, forthcoming in the Windsor Yearbook of Access to Justice, and The Fiduciary State and Private Ordering, forthcoming in Contract, Status, and Fiduciary Law, an Oxford University Press book edited by Paul B. Miller and Andrew S. Gold.

Professor Radin keeps revisiting the area because of its overall importance. Contracts that take away the right to redress also take away the rights to due process. People are generally not aware of this – they become subject to boilerplate without even realizing what might be enforced. “It is very simple. Most of us, when we sign things, do not think that we will be the ones to get hurt,” Professor Radin explains, “but people really sign away their rights, and in the US in some states, the rights of their children or parents as well, when they waive all of the firm’s negligent behavior.”

An even more troubling US trend is forcing individuals to submit their claims to arbitration, a private procedure, instead of taking disputes to court. “There is nothing wrong with arbitration between firms of equal power, and international arbitration has become very useful to companies,“ Professor Radin says. Boilerplate clauses forced upon consumers are a different matter. Such clauses used against consumers are called Pre-Dispute Binding Mandatory Arbitration Clauses, meaning that as soon as the consumer clicks ‘I Agree’ he or she gives up any remedies in court that may be needed in the future if there is a claim against the provider. As Professor Radin notes “Most people give up in advance and do not try to go to arbitration; very few have faith in the process because it seems like the arbitrators are hired by the company.”

An additional issue present in common law countries is that, as interpreted in the US, the arbitration process works against a class action or aggregative relief route. Furthermore, arbitration is done in secret, and its results do not have to be published. Common law countries go by the precedent of the law, not just by a Code – however, with the arbitration process, there is no precedent to work with.

Professor Radin argues that using adhesion contracts to erase legal remedies takes away the protection that society is supposed to give us. “I think that society must decide what can constitute a contract. This has always been true in the law of contracts, what I like to call its legal infrastructure: there is the court system, there are statutes, and there is common law about what a contract is,” Professor Radin says. “If you bring an action for breach of contract the courts are supposed to interpret the contract’s validity, and make the person who breached it pay,” she argues. The courts have the ability to give relief and order compensation, a power that Professor Radin believes should be reserved to the legal system, not subject to deletion by private firms that seek to insulate themselves from liabilities for injuring consumers.

Professor Radin also argues that the sovereign state has a fiduciary duty to make sure that protections are in place, and for this reason judges should stop enforcing contracts which seem to be without an actual agreement. “What makes a contract valid is two people who use their free will to agree to an exchange, knowing what they are agreeing to; there has to be actual consent,” Professor Radin adds.

The internet age has deepened the boilerplate trend. An individual will encounter numerous ‘Agree to’ terms, presented in a way that would never happen in a physical store. “The terms are always very favourable to companies that do not ever want to pay for their mistakes. However, I think that this is ultimately hurting companies as well. I do not think companies should want to make their product look bad,” Professor Radin adds.

Professor Radin suggests that technology might also offer some solutions – for example, giving people a chance to avoid websites with arbitration clauses. Professor Radin also believes that the practices of insurance companies should be investigated. Insurance companies, at least in the US, seem to be often refusing to sell insurance to companies unless they make their customers give up rights. “The insurance company wants to insure a provider against a risk – for example that the provider will negligently injure a customer – while trying to shift that risk to the customer himself,” she explains.

Professor Radin is particularly concerned about how students understand these recent changes. “Most of the contract casebooks do not spend a lot of time on what has happened to contract law. I am hoping at least to change how contract is taught to students. If a client wants to use one of the far-out boilerplate clauses that is known to be unenforceable – such as a clause that seems to absolve the firm from liability even for intentionally harming a customer – a lawyer should just say no.” She would like students to keep in mind that a lawyer must not present argument in court based upon something known to be legally unenforceable. If the purpose of the client is not to rely on the clause in court but only to deter consumers from even trying to get to court, that is also unacceptable. “Hopefully at least Canadian lawyers will counsel their clients not to use the worst models of adhesion contracts, because ultimately they make their clients look bad,” Professor Radin concludes.

Professor Margaret Jane Radin

Professor Radin is the Faculty of Law Distinguished Research Scholar at the University of Toronto, where she serves on the Faculty Advisory Group for the Centre for Innovation Law and Policy. Her most recent book, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law (Princeton University Press, 2013), winner of the Scribes Book Award for 2014, explores the problems posed for the legal system by standardized adhesion contracts and how those problems might be ameliorated. She is the author of about 70 articles, two of which, Property and Personhood and Market-Inalienability, were selected for a list of the 100 most-cited law review articles of all time. Recently she was the 2016 Fasken Martineau Visiting Senior Scholar at the Allard School of Law, hosted by the Centre for Business Law.

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