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Is the CISG Irrelevant?

John F. Coyle, The Role of the CISG in U.S. Contract Practice: An Empirical Study, U. Penn. J. Int'l L. (forthcoming 2016), available at SSRN.

Very few American contract courses cover the CISG. (My book gestures at coverage; my course doesn’t.) That was true before the recent lamented trend toward a one-semester course, and it is increasingly the rule today. Why? Contract professors I’ve talked to on this subject typically justify themselves by asserting that the CISG is rarely relevant in domestic practice. But such casual empiricism, when asserted in a company mixed with comparativists, can seem irresponsible. What if we’re wrong?

Now comes John Coyle to test that conventional account. Of course, there’s nothing easier to publish than a surprising empirical finding. (That such findings are rarely replicable is an embarrassment.) Articles confirming instead of rebutting our priors are thus especially important to celebrate. Coyle tells teachers of contract law that we’ve gotten it basically right: the CISG is less popular than the Congress. He does so in a mixed-methods paper notable for its carefulness and restraint. I like it lots.

Coyle’s approach starts by noting recent surveys finding that most domestic practitioners urge their clients to opt out of the CISG when otherwise applicable. But, as Coyle notes, such surveys are bedeviled by various methodological problems. He thus starts afresh by looking at the CISG’s use in material contracts on EDGAR. He finds ~5,000 contracts from 1988 to 2014 which include the term “international sale of goods.” That’s 0.7% of a population of approximately 700,000 filed agreements. As Coyle notes, his identification strategy has limits: (1) EDGAR’s material contract database is not representative of all corporate contracts, and (2) since the CISG is a default rule, identifying contracts which specifically address it may offer a distorted lens. That is, parties wishing the CISG to apply can simply be silent. Perhaps a large number of the 695,000 contracts that he did not identify intended to adopt the CISG by default. Similarly, parties that chose the law of a particular state may have intended for the Convention to apply under the treaty power. Thus, Coyle’s 5,000 contract sample, however large, may be unrepresentative if used as a proxy for parties’ attitudes toward the CISG.

But the contracts do tell us something. Coyle uncovers a number of curious facts. First, 69% of the contracts in the sample excluded the CISG unnecessarily—i.e., the contract was not a sale of goods, or the CISG was not ratified in the counterparty’s home country, or the contract was between wholly domestic parties. This either reflects an overweening fear of the CISG or boilerplate error. Second, the absolute number of contracts affirmatively choosing the CISG was negligible: 61 out of 5092, and the trend is against adoption. Coyle contacted the firms opting in, and found that a striking number now routinely opt out, or claimed that the instance of opting in was a one time concession to a counterparty. As Coyle summarizes: “Whatever the intrinsic merits of the CISG, and notwithstanding the broad support that it enjoys within the academic community, the treaty has made scant little headway in gaining adherents among lawyers in the United States in the twenty-eight years since it entered into force.” (P. 24.)

These data would be themselves quite illuminating, but Coyle adds to our understanding by compiling a secondary dataset of supply contracts filed with the SEC between 2011 and 2015. Identifying a universe of 5549 contracts, he reviewed each to see whether one party was international and thus subject to the CISG. From the 248 international supply contracts that remained, he focused on 44 contracts where the CISG applied but the parties had been silent—i.e., the parties appeared to have chosen the CISG by default. He then wrote each of the companies involved and asked, in essence, what were you thinking?

The responses offered powerful evidence that the CISG isn’t an intentionally chosen, thoughtful, default norm—none of the contacted firms appeared to have intentionally been silent. Attorneys’ excuses for their (resulting) mistaken choice of the CISG ranged from puzzled to rueful to apologetic. (As Gulati and his co-authors have found in another context, attorneys’ bad choices can always be rationalized, but rarely explained.) In any event, this extra research provides some comfort to those worried about Coyle’s identification strategy (discussed above) but little to comparativists who thought that the silent majority was with them.

Coyle concludes by arguing that the CISG “has no real constituency among public companies in the United States.” Indeed, as he points out, it is rarely applied in litigated cases, and only then when the parties have failed to adopt the normal practice of excluding it. Coyle argues that the result is an interpretive jurisprudence developed on the backs of suckers, whose lawyers aren’t thoughtful, or well-trained, enough to exclude the convention from their agreements. The CISG ends up looking less like a majoritarian, and more like a penalty, default.

This leads, of course, back to a pedagogical question. Given that domestic firms apparently do not want the CISG to apply, should we, as contracts teachers, be in the business of drilling students on the convention solely so that it can be routinely excluded? This seems a bit like teaching students all about the life cycle of e. coli so they can avoid a restaurant with a bad health grade. Perhaps courts ought to adopt a different default rule, at least when parties chose the law of a particular state.

Cite as: David Hoffman, Is the CISG Irrelevant?, JOTWELL (November 4, 2016) (reviewing John F. Coyle, The Role of the CISG in U.S. Contract Practice: An Empirical Study, U. Penn. J. Int'l L. (forthcoming 2016), available at SSRN), https://contracts.jotwell.com/is-the-cisg-irrelevant/.

What Does “Buy Now” Really Mean?

Aaron Perzanowski & Chris Jay Hoofnagle, What We Buy When We Buy Now, 165 U. Pa. L. Rev. (forthcoming 2017), available at SSRN.

In their forthcoming article, What We Buy When We Buy Now, Aaron Perzanowski and Chris Jay Hoofnagle richly capture today’s digital media marketplace and rightly raise concerns about consumers’ understanding of their legal rights upon licensing a book, movie, or song. They focus upon vendors’ use of the language “buy now” on their websites and test consumer comprehension of this language empirically. The results, showing, for example, that 83 percent of respondents believed they “owned” their media, certainly raise alarms. The article proposes a sensible and inexpensive solution, supported by the authors’ empirical evidence, that would help clear up the “buy now” confusion, namely “adding a short notice to a digital product page that outlines consumer rights.” I enthusiastically recommend this article for anyone interested in twenty-first century digital commerce.

As with any excellent article, perplexing issues remain. For example, is “buy now” less misleading than the article suggests? As mentioned, 83 percent of respondents believed they “owned” their media, but as the authors concede, the concept of ownership is inherently ambiguous, and perhaps doesn’t preclude in consumers’ minds the limitations that licensing entails. In addition, although more than 80 percent of respondents believed they could use their digital media on any of their devices, the reality is not so starkly different according to the authors, with some vendors allowing such usage and others not. Fewer than 50 percent of respondents thought incorrectly that they held the right in turn to lend, gift, resell, or copy their product, or leave their product in a will. In fact, fewer than 25 percent thought mistakenly that they had the right to resell or copy their media. On the other hand, 86 percent of respondents thought they could keep their digital product indefinitely, and Perzanowski and Hoofnagle set forth several counterexamples demonstrating that this misperception may be a real problem. In addition, the authors note that the FTC labels an advertising practice as deceptive even if only 10 or 15 percent of people are misled by the practice.

Another issue concerns the so-called duty to read. After all, the licensing agreement makes the rights of the licensee clearer, if not clear, if the consumer bothered to read the form. And “buy now” is not the most precise guarantee of consumer rights. Of course, for good reason, consumers give digital licenses (as well as paper ones) short shrift (if any “shrift” at all!). And my coauthor and I have shown that vendors of software on the Internet make important quality claims on their websites only to withdraw them through warranty disclaimers on their digital standard forms. (Robert A. Hillman & Ibrahim Barakat, Warranties and Disclaimers in the Electronic Age, 11 Yale J.L. & Tech. 1 (2009).) We therefore concluded that in the digital age, bait-and-switch is a real problem in the area of software product warranties. So I am the last to say that the duty-to-read idea should trump any concern in the licensing-of-media context. But, playing devil’s advocate for the moment, perhaps the arguably ambiguous meaning of “buy now” combined with the elaboration of rights in the digital standard form, if clear, should give pause as to whether consumers need additional protection.

To the extent that there is a serious problem, the authors’ solution, a box on the digital product page explaining rights, “You may not resell this ebook,” etc., is a good solution as far as it goes. However, what about consumers’ confusion over the extent of warranty coverage, access to courts, the right of the vendor to modify the terms, etc.? In short, if consumers are to be protected and the license itself cannot do the job, the box may itself grow too large and unwieldy to do much good. Further, the task of determining what rights are sufficiently important to require box treatment will challenge the lawmaker.

In the end, I believe much can be said for an alternative, albeit modest, solution suggested by the American Law Institute’s Principles of the Law of Software Contracts. Despite some rather farfetched claims in the literature about the failure of disclosure as a general remedy for consumer (and others’) ignorance, the software project took the position that early disclosure of terms on the Internet, even before a consumer took the leap and decided to “buy,” in conjunction with adequate judicial policing of “dangerous terms,” was likely the only realistic contribution to greater consumer protection. The expectation was not that consumers would likely increase reading their standard forms and shop around for better terms, but that watchdog groups would access the openly available forms, and spread the word about their meaning and ramifications. This would create the incentive on the part of vendors to write reasonable terms. An example of the success of such a strategy was the furor over Facebook’s privacy terms that caused it to reverse its approach.

I hope it is clear from this brief discussion that I believe What We Buy When We Buy Now is an important contribution to the literature on digital contracts and that the authors deserve kudos for bringing the “buy now” problem to our attention.

Cite as: Robert Hillman, What Does “Buy Now” Really Mean?, JOTWELL (October 10, 2016) (reviewing Aaron Perzanowski & Chris Jay Hoofnagle, What We Buy When We Buy Now, 165 U. Pa. L. Rev. (forthcoming 2017), available at SSRN), https://contracts.jotwell.com/what-does-buy-now-really-mean/.

Meet the Editors

CONTRACTS Section Editors

The Section Editors choose the Contributing Editors and exercise editorial control over their section. In addition, each Section Editor will write at least one contribution (”jot”) per year. Questions about contributing to a section ought usually to be addressed to the section editors.

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Professor David A. Hoffman
Murray H. Shusterman Professor of Transactional and Business Law
Temple University Beasley School of Law

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Professor Nancy S. Kim
ProFlowers Distnguished Professor Internet Studies & Professor of Law
California Western School of Law

Contributing Editors

Contributing Editors agree to write at least one jot for Jotwell each year.

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Professor Aditi Bagchi
Professor of Law
Fordham University School of Law

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Professor Daniel D. Barnhizer
Professor of Law & The Bradford Stone Faculty Scholar
Michigan State University College of Law

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Professor Shawn Bayern
Larry & Joyce Beltz Professor of Torts
Florida State University College of Law

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Professor Omri Ben-Shahar
Leo & Eileen Herzel Professor of Law
The University of Chicago Law School

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Professor Martha Ertman
Carole & Hanan Sibel Research Professor of Law
University of Maryland Francis King Carey School of Law

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Professor Robert A. Hillman
Edwin H. Woodruff Professor of Law
Cornell Law School

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Professor Hila Keren
Professor of Law
Southwestern Law School

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Professor Florencia Marotta-Wurgler
Professor of Law
New York University School of Law

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Professor Eboni S. Nelson
Professor of Law
University of South Carolina School of Law

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Professor Robert E. Scott
Alfred McCormack Professor of Law
Columbia Law School

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Professor Tess Wilkinson-Ryan
Professor of Law & Psychology
University of Pennsylvania Law School

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Professor Eyal Zamir
Augusto Levi Professor of Commercial Law
The Hebrew University of Jerusalem

Call for Papers

Jotwell: The Journal of Things We Like (Lots) seeks short reviews of (very) recent scholarship related to the law that the reviewer likes and thinks deserves a wide audience. The ideal Jotwell review will not merely celebrate scholarly achievement, but situate it in the context of other scholarship in a manner that explains to both specialists and non-specialists why the work is important.

Although gentle critique is welcome, reviewers should choose the subjects they write about with an eye toward identifying and celebrating work that makes an original contribution, and that will be of interest to others. First-time contributors may wish to consult the Author Guidelines and the Jotwell Mission Statement for more information about what Jotwell seeks, and what it seeks to achieve.

Reviews need not be written in a particularly formal manner. Contributors should feel free to write in a manner that will be understandable to scholars, practitioners, and even non-lawyers. See the Author Guidelines for more details.

Ordinarily, a Jotwell contribution will

  • be between 500-1000 words;
  • focus on one work, ideally a recent article, but a discussion of a recent book is also welcome;
  • begin with a hyperlink to the original work — in order to make the conversation as inclusive as possible, there is a strong preference for reviews to focus on scholarly works that can be found online without using a subscription service such as Westlaw or Lexis. That said, reviews of articles that are not freely available online, and also of very recent books, are also welcome.

Currently, Jotwell particularly seeks contributions relating to:

We also have a Classics section, limited to reviews of works more than 50 years old. We intend to add more sections in the coming months.

References

Authors are responsible for the content and cite-checking of their own articles. Jotwell editors and staff may make editorial suggestions, and may alter the formatting to conform to the house style, but the author remains the final authority on content appearing under his or her name.

  • Please keep citations to a minimum.
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  • Textual citations are preferred. Endnotes, with hyperlinks, are allowed if your HTML skills extend that far.
  • Authors are welcome to follow The Bluebook: A Uniform System of Citation (20th ed. 2015), or the The Redbook: A Manual on Legal Style (2d Ed.) or indeed to adopt any other citation form which makes it easy to find the work cited.

Technical

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Jotwell Mission Statement

The Journal of Things We Like (Lots)–JOTWELL–invites you to join us in filling a telling gap in legal scholarship by creating a space where legal academics can go to identify, celebrate, and discuss the best new scholarship relevant to the law. Currently there are about 350 law reviews in North America, not to mention relevant journals in related disciplines, foreign publications, and new online pre-print services such as SSRN and BePress. Never in legal publishing have so many written so much, and never has it been harder to figure out what to read, both inside and especially outside one’s own specialization. Perhaps if legal academics were more given to writing (and valuing) review essays, this problem would be less serious. But that is not, in the main, our style.

We in the legal academy value originality. We celebrate the new. And, whether we admit it or not, we also value incisiveness. An essay deconstructing, distinguishing, or even dismembering another’s theory is much more likely to be published, not to mention valued, than one which focuses mainly on praising the work of others. Books may be reviewed, but articles are responded to; and any writer of a response understands that his job is to do more than simply agree.

Most of us are able to keep abreast of our fields, but it is increasingly hard to know what we should be reading in related areas. It is nearly impossible to situate oneself in other fields that may be of interest but cannot be the major focus of our attention.

A small number of major law journals once served as the gatekeepers of legitimacy and, in so doing, signaled what was important. To be published in Harvard or Yale or other comparable journals was to enjoy an imprimatur that commanded attention; to read, or at least scan, those journals was due diligence that one was keeping up with developments in legal thinking and theory. The elite journals still have importance – something in Harvard is likely to get it and its author noticed. However, a focus on those few most-cited journals alone was never enough, and it certainly is not adequate today. Great articles appear in relatively obscure places. (And odd things sometimes find their way into major journals.) Plus, legal publishing has been both fragmented and democratized: specialty journals, faculty peer reviewed journals, interdisciplinary journals, all now play important roles in the intellectual ecology.

The Michigan Law Review publishes a useful annual review of new law books, but there’s nothing comparable for legal articles, some of which are almost as long as books (or are future books). Today, new intermediaries, notably subject-oriented legal blogs, provide useful if sometimes erratic notices and observations regarding the very latest scholarship. But there’s still a gap: other than asking the right person, there’s no easy and obvious way to find out what’s new, important, and interesting in most areas of the law.

Jotwell fills that gap. We are not afraid to be laudatory, nor do we give points for scoring them. Rather, we challenge ourselves and our colleagues to share their wisdom and be generous with their praise. We will be positive without apology.

Tell us what we ought to read!

How It Works

Jotwell is organized in sections, each reflecting a subject area of legal specialization. Each section, with its own url of the form sectionname.jotwell.com, is managed by a pair of Section Editors who have independent editorial control over that section. The Section Editors selecting a team of ten or more Contributing Editors. Each of these editors commits to writing at least one Jotwell essay of 500-1000 words per year in which they identify and explain the significance of one or more significant recent works – preferably an article accessible online, but we won’t be doctrinaire about it. Our aim is to have at least one contribution appear in each section every month, although we won’t object to more. Section Editors are also responsible for approving unsolicited essays for publication. The number of sections is not fixed, and is still growing.

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