Chaumtoli Huq, Integrating a Racial Capitalism Framework into First-Year Contracts: A Pathway to Anticapitalist Lawyering
, 35 J. Civ. Rts. & Econ. Dev.
__ (forthcoming 2022), available at SSRN
Professor Chaumtoli Huq’s recently posted Article, Integrating a Racial Capitalism Framework into First-Year Contracts: A Pathway to Anticapitalist Lawyering, provides an accessible and insightful map for engaging with and applying theories of racial capitalism in a first year Contracts law course. Her Article is a powerful testament to the idea that critical legal thinking skills are good legal practice skills. Asking questions informed by racial capitalism enables us to better articulate in the classroom how the law that builds and reinforces capitalism is not (only) racially exploitative through one-off instances of discrimination, but rather throughout the very foundations of labor, property, contract, and corporate jurisprudence.
The Article deftly demonstrates the pedagogy of a racial capitalism-informed contracts law analysis. Huq presents several critical concepts, including “praxis” and “racial capitalism,” in accessible language while also explaining their relevance for legal education. In describing racial capitalism as “the mutual interdependence of racism and capitalism, a form of capitalism that relies on and is maintained by the exploitation and reproduction of racial differences” (P. 5), she draws from Ruth Wilson Gilmore, Cedric Robinson, Robin D. G. Kelley, Claudia Jones, and others, explaining the under-appreciation of Jones’ and other Black feminist insights in academic literature along the way. She describes the relevance of racial capitalism for contract law thus:
Racial capitalism provides an important through-line for students to understand how racial inequalities are reproduced in the present and the law’s role in this reproduction. As essentially a political- economic theory, it is particularly useful to draw connections between legal doctrine and the market economy. It stands in contra- distinction to the dominant classical and neoclassical economic theory embedded in contract doctrine. (P. 10.)
After laying the foundational vocabulary of the Article, Huq re-reads a well-known 1845 Alabama contracts law case, Kirksey v. Kirksey, through the lens of racial capitalism. Huq’s analysis shows what is missing from conventional accounts of the case. The case involves a lawsuit between a woman and her brother-in-law. The woman was a widow with children, and the brother-in-law had offered them a place to live, only to evict them after several years. As we learn from Huq’s discussion, the land which is offered to the widow is not actually owned by her brother-in-law. Huq draws in historical literature depicting how the brother-in-law had been attempting to use the widow as a kind of placeholder enabling him to avail himself of a government program granting land to white settlers in the American South. She then takes the analysis further to reveal what is rendered invisible through the Court’s recognition of the claim between the two family members: the dispossession of Indigenous peoples by the American government as well as the exclusion of Black people from land ownership. Both modes of dispossession are ongoing. Huq brings in contemporary work by scholars such as Thomas Mitchell to show how property and contract law as well as government regulation perpetuate that dispossession.
Huq effectively shows how social science literature –both the racial capitalism understandings of the economy as well as the historical literature around land allocations in the South – is essential to understanding the case before us. Such literature and the valid concerns around racial equity that it raises is not mere “policy” to be added on at the end of “real” or “doctrinal” legal analysis.
Huq’s Article also elegantly illustrates how to appreciate seemingly race-neutral private law doctrine as having profound, invisibilized, racial effect. She distinguishes this kind of analysis from a “narrow legal analytic approach” which “fails to give students a robust understanding of the doctrine and fails to reveal how the doctrine is formed on the exclusion of others whose stakes to the claim for land were denied.” (Pp. 17-18.) The assumption that contracts, property, and corporate law are generally race-neutral (unless they are facially discriminatory) has reinforced racial subordination by constructing and entrenching deeply oppressive economic structures such as land access and ownership as we see in Kirksey. By drawing our attention to what has been rendered invisible outside of the legal claim at stake, Huq shows us (and her students) how to better appreciate the piece-by-piece, or case-by-case and policy-by-policy, construction of structural oppression. She shows how cases like Kirby exist not just in their text but in what happened when that text was written and when that opinion was rendered. In the shadow spaces surrounding claim recognition in judicial opinions, racial and other forms of subordination are given free reign.
To illustrate the ongoing effect of dispossession and the widespread impact of racially-discriminate housing policy in more recent times, Huq then turns to African American Studies Professor Keeanga-Yamahtta Taylor’s work on the racially exploitative structures put in place by the federal government and the banking and real estate industries in the 20th and 21st centuries. (Pp. 23-26.) This wider frame of analysis enables students to appreciate what facts are being left out of dominant narratives, how public and private actors’ racially-disparate programs and policies are invisibilized through the assumption that they are race-neutral, and to therefore make stronger arguments for deserved relief.
By seeing contract and other fields of law through the lens of racial capitalism, we can better appreciate how law renders its own structural racism invisible – not just in the effect of a single judicial opinion or policy, but rather more deeply in methods of claim adjudication and reasoning, resulting jurisprudence, and in legal pedagogy. Eradication of those institutions and practices requires the form of anti-racism and anti-capitalist education and critical legal analysis which Huq’s Article exemplifies.
Each time we browse the web, we are steered into making dubious contracts. A common example is digital platforms’ pressure that users click to ‘ACCEPT ALL COOKIES.’ Web designers not only make the ‘accept’ button the most eye-catching option, they often enhance the effect by having it block what users really want to view. Additionally, the disfavored behavior of rejecting some cookies is intentionally made to frustrate, frequently requiring users to navigate through several screens and choose between deliberately confusing alternatives. When users surrender to this design, they consent to sell their information to innumerable entities without reward—manipulated into donating their private data to sophisticated strangers.
In Shining a Light on Dark Patterns, Jamie Luguri and Lior Strahilevitz do a remarkable job explaining and demonstrating the problem and starting the search for solutions. Their important article contributes to a growing body of literature that discusses the fast-spreading phenomenon of using big data and advanced technologies to prey on human biases and maneuver the decision-making of countless people. As the authors specify, the behavior is based on “altering online choice architecture in ways that are designed to thwart users’ preferences for objectionable ends.” (P. 52.) Their article presents a long list of recognized methods used to manipulate customers, offering examples that would be too familiar to apps and digital platforms users. And, yes, these examples include the method of convincing people to choose the firm-friendy option of accepting all cookies, calling it “interface interference.”
Scholars have used various terminologies to capture those vast scale manipulations. While Luguri and Strahilevitz use the term dark patterns, others have referred to digital or online manipulations and deception by design. Regardless of title choices, researchers seem to agree that the problem is significant and urgent, perhaps “the most alarming problem confronting us today.” Shining Light on Dark Patterns considerably substantiates this claim.
The article reports two large-scale experiments that provide evidence that efforts to manipulate the masses actually work. Here is how the authors summarize their main finding: “Our bottom line is that dark patterns are strikingly effective in getting consumers to do what they would not do when confronted with more neutral user interfaces.” (P. 46, emphasis by the authors.) The experiments also offer two more nuanced but as meaningful results. First, they show (somewhat counterintuitively) that the most effective manipulations are the subtler ones, while the power of more aggressive interventions tends to be countered by a backlash. Second, they illuminate a distributive effect, demonstrating that less educated Americans are more likely to be swayed by dark patterns than their more educated counterparts.
Turning from experiments to the law, the authors discuss ways to regulate dark patterns. Their rich analysis leads them to argue that “[t]he contract doctrine of undue influence provides the most promising existing framework for efforts to curtail dark patterns.” (P. 94.) This is a valuable idea that deserves closer attention. As the authors point out, the relevancy of the doctrine comes from its focus on unfair persuasions that impair the exercise of judgment by influenced parties. On this point, they compellingly argue that since their experiments show an intentional and impactful interference in people’s decision-making, the doctrine of undue influence can and should be used in the digital context.
However, the article alludes to the limitation arising from the doctrine’s conventional narrowness. In particular, it refers to the doctrine’s demand for a special relationship between influencers and the people they exploit. The authors’ general response to this challenge is based on their observation that “some courts construe the relationship language broadly.” (P. 94.) The problem is, of course, that there are not too many cases that prove this point. Accordingly, Luguri and Strahilevitz ultimately concede that handling dark patterns with conventional undue influence tools “would amount to an extension of the doctrine.” (P. 96, emphasis added.) Nonetheless, they state that such an extension would be desirable in light of the darkness they describe and “consistent with the purpose of the doctrine.” (P. 96.)
The article’s call to use the doctrine of undue influence against digital manipulations is invaluable. Indeed, the doctrine relies on a triangle of dominance, vulnerability, and a harmful contract, and this triangle can be found in various contractual scenarios, old and new alike. The problem is that the doctrine has long been applied too narrowly, preventing many from seeing how it can be utilized to address new realities. As the article suggests, part of the challenge comes from the conventional insistence that the parties will have a particularly close relationship, such as in the cases enumerated in the Restatement (Second) of Contracts, which include, for example, “parent and child, husband and wife, clergyman and parishioner, and physician and patient.” By contrast, dark patterns operate between strangers. Moreover, compared to the classical stories of undue influence, they are distinct in their “newness, scale, and effectiveness of techniques.” (Pp. 45-6.)
Those notable differences, however, should support rather than undermine the authors’ claims regarding undue influence. The doctrine’s past focus on relationships that reside at the margin of the market should not prevent us from using it to handle contemporary and emerging issues that occur at the heart of the marketplace.
It should be further noted that another obstacle to applying undue influence to novel and vast forms of manipulation is the doctrine’s traditional focus on the most extreme cases of vulnerability. For example, common law scholars describe claimants of undue influence as “impaired in their judgmental capacity” due to “their morbid dependence on another.” However brazen, this description reflects the more general belief that only the pathologically vulnerable should be awarded relief under the doctrine. At the same time, it strongly suggests that ordinary users of contracts are not vulnerable and thus should be able to resist manipulations without legal help.
Yet, this view is misleading. In reality, as the vulnerability theory reminds us, we are all vulnerable due to our embodied humanity. And, counter to the neoliberal myth, people’s survival and thriving always entail dependency on others and susceptibility to influence. Indeed, firms and web designers are fully aware and ready to profit from the moderate vulnerabilities shared by ordinary people. As the authors explain, “[Dark patterns] typically prompt users to rely on System 1 decision-making rather than more deliberate System 2 processes, exploiting cognitive biases like framing effects, the sunk cost fallacy, and anchoring.” (P. 44.) In fact, recent literature demonstrates that digital manipulations can trick even Google software engineers.
New technologies make it easier to detect and exploit vulnerabilities in a systematic way that reaches everyone and is—as Luguri and Strahilevitz show—uniquely effective. This problem is presently acute and undoubtedly will further intensify. While concrete rules may help, we must also utilize existing flexible standards such as the one offered by the doctrine of undue influence to timely respond to emergent variations of manipulations. In the face of obstacles rooted in the doctrine’s conventional application, works like Shining Light of Dark Patterns justify a call for its modernization so that law can meet rising challenges to contracts’ voluntary nature.
Fred O. Smith, Jr.’s complex and ambitious article On Time, (In)Equality, and Death wakes us up to what we owe the dead, especially the dead who have suffered mass, systemic horrors such as slavery. The article dexterously ties a relatively niche doctrinal area — legal rights and duties regarding dead bodies — to the monumental and pressing question of what we who live owe to the dead and their descendants. His core contention is that the living act as trustees for the dead, not just as individual embodiments of their lineal relations. Moreover, we violate our duty as trustees when we fail to hold and curate society’s collective memory to also honor evolving norms of equality and anti-subordination.
Bottom line: Our generation is complicit in harms of past generations unless we recognize and remedy mass horrors. While he discusses harms caused by both slavery and the colonization of Indigenous peoples, this Jotwell piece focuses on slavery.
Smith’s wide reach across doctrines and theory make this article just as suitable for a Jotwell piece on Estates & Trusts. I write about it here because any reparations argument presupposes a debt. Society owes a debt to those it has harmed and their descendants, who inherited those and related harms such as racial wealth disparities. Reparation claims implicate contract theory and doctrine because systemic injustices such as discriminatory credit laws and contracting practices flowed from slavery and Jim Crow to produce and maintain economic harms to African-Americans today. Law as well as public and private actors thus breached the social contract that is supposed to provide equal justice for everyone. On Time, (In)Equality, and Death could help legal theory and doctrine overcome specious arguments that passage of time since slavery and Jim Crow currently allows those whom White supremacy has unjustly enriched continue to weasel out of paying their debts.
- Doctrine of Unequal Treatment Among the Dead
The first part of On Time, (In)equality, and Death identifies and categorizes the many factual and legal instances in which supposedly dead hands get legal work done. Smith catalogs a wide range of cases in which criminal, tort, and contract law police against desecrating graveyards, wrongfully disinterring buried bodies, and disfiguring or otherwise abusing dead bodies. He distills principles that guide posthumous interests, including the decedent’s intention, the claimant’s relationship to the dead person, and any motive or fault of the people involved. Contracts come into play in the form of estate planning tools such as wills and health care directives, in which living people express binding instructions regarding the disposition of their property, and, in the context of burial, of their funeral and interment. In addition, mortuaries and crematoria conduct their business via contracts. Breach of a contract to properly embalm a corpse is among the few instances in which contract law has awarded punitive damages. And cemeteries long imposed apartheid beyond the grave via restrictive covenants. (P. 238.)
These legal doctrines reflect our biased past. Smith uses recent, compelling cases to show how legal rules that are supposed to honor the dead get applied in ways that re-enact historic subordination of enslaved people and their descendants.
Smith weaves two cases regarding African-America graveyards throughout the article. One involved a slave graveyard lying under a parking lot at Virginia Commonwealth University, and the other case arose out of the University of Georgia disturbing a graveyard during construction. In both cases descendants — including Smith’s own father in the Georgia case — sought the legal protections that law affords to the dead. (Indeed, Smith’s own family story of cemetery desecration is consistent with the article’s core message: Smith honors his own ancestors by writing the article.) In the Virginia Commonwealth University case, a claimant who was likely descended from those buried under the cars essentially demanded that the University “get your asphalt off of our ancestors!” (P. 228.) But he lost the case for lack of standing because he could not prove biological kinship with the people buried there. Both the desecration and the lack of a remedy for it stem from slavery. Slavery excluded those enslaved from the human community in which the dead merit burial rituals and markers, thus leaving the land vulnerable to predation, and slavery also legally erased and broke the very bonds of kinship that would have provided that proof to remedy the desecration. Smith punctuates this Catch-22 story ensnaring the descendants of enslaved people with a procedural tidbit: Virginia law on standing requires only a “identifiable trifle” of a legal interest. (P. 253.) The court’s unwillingness to recognize the harms suffered by descendants of enslaved ancestors — likely his kin — as even a “trifle” shows a willful blindness.
The article also describes how a Massachusetts court likewise refused to honor the claims of descendants who sought to stop Harvard University’s continued use of a eugenicist’s photographs of two enslaved people — Renty and Delia — which he used to support pseudo-scientific claims of white supremacy. (P. 259.) Yet Smith provides one story of an institution that did the right thing by ceasing — in 2020 — to display enslaved people’s body parts when it withdrew from its museum collection a set of skulls of people enslaved in Cuba. (P. 233.) Whether the University also scrubbed the images from the Museum’s digital footprint, and stopped using data collected from these desecrated corpses is another question. (Pp. 226-227.)
These stories and others in On Time, (In)equality, and Death show both how and why more institutions should stop acting like they still own the bodies that their predecessors enslaved.
- Theory & Doctrinal Fixes to Right the Wrongs to Posthumous Interests
Smith presents what he calls “fragments of a theory” of “posthumous harm.” (P. 246.) It turns on our collective responsibility to curate collective memory in light of evolving understandings of the wrongs of slavery and subordination more generally. By “collective memory” Smith means French sociologist Maurice Halbwachs’ notion of a reconstruction of the past via, for example, legal narratives, trials, and doctrines, that “adapt[s] the image of ancient facts to the beliefs and spiritual needs of the present.” (P. 241.) Historic preservation laws honor this truth, and Smith’s theory justifies continued replacement of monuments glorifying the Confederacy with those honoring the memory of those dead whom the Confederacy sought to deprive of their very humanity.
Smith then applies his theory of collective memory to propose fixes in the graveyard desecration cases as well as the one involving the body parts and images of deceased slaves. These concrete reforms would have law:
- Stop requiring proof of biological kinship to those who would prevent desecration of the dead in slave cemeteries;
- Require more process including notice and opportunities for a hearing before disturbing ancient burial grounds;
- Acknowledge histories of “violent subordination” and systemic destruction of kinship ties among subordinated people in doctrines policing harms against the dead; and
- Increase investments in monuments, museums, historical preservation, and other efforts to “counter the corrupted memories about America’s past.” (P. 252.)
These proposals, if adopted, would help American law and society to take the key first step of acknowledging its debts to the dead whom it systematically and violently subordinated, as well as their descendants. Only then can we fashion and award remedies.
- Applicability to Other Reparations Contexts
An extraordinarily important implication of Smith’s article is its potential to contribute to a theory of reparations in other contexts. Much opposition stems from the delusion that White people today do not benefit from the White supremacist laws and practices of the past. Recent books such as Dorothy Brown’s The Whiteness of Wealth (2021) and William Darity & A. Kirstin Mullins’ From Here to Equality (2020) systemically dismantle that big lie.
If law does a better job of honoring the dead who suffered America’s brutal subordination and erasure, it may well come to recognize the debt for losses that flow to the descendants of those long-suffering souls. For example, the case In re African-American Slave Descendants Litigation could and should have held accountable businesses and institutions that profited from slavery. But it was dismissed for lack of standing and statute of limitations issues. The doctrinal and theoretical lessons of On Time, (In)equality, and Death may provide future claimants with a foundation for overcoming hurdles of standing and statutes of limitation in reparations cases. Along the same lines, the Biden Administration is litigating the validity of a 2021 U.S. Dept. of Agriculture plan to spend $4 billion to help Black and Latinx farmers and ranchers pay off government loans as reparation for decades of systemic governmental race discrimination in the form of lower approval rates, inferior loan terms, inferior loan servicing, and concerted efforts to ignore complaints about that discrimination. White farmers successfully claimed that this reparative remedy constituted unlawful race discrimination, so the agency must now re-write the regulation to provide a remedy on other grounds.
Honoring the memories, bodies, and systemically limited life chances of the deceased who suffered White supremacist subordination may chart a course for courts to finally honor the past-due debt owed to the descendants of enslaved Americans for the many ways that government and private actors have short-changed them. To get there, we must first acknowledge the racial harms of the past and their continued economic and cultural consequences today. The theory and doctrine in Smith’s article could inject that needed life into long-overdue claims for both cultural and economic reparations.
Michael A. Blasie, The Rise of Plain Language Laws,
76 U. Miami L. Rev.
447 (2022), available at SSRN
Many contract professors find the cases describing modern consumer contracts to be particularly challenging. The adhesive, omnipresent, nature of such deals belies the idea of the meeting of the minds, and the nation’s politics make reform seem out of reach. We all know that there are too many consumer contracts, and that the terms of such deals get worse every year. But what’s to be done about it? The fervor about consumer contracts even reached into the august halls of the American Law Institute, whose Restatement of Consumer Contracts faced substantial opposition last year when it embraced courts’ apparent tendency to de-emphasize the role of conspicuous notice in formation. You would be well within your rights to think that realities of consumer contracts make the rest of the semester feel like a bait-and-switch.
But take heart and read Michael Blasie’s The Rise of Plain Language Laws. Blasie shows that the last 40 years has wrought a quiet revolution in consumer contracting – one that is essentially never taught in our classrooms or remarked on in mainstream contracts scholarship. Legislatures have apparently created strong substantive mandates for what can be in consumer contracts, and how they can look, in essentially every state. They’ve done so in a relatively non-partisan way, over only modest opposition. It’s a shocking story.
Plain Language Laws helpfully sets out the intellectual foundations of the plain language movement, from David Mellinkoff’s 1963 The Language of the Law, to Bernie Black’s 1981 (!) law student note on the utility of plain language laws in regulating consumer contracts. The claim is that plain language deals, statutes and opinions are easier to read and more democratically accessible. Though the movement comes in various shapes and sizes, it has a common set of commitments:
Plain language recommends presenting information in a logical order; leading with the most important information; and deploying headers, topic sentences, and transitions. Plain language emphasizes brevity: short sentences, short paragraphs, and short sections. Plain language prefers using present tense verbs and active voice. At the same time, writing with simple words and phrases, while minimizing jargon, abbreviations, and definitions exemplify plain language.
Given these foundations, the battle against legal jargon has been on a generations-long upswing, both in law school pedagogy and in regulatory interest. Blasie illustrates that fact through the “first empirical nationwide survey of plain language laws.” His work reveals a whopping 776 plain language laws, covering the gamut of industries, statutes, regulations and constitutions spread across every state and the Federal Government to boot. What’s revealed by this survey may be unsurprising for scholars of public law, for whom the regulation of statutory proscriptions perhaps anodyne. But for contract scholars, the idea that so much of contract practice is already governed by statute was quite surprising.
The heart of Blasie’s article is an empirical survey of plain language laws (gathered through a laborious and comprehensive search). He found 14 distinct categories where such laws covered. The most – 509 of 776, or nearly 60% were consumer protection (laws governing consumer contracts), while the next largest category was laws governing executive function 12(2), judicial function (6%), housing (5%) and the like. That is, plain language laws are having their largest effect in the rules governing consumer contracts. Of these the plurality govern insurance contracts (42%), some sale of good transactions (16%). But some states—like Pennsylvania—have plain language laws that govern across industries, for all contracts worth less than a sum ($50,000 in Pennsylvania) a year.
What do such laws do? Blasie offers a wide variety of answers to that question, from substantive mandates about writing style and format, to certification regimes, to particular requirements like Connecticut, which requires consumer contracts to have an “ average number of words per sentence is less than 22; [with] no sentence [exceeding] 50 words; the average number of words per paragraph [to be] less than 75; … no paragraph [exceeding] 150 words; and the average number of syllables per word is less than 1.55.” Even in states with less precise requirements, most now states require consumer contracts to follow plain language prescriptions, or face fines and penalties.
Given this broad ranging regulatory movement, you might wonder: has the plain language movement for consumer contracts made the world better? Blasie concedes that we simply do not know:
So far, much of the research has been case studies into documents written for particular readers in specific contexts . . . no research has shown mass market benefits across all documents, industries, and contexts. Success in billing statements and agency letters does not necessarily translate to the same benefits and costs with quintessential, lengthy, complex legal documents like contracts.
This provides an opportunity for other scholars who can use Blasie’s categorization to ask necessary questions. First, do such laws actually change contracts: are consumers in states with strong plain language rules seeing contracts that look differently than those without, or are firms simply ignoring the regulatory overhang as much as contracts professors do? Second, are plain language contract terms more often read, understood, and therefore priced? I would be quite (pleasantly) surprised if that were the case. And, if not, who are plain language consumer contract laws actually benefiting? One possibility is that by increasing the price of contracting, plain language laws perversely reduce the supply of novel goods and services for consumers by creating artificial barriers to entry that help incumbents. Another is that the benefits from such laws are reaped by lawyers. Either way, it’s important to think carefully about this movement, which has swept opposition before it.
Blasie’s article, by giving us the tools to ask and answer a novel set of questions about consumer contracting, adds enormous value to the field. I recommend it to you.
Roseanna Sommers, Contract Schemas
(Jul. 8, 2021), available at SSRN
There are some things that we know about contracting behavior even without the benefit of empirical studies. Do we really need studies to prove that nobody clicks on a hyperlink to read Terms of Service when it is something that we ourselves have never done? Do we really need more empirical studies to show us that most people wouldn’t understand the fine print even if they did? It is our everyday experience that informs our understanding of contracting behavior, not necessarily our expertise or knowledge of doctrine.
But sometimes, our expertise may cloud our thinking so that we can no longer put ourselves in the shoes of the layperson, and what we assume about contracting behavior turns out to be wrong, incomplete, or misleading. For that reason, Roseanna Sommers’s article Contract Schemas should prove to be a useful resource for those who write on consumer contracts and consumer contracting behavior. Sommers’s article is a review of the literature involving “what ordinary people think is happening when they enter into contractual agreements.” (P. 2.) It reinforces what we may already have suspected about some things and reminds us that some of what we know and assume others know is, in fact, not universally known. Because Sommers includes somewhat obscure sources as well as more familiar studies, it is a useful overview of the literature of the psychology of consumer contracts for both newcomers and those already familiar with the field.
The review starts with “the array of features that prompt people to categorize an arrangement as a contract, thereby activating their contract schemas.” What is a “contract schema”? As Sommers explains, schemas are “stereotype-like cognitive structures” or, “pre-existing cultural scripts” (P. 2) which “allow us to process and navigate situations that are entirely novel, with little effort.” Contract schemas then are those things which people believe are true about contracts, the things that make then “contract-y”.
So, what do lay people think is a contract? Drawing primarily upon the research of D.P. Stolle, she states that most lay people associate contracts with unreadable text, long complex sentences, and small font. They also think of boilerplate, “loopholes,” and “hidden strings.” As Sommers notes, the layperson thinks of the “prototypical contract” as “one that you cannot read but that is laced with peril.” (P. 3.) Not a very flattering impression of contracts. Above all else, laypeople believe contracts are signed. She notes that “(f)ocus group participants mentioned signing one’s name nearly twice as often as any other feature” and “(s)everal studies have confirmed that signatures loom large in the lay conception of contracts.” (P. 3.) Thus, “people schematically represent contracts as documents filled with blocks of tiny, inscrutable, jargon-laden text, with a signature at the bottom.” (P. 4.)
As for the substance? Perhaps unsurprising given the jargon, fine print, and legalese, “(p)eople rarely have more than a vague sense of what is contained within the dense text.” (P. 4.) The dispiriting conclusion is that “when people encounter an object that has these characteristic features – long, complicated sentences; fine print; legalese, signature block; and so on – they heuristically represent it as a contract even as they fail to engage with the substance.” (P. 5.)
So much for the look of contracts. What do laypeople expect from these off-putting blocks of text? What psychological and behavioral effects do these schemas trigger? According to the review, they believe that contracts “will be enforced as written” and “generally do not contemplate the possibility of unenforceable clauses.” (Pp. 6, 11-12.) In fact, the “lay expectation that contracts are enforced as written is so strong that people often look to their contracts for guidance on their legal rights and obligations.” (P. 7.)
All this fine print has a “demoralizing” effect which leaves consumers feeling helpless and blaming themselves for failing to read contracts more carefully – even though it would be unrealistic for them to do so. (P. 9.) Moreover, “socioeconomic status” was an “important predictor of whether people view contract terms as authoritative.” (P. 9.) MBA students, lawyers and law students were all less inclined to view clauses as binding or unchallengeable which “may leave some groups more open to exploitation by sophisticated parties, who can use laypeople’s contract schemas against them.” (P. 10.)
Perhaps the average consumer’s belief in the immutability of contract terms is warranted. As Manisha Padi (reviewed here) documented, sophisticated parties negotiate and take advantage of unclear terms to get more lenient treatment from firms, which means that one-sided adhesive terms would more negatively impact those with fewer resources.
Sommers review of contract schemas provides an additional dimension and an exclamation point of sorts to the concerns raised by scholars like Danielle Kie Hart who have expressed concerns about the pitfalls of relying upon contract defenses like unconscionability to get out of unfair contracts. It also raises additional questions about how to best incorporate the findings from the literature on consumer beliefs about contracts into contract law. If consumers believe in contract formalities, such as a signature block, shouldn’t we refuse to recognize a click on an “Accept” icon as a manifestation of assent because it is not “contract-y” enough? If consumers believe contracts are unchallengeable, should we require more to find contract formation and rely less on contract defenses such as unconscionability to avoid socially undesirable bargains? The research as summarized by Sommers in this literature review requires contract law – and contracts scholars – to ask better questions and demand more realistic doctrinal solutions.
David V. Snyder, Susan Maslow, and Sarah Dadush, Balancing Buyer and Supplier Responsibilities: Model Contract Clauses to Protect Workers in International Supply Chains, Version 2.0
, 77 Bus. Law. (ABA)
___ (Winter 2021-2022), available at SSRN.
More than 40 million people in the world today are held in some form of slavery. Slavery today takes many forms, ranging from the abhorrently obvious open slave markets in Libya reported in 2017 to bonded labor, prison labor, sex trafficking, child soldiers, debt slavery, and many other permutations of one of the oldest human institutions. Slavery is so endemic and difficult to police that the continuing human tragedy seems intractable, especially when viewed from the limited toolset available to governments seeking to prevent the practice.
The Model Contract Clauses 2.0 (MCCs 2.0) presented in this report represent a movement away from traditional command and control legislative and regulatory enforcement efforts to provide private commercial actors with a set of modular, scalable, flexible, and implementable mechanisms for addressing slavery in international supply chains. As Snyder, Maslow, and Dadush note: “This project was born of challenge, frustration, and hope. There is little doubt that workers in international supply chains are being abused, in the most horrifying ways, even as they work to produce the staples of our everyday lives and indeed support much of our economy.” (P. 2.)
While private efforts to combat slavery in international supply chains have largely been limited to corporate codes of conduct purporting to prohibit individual firms from supporting directly or indirectly human trafficking, slavery, or slave-made goods in their supply chains, there is little evidence that such internal codes actually impact slavery within these firms’ supply chains on a systematic scale. In contrast, the MCCs (both version 1.0 and 2.0) confront this problem by providing a well-crafted and coherent set of contract terms that every actor in a supply chain—whether buyer or seller—can incorporate into their supply chain contracts thus situating private contract as a supplement to legislative and efforts. Although it is not possible in this review to engage with the actual contract clauses, the strategic thinking behind the MCCs 2.0 is both artful and a powerful demonstration of how private contracts may be drafted to mobilize international supply chains more effectively in the fight against slavery worldwide.
First, the MCCs 2.0 begin with the recognition that both buyers and suppliers bear responsibility for slavery within their supply chains. While the first version of the MCCs (MCC 1.0) focused on irresponsible suppliers, subsequent research revealed that “buyer demands, typically related to production times, price requirements, or change orders, can often cause or contribute to human rights violations.” (P. 9.) Ignoring buyers in the forced labor – supply chain calculus arguably incentivizes a “Somebody Else’s Problem” ethic since, after the initial supplier who engaged in forced labor practices, all other actors in the supply chain may focus on their role as buyers who did not themselves commit human rights abuses and therefore do not bear responsibility for those acts.
Second, the original MCCs 1.0 approached the problem of forced labor in supply chains through a series of representations and warranties purporting under which suppliers guaranteed to subsequent buyers that forced labor was not used in production. The MCCs 2.0 abandon this approach in favor of terms that impose human rights due diligence obligations on the parties. This approach is more realistic than imposing warranties since some countries already require human rights due diligence in supply chains and since firms are more likely to operationalize a due diligence regime than a warranties regime:
The regime of representations and warranties, with their accompanying strict liability – if they are not true, there is breach – is unrealistic and ineffective, and often so much so as to be downright fictitious. Frequently, this regime is thought to lead to what is called a “tickbox” or “checkbox” approach to supply chain management in which buyers require a laundry list of representations of compliance from their suppliers. Suppliers mechanistically provide them by checking the boxes, and everyone goes home happy (although they may be more than a little resentful of the time wasted filling forms). Little is achieved. (P. 11.)
The advantages of a due diligence regime over a warranties regime are captured by the authors’ recognition that “Not everything can be made perfect, ever, much less all at once. Perfection is not and cannot be the standard. Priorities are necessary, as is reflected in MCCs 2.0….” (P. 11.) Forced labor hides in the shadows, meaning not only that warranties against slavery are likely breached in a massive number of contracts, but also that the buyers and sellers within the supply chain have strong incentives to put their heads in the sand rather than deal with potential liability and contract disruption that would result if they actually discovered the forced labor within their supply chains. Requiring perfect compliance through warranties creates perverse incentives. Requiring human rights due diligence “is a prospective, retrospective, and ongoing risk management process that enables businesses to respect human rights by identifying, preventing, mitigating, and accounting for how they address the impacts of their activities on human rights.” (P. 11.)
Third, the MCCs 2.0 are intentionally modular, making them both scalable and flexible.
A modular approach is the central drafting strategy of the MCCs…. The Working Group fully recognizes that not all companies are in the same place. Not only do they possess differing capabilities and face varying context, they are simply in different positions in their approach to human rights. Some companies—often those that have been involved in the worst problems—have advanced far in taking responsibility for the effects of their business on human rights. Other companies have taken only a few steps, and many have not yet started on the path. The MCCs are drafted for all of these companies and are designed so that counsel, with a minimum of effort, can adapt them to the particular circumstances of each company.
This modularity means that firms may flexibly adopt the model terms that fit their business context and may also scale up their efforts as they develop. Importantly, the flexibility of the MCCs both increases the likelihood that firms will feel comfortable adopting at least some of those terms and that the terms will not become barriers to entry. At the end of the day, creating a private law structure in which anyone can engage to protect human rights is infinitely preferable to a mandatory regime that prevents any participation at all.
Cite as: Daniel Barnhizer, Soccer Balls Stitched by Tiny Fingers
(January 6, 2022) (reviewing David V. Snyder, Susan Maslow, and Sarah Dadush, Balancing Buyer and Supplier Responsibilities: Model Contract Clauses to Protect Workers in International Supply Chains, Version 2.0
, 77 Bus. Law. (ABA)
___ (Winter 2021-2022), available at SSRN), https://contracts.jotwell.com/soccer-balls-stitched-by-tiny-fingers/
Omer Pelled & Ohad Somech, The Value of Accuracy in Contract Interpretation
(Aug. 5, 2021), available at SSRN
In the past twenty years or so, the new formalism, led mostly by legal economists, has been quite influential in contract theory. Focusing on commercial transactions between sophisticated firms, leading scholars have questioned the courts’ competence to accurately determine the parties’ intentions and called for a textualist approach to contract interpretation (see, e.g., Schwartz & Scott 2000; 2003).
Two common responses to the new formalism are to deny that economic efficiency is the only value underlying contract interpretation, even in commercial contracts, and to shift attention from negotiated, commercial transactions to standard-form and consumer contracts. In The Value of Accuracy in Contract Interpretation, Omer Pelled and Ohad Somech take a different route. They convincingly criticize one of Schwartz & Scott’s key arguments on the latters’ own terms, thereby casting doubt on the accuracy of mainstream economic analysis of contract interpretation even in bespoke commercial transactions between sophisticated parties.
A key insight of Schwartz & Scott’s theory is that contract interpretation need not strive to effectuate the parties’ true intentions. Rather, courts should apply interpretation rules that most contracting parties would have preferred (while allowing those who prefer other rules of interpretation to opt out of the majoritarian default rules). Furthermore, it is assumed that large commercial firms are risk-neutral. Assuming that there is a range of possible interpretations, and that the payoffs for each party are continuous along this range, a “risk-neutral party cares about the mean of the interpretation distribution, but not the variance. This is because the variance term measures risk while risk-neutral parties are indifferent to risk.” (Schwartz & Scott 2003, at 576). It follows that it suffices for a risk-neutral firm that the mean interpretation equals the correct interpretation. This argument, in turn, lends support for textual, rather than contextual interpretation of contracts: even if taking into account extrinsic evidence can enhance the accuracy of interpretation, as long as a literal interpretation is accurate on average, sophisticated, risk-neutral parties would prefer to save on the extra litigation costs involved in the production of such evidence.
Using a series of simple examples, Pelled and Somech demonstrate that this analysis is flawed. In the first part of the article, they show that even if the distribution of a court’s possible textual interpretations is symmetrically distributed around the mean, risk-neutral parties do care about the variance, because typically a more accurate interpretation increases the joint surplus of the contract. Consider the following example: in a contractual dispute, there are three possible interpretations of a given clause, A, B, and C. Under interpretation A, the seller’s cost of performance is 100, the buyer’s benefit from the seller’s performance is 150, and the joint surplus is therefore 50 (150 minus 100). Under interpretation B, the seller’s cost of performance is 150, the benefit from this performance to the buyer is 250, and the joint surplus is therefore 100 (250 minus 150). Under interpretation C, the seller’s cost is 250, the buyer’s benefit is 300, and so the contract surplus is 50 (300 minus 250). Clearly, rational parties must have meant the contract to mean B, as under this interpretation the transaction yields a joint profit of 100, rather than only 50 under each of the other interpretations.
Now, suppose that a textual interpretation of the contract can lead the court to adopt interpretation B with a probability of 0.5, and interpretations A or C with a probability of 0.25 each. In that case, the expected joint surplus of the contract would be 0.5×100 + 0.25×50 + 0.25×50 = 75. In contrast, a contextual interpretation that would accurately adopt interpretation B with certainty would yield a joint profit of 100. It follows that, as long as the added litigation costs of providing external evidence that would enable the court to reach the accurate interpretation is smaller than 25, rational parties would prefer a contextual, rather than textual, interpretation.
Pelled and Somech go on to show that under plausible circumstances, the textualist approach, which is likely to reduce the accuracy of interpretation, may lead rational parties to adopt inefficient clauses in order to reduce the expected costs of inaccurate interpretation, and may even affect the agreed price. The second part of the article then analyzes how accuracy determines the parties’ preferred interpretative approach, taking into account transaction costs, the possibilities of settlement and renegotiation, the contractual environment, and the type of disputed term. Finally, in the third part of the article, Pelled and Somech argue that their modified analysis is actually reflected in legal practice, focusing on the interpretation of force majeure clauses, alternative dispute resolution clauses, and loan agreements. In doing so, they considerably enrich the economic analysis of contract interpretation and bring its conclusions closer to conventional legal thinking.
Both Schwartz & Scott and Pelled & Somech restrict their analysis to negotiated contracts between not-too-small firms, thus excluding most commercial contracts (which are executed through standard forms), private contracts, employment and consumer contracts, and more. They further limit the scope of the analysis by assuming that firms are perfectly rational, do not care about anything but their profits, and are risk-neutral – assumptions that are all contestable. Finally, they posit that the rules of interpretation should reflect a single normative criterion: welfare maximization, thus excluding other values that should arguably inform contract interpretation, such as fairness (see, e.g., Zamir 1997). Adding the fact that sophisticated firms mostly resolve their disagreements outside of the court system, and not necessarily according to the prevailing legal norms, one may wonder how relevant the discussion is for the great majority of contractual disputes.
I believe that, as long as one keeps in mind its premises and limits, the analysis is important and intriguing. Eric Posner (2003) has argued that economic models generate predictions and normative recommendations that are either wrong (because they rest on too many simplifying assumptions) or indeterminate (because the more complex a model is, the more difficult it is to ascertain all the information necessary for its implementation). According to Pelled and Somech, one of the economic rationales for textualism is problematic even under its simplifying assumptions. Nonetheless, like much of economic analysis in general, the present discussion should be praised for challenging accepted truths and provoking new thinking, even if it does not provide simple answers to complex questions.
Pelled and Somech show that economic analysis does not necessarily lend support for formalism and textualism. Indeed, there is no logical connection between individualism, economic efficiency, and formalism. Yet, as Duncan Kennedy (1976) has argued theoretically, individualism and formalism share similar “visions of humanity and society.” And as Ori Katz (2021) has recently demonstrated empirically, individualists actually tend to be more formalists, and vice versa. Possibly, then, the support of many legal economists for formalism is not a product of the normative or methodological commitments of economic analysis, but rather of ideological inclinations.
Manisha Padi, Contractual Inequality
,120 Mich. L. Rev.
___ (forthcoming, 2022), available at SSRN
Standard form contracts have long been thought to be, well, standard. One size for all. A long and distinguished line of commentary has convincingly explained why mass contracts, like mass products, are standardized, what benefits uniformity brings to business and even to consumers, and why a take-it-or-leave method of negotiating them is inevitable.
But a recent empirical line of scholarship has begun to cast doubt on that idée fixe. Standard form contracts, the new perspective suggests, are uniform in paper but personalized in practice. They are handed equally to all customers, but they merely serve as baseline for what some scholars previously called “tailored forgiveness.” In the shadow of boilerplate contracts, businesses exercise discretion and negotiate with individual parties specific accommodations and other variations from the text.
This conjecture—that standard form contracts are in fact adjusted individually—has now received powerful empirical support from Manisha Padi, but with a twist. Against the earlier theoretical accounts, which viewed discretionary variations from one-sided “adhesion” contracts as good news, Padi’s account is more troubling. She finds that the negotiated variations from the standard terms indeed offer some relief from harsh consequences, but are not distributed evenly or fairly across consumers. Businesses reserve these accommodations to select groups among their clientele. To whom are these discretionary benefits directed? Not surprising, to those who need them least. To the more affluent consumers.
Padi’s forthcoming law review article is based on her earlier empirical work, which looked at mortgage loan modifications during the financial meltdown of the early 2000’s. Borrowers who fell behind on their debt payments—who breached their promise to repay—faced the risk of foreclosure. Lenders had the unambiguous contractual rights to foreclose and liquidate the homes, but they exercised these rights selectively and with personalized discretion. After all, lenders, too, stood to lose from foreclosure, recouping only a fraction of each loan in the ensuing fire sales. They therefore often agreed to modify the loans, avert liquidation, and afford the borrowers more manageable payment plans. Padi’s data shows that foreclosure avoidance occurred more often in the more affluent neighborhoods. She estimates the magnitude of the dollar loss poorer borrowers suffered by not being granted the same reprieve.
Padi recognizes (albeit in a footnote) that we don’t know the reasons for these disparities. Maybe more affluent borrowers are also more capable of demonstrating a realistic path for repayment. Or maybe they are more likely to fight foreclosure tooth and nail with every legal means and inflict higher enforcement costs on the banks. But, in truth, it doesn’t matter. What we see is a form of regressive distribution of a specific benefit—the benefit of tailored contractual modification. Those least likely to recover from personal financial ruin are also least likely to be offered a rescue plan.
This pattern, Padi thinks, must be occurring in other consumer contract sectors. Businesses are negotiating with their customers discretionary treatments beyond the contractual rights, but are (probably) distributing them unequally. Indeed, Meirav Furth-Matzkin found in a (yet unpublished) field study that retail stores accept returned merchandize even when shoppers do not abide by the uniform return policy, but that such extra-contractual privileges are distributed unequally across shoppers, favoring whiter and more affluent consumers.
Padi’s insight of post-contractual inequality illustrates a far broader distribution paradox in society. The pattern is familiar. It starts with the enactment of a protective program, to address the hardships people encounter. It offers some benefits or grants access to open resources. But access is not exercised equally. The benefits of the program are enjoyed disproportionately by those who need them less—those more sophisticated who better identify and know how to deploy the programs. Elsewhere, I labeled this phenomenon “the paradox of access justice” and showed that it occurs more often than we realize, with harsh regressive consequences. Governments, for example, provide subsidized insurance that benefits wealthier people; Disclosure schemes which aim to make people more informed and thus more protected are used more effectively by the educated, younger, healthier, and wealthier recipients of the information. In short, many pro-consumer programs have unintended regressive effect.
What, then, can be done about post-contractual inequality? Padi proposes an information-based reform. Governments should require lenders to report patterns of loan modifications, so as to identify the inequality. And do what? Well, unfortunately not much. They might be able to pressure banks to institute more progressive loan programs, or, in extreme cases, sue for violations of civil rights. Or maybe (this is a bit quixotic) trigger reputational sanctions. In the end, it is hard to find a solution because the inequality of tailored standard contracts is yet another artifact of the injustice of poverty. The poor buy worse products at higher prices with more risks and less insurance. And they also—it is important to realize—are disfavored in their post-contractual treatment.
Babette Boliek, Upgrading Unconscionability: A Common Law Ally for a Digital World
, __ Md. L. Rev.
__ (forthcoming, 2021), available at SSRN
Professor Babette Boliek makes two important contributions in Upgrading Unconscionability: A Common Law Ally for a Digital World before even reaching the article’s normative argument.
First, the article challenges what has become a surprisingly prevalent bit of supposed wisdom among commentators on contract law: that the doctrine of unconscionability barely exists and that nobody should take it seriously—or, as Professor Boliek puts it, that “the application of unconscionability is so rare that it is the last refuge of fools.” The pessimistic view of unconscionability’s role may confuse a paucity of rules about unconscionability with a paucity of cases (or more generally with a lack of importance of the doctrine). It is true that unconscionability is a vague doctrine. Even its statutory formulations in US law tend not to supply clear definitions; for example, the Uniform Commercial Code provides general rules that let courts respond to “unconscionable” contracts (see U.C.C. § 2-302), but never defines the term. But while that may make it hard to apply unconscionability on a Contracts exam, it doesn’t mean the doctrine of unconscionability isn’t important. Indeed, if the purpose of the rule is simply to give courts flexibility to prevent the worst abuses of contract-related processes or the most oppressive contracting outcomes, the doctrine needn’t be specific, and pinning it down too tightly may limit the doctrine’s ability to respond flexibly to abuses.
Professor Boliek challenges the supposed withering of unconscionability doctrine by investigating real cases; as she points out, whether the doctrine of unconscionability is really “the last refuge of fools” is, “of course, an empirical question.” Professor Boliek’s investigation (which I reviewed only in draft form, so I do not comment here on the particulars of the empirics) finds that litigants do often raise arguments about unconscionability—and they succeed in roughly a fifth or a quarter of cases, depending on the type of argument. The precise numbers are not as important as the general observation that lawyers do routinely raise arguments about unconscionability and that those arguments are not destined to fail.
Second, Professor Boliek’s investigation and analysis divide cases based on whether the unconscionability argument is directed at an arbitration clause or not. Most or all analysis of form contracts should draw the same division. In discussions of form contracts generally, it’s become too easy to mistake a pattern of decisions that apply the Federal Arbitration Act as if it suggests that form terms generally are enforceable. Arbitration clauses are distinct both because they’re protected by federal statute and also, more generally, because they’re a known type of clause—standard and often predictable in their own way, aided by at least the formal concept that they vary only procedure rather than substantive rights, and plausibly an appropriate part of what Karl Llewellyn called “essentially private self-government in the lesser transactions of life…— if only [businesses] and all their lawyers would be reasonable.” Enforcing an arbitration clause is very different from enforcing, say, a clause that charges consumers money when they post negative online reviews of products or services. It’s not clear that idiosyncratic clauses in forms should even get off the ground as “contractual” in the first place and thus even require an analysis of unconscionability before striking them down: they’re not agreed to or constrained by any normal process of bargaining, they’re certainly not commonly read, and many probably wouldn’t be accepted if consumers were aware of them (see Restatement (Second) of Contracts § 211). But in that analysis, and in applying the doctrine of unconscionability as a final guardrail to prevent their enforcement, distinguishing clauses based on their content—and starting with the distinction between purely procedural clauses (involving arbitration and forum selection) and others—is a wise step.
Professor Boliek’s normative discussion favors statutory responses to particular types of concerns about form contracts—that is, outright prohibition of certain problematic types of terms—as is commonplace in other jurisdictions. That approach seems to have worked well in the jurisdictions that have used it. Online commerce hasn’t ground to a halt in Europe, for example; familiar commercial flexibility isn’t destroyed because sellers can’t unilaterally impose terms on consumers under the banner of private ordering. In an ideal world we probably wouldn’t need a statutory response, but identifying particular abuses and trying to prevent them with legislative or administrative processes is probably, in the real world, a step in the right direction.
Danielle Kie Hart, Contract Law & Racial Inequality: A Primer
, 21-05 Sw. L. Sch. Res. Paper
1 (2021), available at SSRN
For nearly a year and a half, our country has been in the grips of a global pandemic. Covid-19 has exposed and exacerbated racial and economic inequities that have plagued our society for centuries. As we have grappled with the dual pandemics of Covid-19 and systemic racism, there has been a renewed focus on interrogating historical and current practices that have contributed to the inequalities that many communities of color experience. In her recent thought-provoking essay Contract Law & Racial Inequality: A Primer, Professor Danielle Kie Hart examines the role that contract law has played in creating, maintaining, and perpetuating such inequities. She argues that acknowledgement of this role is critical if America is to become a more equitable society.
Professor Hart begins her essay by detailing the medical and economic harms that members of Latinx, Black, indigenous and immigrant communities have disproportionately experienced during the pandemic. Death rates, job and wage loss, and housing and food insecurity were proportionately higher for communities of color, and, generally speaking, such communities did not share in the increases in wealth that occurred during the pandemic. According to Professor Hart, this disparate reality can be explained, in part, by the historical and present operation of contracts and contract law in our society.
In her discussion of the use of contracts to transfer property, Professor Hart explains the importance of bargaining power and asserts that “in the context of contract law, property also means bargaining power, because property is the original basis of bargaining power.” (Pp. 6-7.) She argues that a property owner’s right to withhold or exclude property from others gives the owner power to compel the non-owner to accept the owner’s terms. “Consequently, the more one person owns, the more potent the owner’s threat to withhold and, therefore, his ability to get his preferred terms becomes.” (P. 7.) Those with more property and, thus, more bargaining power “will be able to reap more gains from each contract that it enters into than it otherwise would with less bargaining power at its disposal.” (Pp. 11-12.) She contends that “[o]ver time, the party with more bargaining power will end up owning more—more land, money, labor, and other resources both tangible and intangible” (P. 12), which contributes to “pre-existing and intersecting hierarchies of race and class.” (P. 12.)
Given that unequal bargaining power is rarely a successful claim to justify the unenforceability of contracts, Professor Hart asserts that contract law’s lack of acknowledgment of the detrimental role such power can play in contract formation contributes to contract law’s “own structural inequality.” (P. 8.) She argues that ignoring this issue is particularly problematic considering the relative ease in which a party can be deemed to have consented to entering into a contract and the considerable difficulty a party will have in seeking to invalidate one. Although contractual defenses including duress and unconscionability remain available to parties challenging the enforceability of contracts, Professor Hart cites to empirical research evidencing that such defenses are rarely successful. Therefore, in order to minimize the reinforcement of structural inequities to which contract law contributes, she advocates for greater recognition and consideration of the societal consequences that can result from the operation of contractual bargaining power (or the lack thereof) in practice.
In examining bargaining power and its role in creating and fostering inequality, Professor Hart situates her discussion in the context of slavery, Emancipation, and Reconstruction, which I found to be quite illustrative. As she acknowledges, prior to obtaining their freedom, enslaved persons were considered to be property with no property rights of their own. Their owners, who had the contractual right to buy and sell them, possessed the power to bargain and negotiate. After Emancipation, freedmen’s newfound “freedom” to sell their labor was significantly hampered by their lack of bargaining power resulting in unfair arrangements that continued the exploitation experienced by Black people during slavery.
Professor Hart provides an informative historical account of the adoption of a “formal equality” (P. 21) approach during Reconstruction whereby newly freed persons were expected to “take care of themselves” (P. 20) rather than a reparative regime in which the government would take a more active role in mitigating the devastating harms of slavery. She makes a compelling argument that this misguided approach, which was based on an inherently false assumption that a “free” post-Emancipation market would produce just and equitable outcomes between private contracting parties, significantly impeded racial and economic progress then and continues to do so today. Professor Hart urges us to confront and interrogate this reality and to no longer overlook or accept contract law’s role “in facilitating and perpetuating” (P. 25) similar assumptions and inequities.
Using the housing market crisis as her example, she recounts the harms that disproportionately fell upon Black and other borrowers of color who were targeted by subprime lenders. Unlike many banks and lenders who were bailed out by the government during the ensuing Great Rescission, the vast majority of borrowers, who were deemed to be private actors who willingly entered into mortgage contracts, found themselves with little or no recourse. This and other examples in Professor Hart’s essay highlight how contract law policies and assumptions can impede racial and economic equality rather than advance it.
With a renewed focus on examining issues of racial and social justice, particularly in the legal academy and profession, Professor Hart’s essay is a timely and helpful contribution. She provides a valuable perspective through which professors, scholars, jurists, and policymakers can reexamine and afford serious consideration to the role contracts and contract law play in contributing to inequities that continue to plague our society. As Professor Hart correctly notes, “there is a particular urgency to any discussions about inequality right now.” (P. 36.) We must all engage in such discussions and take concrete action if we are to achieve real and sustainable progress.