The search interest in contract

Iowa Law Review

Volumn 92, Issue 4, 2007, Pages 1237-1291

  Fairfield, Joshua A T ^a  

^a INDIANA UNIVERSITY   (United States)

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EID: 34548215628     PISSN: 00210552     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (283)

1. See, e.g., Isler v. Tex. Oil & Gas Corp., 749 F.2d 22, 23 (10th Cir. 1984) (upholding a bargained-for provision to limit liability, and noting that "[t]he very notion of contract is the consensual formation of relationships with bargained-for duties");
2. see also Caribbean Ins. Servs., Inc. v. Am. Bankers Life Assurance Co., 715 F.2d 17, 20 (1st Cir. 1983) (enforcing a successfully-bargained-for express right to early trial).
3. See generally Cumberland Valley Coop. Ass'n v. Martin, 11 Pa. D. & C.4th 10, 12 (Ct. Com. Pl. Pa. 1991) (ordering judgment against a debtor with the rate of interest agreed to by the parties rather than at the legal interest rate because the former rate was expressly bargained for).
4. As discussed in Part II.D. below, the current literature on contract standardization focuses on the value of boilerplate in saving negotiation and drafting costs and does not focus on search. See generally Michael Klausner, Corporations, Corporate Law, and Networks of Contracts, 81 VA. L. REV. 757 (1995);
5. Michael Klausner & Marcel Kahan, Path Dependence in Corporate Contracting: Increasing Returns, Herd Behavior, and Cognitive Biases, 74 WASH. U. L.Q. 347 (1996) [hereinafter, Klausner & Kahan, Path Dependence];
6. Michael Klausner & Marcel Kahan, Standardization and Innovation in Corporate Contracting (or "The Economics of Boilerplate"), 83 VA. L. REV. 713 (1997) [hereinafter Klausner & Kahan, Standardization].
7. See Steven P. Croley & Jon D. Hanson, Rescuing the Revolution: The Revived Case for Enterprise Liability, 91 MICH. L. REV. 683, 770-71 (1993);
8. R. Ted Cruz & Jeffrey J. Hinck, Not My Brother's Keeper: The Inability of an Informed Minority to Correct for Imperfect Information, 47 HASTINGS LJ. 635, 641 (1996)
9. (citing WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF TORT LAW 280-82 (1987)) (noting that the greatest contracting cost in purchasing an expensive item is not the cost of drafting an express clause but rather the cost of obtaining information);
10. W. David Slawson, Standard Form Contracts and Democratic Control of Lawmaking Power, 84 HARV. L. REV. 529, 529 (1971) (observing the widespread use of standard-form contracts as opposed to negotiated ones).
11. Russell Korobkin, Bounded Rationality, Standard Form Contracts, and Unconscionability, 70 U. CHI. L. REV. 1203, 1208 (2003).
12. See Cruz & Hinck, supra note 4, at 657-64.
13. Oliver E. Williamson, The Economics of Antitrust: Transaction Cost Considerations, 122 U. PA. L. REV. 1439, 1443 (1974) ("[T]he transaction cost approach attempts to identify a set of market or transactional factors which together with a related set of human factors explain the circumstances under which complex contracts involving contingent claims will be cosdy to write, execute, and enforce.").
14. See generally Oliver E. Williamson, Transaction-Cost Economics: The Governance of Contractual Relations, 22J.L. & ECON. 233 (1979).
15. See Avery Wiener Katz, Is Electronic Contracting Different? Contract Law in the Information Age 16 (Nov. 23, 2004) (unpublished manuscript, on file with the Iowa Law Review), available at http://www.columbia.edu/~ak472/papers/ Electronic%20Contracting.pdf. Katz notes: The electronic setting is also likely to mitigate informational limitations at the point where parties negotiate and enter into contracts. It is easier and cheaper to look into the details of contractual language when one has access to electronic text and can use software search algorithms to discover critical or difficult terms.
16. Id.
17. This trend is exacerbated by statutes that offer default rules that parties must draft around. See infra Part IV.
18. See infra Part III.B.
19. See infra Part III.B.1.
20. See SAUL A. KRIPKE, WITTGENSTEIN ON RULES AND PRIVATE LANGUAGE: AN ELEMENTARY EXPOSITION 55-113 (1982).
21. Kripke notes, "There can be no such thing as meaning anything by any word." Id. at 55.
22. See id at 55-62 (discussing the meaning of language).
23. Klausner & Kahan, Standardization, supra note 3, at 720.
24. See id. (noting the costs of creating new terms).
25. See id. at 729 (noting that using standard terms informs performance expectations).
26. See, e.g., Jeffrey M. Rosenfeld, Spiders and Crawlers and Bots, Oh My: The Economic Efficiency and Public Policy of Online Contracts That Restrict Data Collection, 2002 STAN. TECH. L. REV. 3, 6;
27. Alan Schwartz & Louis L. Wilde, Imperfect Information in Markets for Contract Terms: The Examples of Warranties and Security Interests, 69 VA. L. REV. 1387, 1400-01 (1983).
28. Cf., Frank Adams, Jr., Why Brown v. Board of Education and Affirmative Action Can Save Historically Black Colleges and Universities, 47 ALA. L. REV. 481, 487 n.30 (1996) ("'[T]oday's decision places upon the State the ordinarily unsustainable burden of proving the negative proposition that it is not responsible for extant racial disparity in enrollment.'" (quoting United States v. Fordice, 505 U.S. 717, 753 (1992) (Scalia, J., concurring in part and dissenting in part) (emphasis omitted)));
29. James A. Washburn, Note, Beyond Brown: Evaluating Equality in Higher Education, 43 DUKE L.J. 1115, 1149 n.163 (1994)
30. (quoting the same passage from Fordice as quoted in Adams, supra).
31. See K.N. Llewellyn, Our Case-Law of Contract: Offer and Acceptance, II, 48 YALE L.J. 779, 796-97 (1939).
32. See Hertzog v. Hertzog, 29 Pa. 465, 467 (1857) ("All true contracts grow out of the intentions of the parties to transactions, and are dictated only by their mutual and accordant wills.").
33. See infra Part IV.A.
34. David S. Evans & Michael Noel, Defining Antitrust Markets When Firms Operate Two-Sided Platforms, 2005 COLUM. BUS. L. REV. 667, 689. Evans and Noel explain: At a given size, expanding the number of customers on the platform can create congestion that increases search and transaction costs. It may be possible to reduce congestion by increasing the size of the physical platform, but that in turn may increase search costs. . . . [T]o optimize a customer's search for partners, [two-sided platforms] may find that it is best to limit the size of the platform and prescreen the customers on both sides to increase the probability of a match.
35. Id. (citation omitted).
36. See Daniel D. Barnhizer, Inequality of Bargaining Power, 76 U. COLO. L. REV. 139, 162 (2005) ("In any competitive system involving actors of varying levels of skill, with different needs, desires and goals, every scarce resource-including bargaining power - will be subject to unequal distributions.").
37. See generally Melvin A. Eisenberg, The Bargain Principle and Its Limits, 95 HARV. L. REV. 741, 754-85 (1982) (showing how traditional contract-law assumptions about bargaining are inappropriate when bargaining is too one-sided).
38. Barnhizer, supra note 23, at 152 ("As a practical matter, poor individuals often do lack bargaining power - the power to obtain a preferred outcome in a transaction - in many situations and are often systematically deprived of the ability to offer meaningful consent to proffered contracts.").
39. See generally L.L. Fuller & William R. Perdue, Jr., The Reliance Interest in Contract Damages: 1, 46 YALE LJ. 52 (1936);
40. L.L. Fuller & William R. Perdue, Jr., The Reliance Interest in Contract Damages: 2, 46 YALE L.J. 373 (1936).
41. See Robert E. Scott & George G. Triantis, Anticipating Litigation in Contract Design, 115 YALE L.J. 814, 826 (2006) ("In the adversarial litigation system, the court chooses between the self-interested evidence presented by the parties. The parties present only the evidence that is in their respective self-interest, and the parties also bear most of the cost of their respective evidence production.").
42. RESTATEMENT (SECOND) OF CONTRACTS § 90 (1981) ("A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.").
43. Id.
44. See 5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1202, at 98 (3d ed. 2004) ("The provisions for discovery are so flexible and the provisions for pretrial procedure and summary judgment so effective, that attempted surprise in federal practice is aborted very easily, synthetic issues detected, and the gravamen of the dispute brought frankly into the open for the inspection of the court.").
45. The unique characteristics of real property cause the legal regimes governing contracts for land to be particularly concerned with search costs. See infra Part II.B.
46. See, e.g., eBay, http://www.eBay.com (last visited Mar. 15, 2007).
47. See, e.g., Pricewatch, http://www.pricewatch.com (last visited Mar. 15, 2007).
48. A search of "TV under warranty" in eBay.com returns results not only for television sets still under warranty but also for free-floating contractual warranties available to extend the purchaser's current television warranty.
49. See supra Part II.A. 1 (discussing positive and negative searches).
50. Thanks to Leandra Lederman for the discussions out of which this idea grew.
51. See G. Richard Shell, Opportunism and Trust in the Negotiation of Commercial Contracts: Toward a New Cause of Action, 44 VAND. L. REV. 221, 225 n.14 (1991) ("'[T]rust encourages coordinative behavior by reducing the danger of [loss]' from high-risk bargaining behavior, and 'even low-risk forms require some degree of trust[.]'"
52. (quoting DEAN G. PRUITT, NEGOTIATION BEHAVIOR 92, 100 (1981)));
53. see ato John M. Hawes, Kenneth E. Mast & John E. Swan, Trust Earning Perceptions of Sellers and Buyers, 9 J. PERS. SELLING & SALES MGMT. 1, 1 (1989) ("Trust is the binding force in most productive buyer/seller relationships.").
54. See eBay Feedback Forum, http://pages.ebay.com/services/forum/ feedback.html (last visited Mar. 15, 2007).
55. See generally Joshua G. Graubart, Unintended Consequences: State Merger Statutes and Nonassignable Licenses, 2003 DUKE L. & TECH. REV. 25 (discussing non-assignment clauses).
56. See generally, e.g., Thomas W. Merrill & Henry E. Smith, Optimal Standardization in the Law of Property: The Numerus Clausus Principle, 110YALE L.J. 1 (2000).
57. See id. at 55 ("[C]ontract rights themselves can be tailored just as a house can be custom-built, but the way of owning it is highly simplified to reduce information costs to third parties.").
58. See id. at 38-42 (discussing the economically optimal standardization of property forms as a function of frustration costs and information costs).
59. See id. at 35 (discussing the interaction between frustration costs and property rights).
60. See id. at 26-27 (discussing measurement-cost externalities).
61. See RESTATEMENT (THIRD) OF PROP.: SERVITUDES §§ 3.1-3.2 (2000) (eliminating the formal requirement that servitudes touch and concern the land, but introducing a public-policy requirement that tracks the same goals);
62. see also Merrill & Smith, supra note 39, at 26 ("In modern terminology, the Lord Chancellor thought that permitting interests [in covenants that do not run with the land] to be established as property rights would create unacceptable information costs to third parties.").
63. Merrill & Smith, supra note 39, at 26-27 ("The need for standardization in property law stems from an externality involving measurement costs: Parties who create new property rights will not take into account the full magnitude of the measurement costs they impose on strangers to the title.").
64. See id. at 55 ("[C]ontract rights themselves can be tailored just as a house can be custom-built, but the way of owning it is highly simplified to reduce information costs to third parties.").
65. See id. at 38 ("There is a spectrum of possible approaches to property rights, ranging from total freedom of customization on the one hand to complete regimentation on the other.").
66. Cf. id. at 57 ("[C]ontract should be (and is) less standardized than is property law.").
67. See id. at 38.
68. See, e.g., Matthew Baker et al., Optimal Title Search, 31 J. LEGAL STUD. 139, 139-47 (2002).
69. See id. For a discussion of such costs with regard to contracting,
70. see Klausner & Kahan, Path Dependence, supra note 3, at 353-59;
71. Margaret Jane Radin, Online Standardization and the Integration of Text and Machine, 70 FORDHAM L. REV. 1125, 1139 (2002).
72. See Merrill & Smith, supra note 39, at 3-4.
73. See id. (defining numerus clausus as "the principle that property rights must track a limited number of standard forms").
74. Id. at 26-27 ("[B]y allowing even one person to create an idiosyncratic property right, the information processing costs of all persons who have existing or potential interests in this type of property go up.").
75. Id. at 27 ("Why might the law restrict the freedom of A and B to create such an unusual property right? . . . Given the awareness that someone has created a Monday-only right, anyone else buying a watch must now also investigate whether any particular watch does not include Monday rights.").
76. Id. at 42.
77. Indeed, the Uniform Commercial Code ("UCC") limits such disclaimers. U.C.C. §§ 2-316(4), -318, -719(3) (2003). By not permitting disclaimers of bodily injury, the UCC removes the need to search all contracts for such disclaimers. The more common-and incorrect - explanation of the UCCs limitation on disclaimers of physical damage is as mere paternalism: The law should protect consumers from certain contract terms. Yet this rings false, since parties can shift price terms (microwaves will cost more) where they cannot shift risk. As an aside, although revisions to Article 2 of the UCC were approved in 2003, this Article will cite primarily to the pre-revision Article 2 because the new revisions have not been adopted by any states. Revised Article 2, which was published in 2005, will be cited to the 2005 Edition of the UCC, while the pre-revision Article 2 will be cited to the 2003 Edition of the UCC. Furthermore, revisions to Article 1 of the UCC were approved in 2001 and such revisions have been adopted by the majority of the states. Thus, this Article will cite the revised Article 1 to the 2005 Edition of the UCC.
78. See Merrill & Smith, supra note 39, at 54-55 ("[P]roperty rights are in rem-they serve not only to bind successors in interest but the whole world.");
79. see also Thomas W. Merrill & Henry E. Smith, The Property/Contract Interface, 101 COLUM. L. REV. 773, 778 (2001) [hereinafter Merrill & Smith, Property/Contract]. Merrill and Smith noted: The in personam/in rem distinction is not limited to what are conventionally regarded as contract and property rights, but applies far more generally. . . . Nevertheless, the paradigmatic contract right adopts the in personam structure of rights and duties, and the paradigmatic property right corresponds to the in rem structure of rights and duties.
80. Id. at 778.
81. Merrill & Smith, supra note 39, at 27.
82. See generally Shelley Ross Saxer, Shelley v. Kraemer's Fiftieth Anniversary: "A Time for Keeping; a Time for Throwing Away"?, 47 U. KAN. L. REV. 61 (1998) (describing racially restrictive covenants and discussing the implication of Shelley on private rights).
83. See generally Richard A. Epstein, Covenents and Constitutions, 73 CORNELL L. REV. 906 (1998) (discussing how the rules of recordation help facilitate transactions that bind three or more persons).
84. Merrill & Smith, supra note 39, at 27.
85. Id. ("[B]y allowing even one person to create an idiosyncratic property right, the information processing costs of all persons who have existing or potential interests in this type of property go up.").
86. Other commentators have noted this phenomenon, although from the perspective of weighing costs of permissive rules in negotiations, rather than from the perspective of searching for new contracts:
87. [I] f X and Y can alter a permissive rule, a court might be called upon to decide whether they have in fact done so. The court's determination might increase contracting costs in a similar type of contract subsequently entered into by A and B, since they will want to eliminate any uncertainty about whether they have retained the permissive rule to govern their contract. CLAYTON P. GILLETTE & STEVEN D. WALT, SALES LAW: DOMESTIC AND INTERNATIONAL 138-39 (2d ed. 2002).
88. Id. at 138-39.
89. Id. at 139.
90. See Klausner & Kahan, Standardization, supra note 3, at 718;
91. see also Robert A. Hillman & Jeffrey J. Rachlinski, Standard-Form Contracting in the Electronic Age, 77 N.Y.U. L. REV. 429, 439 (2002) (arguing that uniform terms are efficient and reduce bargaining costs).
92. See Hillman & Rachlinski, supra note 67, at 439.
93. See id.
94. See Metric Constructors, Inc. v. NASA, 169 F.3d 747, 753 (Fed. Cir. 1999) (finding that, where a space-station construction contract called for "relamping" of project prior to completion, a contractor only was required to replace nonworking lamps because replacement of all lamps was inconsistent with the trade meaning of "relamping");
95. Travelers Indem. Co. v. Scor Reinsurance Co., 62 F.3d 74, 78 (2d Cir. 1995) (holding that extrinsic evidence, in the form of industry custom and practice, was admissible to interpret ambiguous notice-of-occurrence clauses in reinsurance policies issued by a reinsurer to a primary insurer).
96. Convention on Contracts for the International Sale of Goods art. 9(2), Apr. 11, 1980, S. TREATY DOC. NO. 98-9, 1489 U.N.T.S. 3, 61, available at http://www.uncitral.org/pdf/english/texts/sales/cisg/CISG.pdf [hereinafter CISG]; U.C.C. § 1-303(b), (c) (2005). Article 9(2) of the CISG provides: The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.
97. CISG, supra, art. 9(2).
98. CISG, supra note 71, art. 9(2); U.C.C. § 1-303(b), (c).
99. See GILLETTE & WALT, supra note 64, at 110-12.
100. Cf. Merrill & Smith, supra note 39, at 54-56.
101. See generally KRIPKE, supra note 12 (analyzing the primary concepts behind Wittgenstein's ideas on philosophy of language and mathematics).
102. See generally Melvin Aron Eisenberg, The Limits of Cognition and the Limits of Contract, 47 STAN. L. REV. 211 (1995);
103. Klausner & Kahan, Standardization, supra note 3;
104. Russell Korobkin, Bounded Rationality, Standard Form Contracts, and Unconscionability, 70 U. CHI. L. REV. 1203 (2003).
105. See generally David Gilo & Ariel Porat, The Hidden Roles of Boilerplate and Standard-Form Contracts: Strategic Imposition of Transaction Costs, Segmentation of Consumers, and Anticompetitive Effects, 104 MICH. L. REV. 983 (2006).
106. See generally Jody S. Kraus, Legal Design and the Evolution of Commercial Norms, 26 J. LEGAL STUD. 377 (1997).
107. Klausner & Kahan, Standardization, supra note 3, at 723-24.
108. Id. at 719-20.
109. Id. at 720-21.
110. Id. at 723.
111. Id. at 722.
112. For an excellent treatment of this subject, see generally Katz, supra note 8 (analyzing the effect of online contracting on common law doctrines from the economic perspective).
113. Id. at 17 ("It is easier and cheaper to look into the details of contractual language when one has access to electronic text and can use software search algorithms to discover critical or difficult terms.").
114. Id. at 16-20.
115. As Katz explains: An offeree in possession of a good search engine, for instance, should be able to check a contract or multiple contracts for unfavorable terms much more easily than in the traditional setting, so long as the terms follow a standard format. Such formats such as XML (extended markup language, an extension of the HTML language) will provide such a standard so long as they are widely adopted. Id. at 30.
116. For example, one major element of online contracting discussed by the literature has been pseudonymity, whereby parties incorrecdy believe they can engage in fraud due to physical distance and difficulties in tracing real identities online.
117. See Katz, supra note 8,. at 16, 29.
118. Hillman & Rachlinski, supra note 67, at 439.
119. Id. at 438-39.
120. Davidson & Assoes. v. Jung, 422 F.3d 630, 640-41 (8th Cir. 2005).
121. See, e.g., Margaret J. Radin, Humans, Computers, and Binding Commitment, 75 IND. L.J. 1125, 1149-53 (2000) (arguing that convenience must not drive out consent in contracts in the new digital era).
122. Id. at 1142-43.
123. Id. at 1155-60.
124. For example, the court in ProCD, Inc. v. Zeidenberg explained: Terms of use are no less a part of "the product" than are the size of the database and the speed with which the software compiles listings. Competition among vendors, not judicial revision of a package's contents, is how consumers are protected in a market economy. ProCD has rivals, which may elect to compete by offering superior software, monthly updates, improved terms of use, lower price, or a better compromise among these elements. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1453 (7th Cir. 1996) (citations omitted).
125. See RESTATEMENT (SECOND) OF CONTRACTS § 22 (1981) (discussing the doctrine of mutual assent).
126. See generally Ammons v. Cordova Floors, Inc., 904 So. 2d 185 (Miss. Ct. App. 2005); Klamen v. Genuine Parts Co., 848 S.W.2d 38 (Mo. Ct. App. 1993).
127. Cf. Wiljamaa v. Bd. of Educ. of Flint, 213 N.W.2d 830, 831 (Mich. Ct. App. 1973) (requiring a board of education to reinstate a teacher after it changed the effective date of her resignation without her knowledge because there was no meeting of the minds).
128. Cf. Del Serrone Contracting Corp. v. Avon Twp., 257 N.W.2d 667, 668 (Mich. Ct. App. 1977) (holding that a rubber-stamped endorsement did not establish the requisite meeting of the minds).
129. See Charles L. Knapp, Taking Contracts Private: The Quiet Revolution in Contract Law, 71 FORDHAM L. REV. 761, 794-95 (2002) ("Knowledgeable drafters can probably engineer consent .... How many times, dear reader, have you - prompted by a selling agent - signed or initialed a space or a box on a standard form, just below language which recites 'I have read and understood the above provisions' ....").
130. This discussion is usually found in state-court treatments of procedural unconscionability. See, e.g., Muhammad v. County Bank of Rehoboth Beach, Del., 912 A.2d 88, 96-103 (N.J. 2006).
131. See Isler v. Tex. Oil & Gas Corp., 749 F.2d 22, 23 (10th Cir. 1984) ("The very notion of contract is the consensual formation of relationships with bargained-for duties.").
132. Consider, for example, the devaluation of consent implicit in the progressive judicial enforcement of adhesion contracts, form contracts, shrink-wrap licenses, click-wrap licenses, and potentially browse-wrap licenses. See, e.g., Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 428-30 (2d Cir. 2004) (discussing shrink-wrap, click-wrap, and browse-wrap licenses); Specht v. Netscape Commc'ns Corp., 150 F. Supp. 2d 585, 592-95 (S.D.N.Y. 2001) (same); Pollstar v. Gigmania Ltd., 170 F. Supp. 2d 974, 981 (E.D. Cal. 2000) ("[A] browse wrap license is part of the web site and the user assents to the contract when the user visits the web site. No reported cases have ruled on the enforceability of a browse wrap license.").
133. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1449 (7th Cir. 1996);
134. Specht, 150 F. Supp. 2d at 593-95.
135. Courts have found these contracts negotiated. See Specht, 150 F. Supp. 2d at 593-94 ("The few courts that have had occasion to consider click-wrap contracts have held them to be valid and enforceable.").
136. See UNIF. COMPUTER INFO. TRANSACTIONS ACT § 105 (d) (4), 7 U.L.A. 242 (2002).
137. See generally Barnhizer, supra note 23;
138. Daniel D. Barnhizer, Propertization Metaphors for Bargaining Power and Control of the Self in the Information Age, 54 CLEV. ST. L. REV. 69, 95-101 (2006).
139. Of course, actual negotiations often have taken place in contracting. When the court deals with that portion of the negotiation-search continuum, an account of negotiation is perfectly appropriate. Problems arise when courts fictionalize negotiation by applying it to the search end of the continuum.
140. See, e.g., U.C.C. § 2-716 (2003) (providing remedy of specific performance where damages calculated according to the benefit of the bargain model would be unjust).
141. See Gentry v. eBay, Inc., 121 Cal. Rptr. 2d 703, 707 (Ca. Ct. App. 2002) (posing this hypothetical).
142. See RESTATEMENT (SECOND) OF CONTRACTS § 201 (1981).
143. See generally Pac. Gas & Elec. Co. v. G. W. Thomas Drayage & Rigging Co., 442 P.2d 641, 644 (Cal. 1968) (containing Judge Traynor's famous rationalization of the parol evidence rule based on the contextual nature of language).
144. See Hotchkiss v. Nat'l City Bank of N.Y., 200 F. 287, 293 (S.D.N.Y. 1911) ("A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties. A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent.");
145. see also C. H. Pope & Co. v. Bibb Mfg. Co., 290 F. 586, 587 (2d Cir. 1923) (quoting Hotchkiss);
146. SAMUEL WLLLISTON, WILLISTON ON CONTRACTS §§ 612-613 (Walter H.E.Jaeger ed., 1961).
147. See, e.g, Ragus Co. v. City of Chicago, 628 N.E.2d 999, 1001-02 (III. App. Ct. 1993) (upholding utilization of trade usage to construe the meaning of a contract inconsistently with its clear language, but consistently with industry standards).
148. See Klausner, supra note 3, at 776 ("A judicial opinion that interprets one corporation's contract term in effect embeds that interpretation in the contracts of all firms that use the same term.").
149. See RESTATEMENT (SECOND) OF CONTRACTS § 213 (1981). The Restatement provides: (1) A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them. (2) A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope. (3) An integrated agreement that is not binding or that is voidable and avoided does not discharge a prior agreement. But an integrated agreement, even though not binding, may be effective to render inoperative a term which would have been part of the agreement if it had not been integrated.
150. Id.
151. See, e.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 467 n.6 (1985) ("Although the franchisees contended that Burger King officials had given them oral assurances concerning assignment, the District Court found that pursuant to the parol evidence rule any such assurances 'even if they had been made and were misleading were joined and merged' into the final agreement." (citation omitted));
152. see also St. Johns N. F. Shipping Corp. v. S. A. Companhia Geral Commercial do Rio de Janeiro, 263 U.S. 119, 120 (1923) (summarizing petitioner's argument and discussing, in a positive way, earlier cases where "testimony was offered to modify the custom by an oral contract, and [two state supreme courts] refused to admit such evidence on the ground of the parol evidence rule").
153. See Porto Rico Sugar Co. v. Lorenzo, 222 U.S. 481, 482 (1912) (finding that parol evidence of the local grinding season based on industry practice properly was admitted to determine the time of performance, which was not specified in a contract to grind sugarcane).
154. See, e.g, Barron Bancshares, Inc. v. United States, 366 F.3d 1360, 1375 (Fed. Cir. 2004) (holding that an integration clause conclusively establishes that the integration is total and prohibits the use of external evidence to add to or modify the terms of a written agreement).
155. UAW-GM Human Res. Ctr. v. KSL Recreation Corp., 579 N.W.2d 411, 421 n.14 (Mich. Ct. App. 1998). When concluding that parol evidence was not admissible to contradict the integration clause, the court noted: To consider parol evidence in interpreting a written contract that includes an integration clause is to accord the integration clause no meaning. An integration clause is not merely an additional "factor" to be weighed in light of the affidavits and other extrinsic evidence to determine the parties' understandings .... [It] is an internal rule of construction that any previous or contemporaneous agreements are nullified. Id.
156. See, e.g., Westdale Co. v. Gietzen, 185 N.W.2d 596, 598 (Mich. Ct. App. 1971) ("A written agreement which is complete on its face, unambiguous in its terms, intended by the parties to be a complete integration of their agreement, and signed by the parties to be bound cannot be varied or changed without consent or subsequent agreement.").
157. Id.
158. See generally Edward Yorio, In Defense of Money Damages for Breach of Contract, 82 COLUM. L. REV. 1365 (1982) (arguing that monetary damages are preferable to specific performance).
159. See, e.g., Katz, supra note 8, at 16 (noting that computer searching of contract provisions "should lower the relative disadvantage faced by less informed parties, in the long run reducing the need for protective interpretive doctrines such as contra proferendum (construing the contract against the drafter), as well as information-forcing doctrines such as unilateral mistake").
160. See, e.g., Sun Oil Trading Co. of Pa. v. M/T "Mercedes Maria," CA. No. 81-1033, -1083, -4021, -4862, 1982 U.S. Dist. LEXIS 17866, at *3 (E.D. Penn. Dec. 29, 1982) (determining that where international fuel shortages had caused parties to begin challenging the amount of wastage of oil during shipment by tanker, an implied contract term permitting 0.5% waste could be read to supplement oil contracts of carriage).
161. Again, a standard law-and-economics analysis would state that the term was not included because the costs of specification were greater than the surplus created by settling the negotiated term. This is satisfying in that parties cannot specify absolutely everything, and sometimes the facts put pressure on litde-considered clauses. Beyond that, the analysis is flawed - if an industry-standard term is actually industry standard such that the meaning is lexical, or the parties are to imply the term in the contract, then the term omission is clearly an act of contractual significance. If facts conspire to make a clause leap into the spotlight, it becomes a drafting issue, not an ongoing issue of contract law. Parties will simply contract around the problem in the future.
162. Compare the tradition of permitting civil actions for bad acts in the precontractual phase (culpa in contrahendo). See generally Nadia E. Nedzel, A Comparative Study of Good Faith, Fair Dealing, and Precontractual Liability, 12 TUL. EUR. & CIV. L.F. 97, 112-13 (1997) (discussing culpa in contrahendo in a civil-law context).
163. See Roth Steel Prods. v. Sharon Steel Corp., 705 F.2d 134, 147-48 (6th Cir. 1983).
164. Id. at 148.
165. See, e.g., GILLETTE & WALT, supra note 64, at 91 ("Strictly, good faith under the U.C.C. is limited to good faith in the performance and enforcement of a contract. Good faith in modification goes to the formation of the modified contract, not its performance or enforcement.").
166. See Roth Steel, 705 F.2d at 148.
167. Avery W. Katz, Remedies for Breach of Contract Under the CISG, 25 INT'L REV. L. & ECON. 378, 384 (2006).
168. For example, no one would claim that the standardization of a three-pronged plug for an outlet somehow was a bad thing for consumers. The standardization of the plug and the wall socket lowers information costs, making the consumer's search for a plug easier. It is worth asking why the same has not held true, to date, for standardized contracts.
169. Katz, supra note 8, at 11.
170. See Todd D. Rakoff, Contracts of Adhesion: An Essay in Reconstruction, 96 HARV. L. REV. 1174, 1176-79 (1983) (developing a model of modern contract-of-adhesion law).
171. See Knapp, supra note 100, at 794-95 (noting that parties do not read adhesion contracts, even where parties use information-forcing mechanisms like term initialing) ;
172. Rakoff, supra note 134, at 1179 ("[T] he adhering party is in practice unlikely to have read the standard terms before signing the document and is unlikely to have understood them if he has read them.").
173. See ProCD v. Zeidenberg, 86 F.3d 1447, 1450-51 (7th Cir. 1996) (holding consumer's failure to return item after opening it sufficient to establish consent to contract); U.C.C. § 2-719(3) (2003) (providing that attempts to limit personal injuries are "prima facie unconscionable").
174. See Rakoff, supra note 134, at 1174-75 (arguing that contracts of adhesion receive different treatment under the common law).
175. It is true that making this intuition into a hard-and-fast rule would invite parties to abuse consumers' lack of knowledge. However, it would do so no more (and probably less) than the current legal fiction of awareness of, and consent to, contractual terms by consumers.
176. Frank H. Easterbrook, Cyberspace and the Law of the Horse, 1996 U. CHI. LEGAL F. 207, 208 (noting that the laws of "cyberspace" are about as substantial as the laws of the "horse").
177. David G. Post, Against "Against Cyberanarchy," 17 BERKELEY TECH. L.J. 1365, 1374 (2002). Post lists some reasons for the shift: It does not take a great deal of insight or deep thinking to come up with ways in which activity in cyberspace is functionally not identical to activity in realspace. For example, in cyberspace, I can communicate an offer to sell some product or service instantaneously (or nearly so); at zero marginal cost (or nearly so); to several million people; [and] with near-zero probability of error in the reproduction or distribution of that offer ....
178. Id.
179. Jack Goldsmith famously argued that these differences are nonexistent because the law was quite capable of dealing with cross-border disputes - say, international copyright disputes - before the advent of networked computer systems. See Jack L. Goldsmith, Against Cyberanarchy, 65 U. CHI. L. REV. 1199, 1200-02 (1998). That this opinion still commands a majority in the legal literature is deeply puzzling. To make the argument, one must assume that the quantity of cross-border transactions has no yield in the quality or cost of cross-border enforcement. Since this is wrong, Goldsmith's approach seems incomplete.
180. See Radin, supra note 51, at 1140. Radin notes: Manufacturing is becoming ever more automated, and the advent of the machine-made contract completes the picture by automating the supply process. If some computer processor "realizes" that more supplies are needed at a certain part of the assembly process, it can also search certain suppliers and see which can most readily supply what is needed, and it can give the go-ahead for the supplies to be delivered. Computers at each end of the transaction could be programmed with sets of terms; when the buyer computer encounters a seller computer, they could enter into a computerized handshake protocol, and if they determine that they have a set of terms in common they could arrive at a commitment, without a human being having to sign off on it.
181. Id.
182. See, e.g., Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082, 1084 (C.D. Cal. 2001) (discussing the popularity of sites such as eBay where over twenty-five million buyers and sellers of consumer goods and services search for and buy items via either an auction or a fixed-price format).
183. See, e.g., Gentry v. eBay, Inc., 121 Cal. Rptr. 2d 703, 706 (Ct. App. 2002).
184. Id. at 832;
185. see infra notes 159-63 and accompanying text (discussing Gentry).
186. See Katz, supra note 8, at 16, 29.
187. Id. at 16-20.
188. Of course, technology has made negotiation easier as well, but that was one communications revolution ago. Technology has added little to the tools of negotiators following the advent of near-instant person-to-person communication that the telegraph or telephone accomplished.
189. The practice has caused some legal controversy, leading to a resurrection of the antiquated trespass-to-chattels tort in the online context. See, e.g., eBay v. Bidder's Edge, 100 F. Supp. 2d 1058, 1060-61, 1066-67 (N.D. Cal. 2000).
190. For a remarkable example of the effect of pyramidal-information schemes on the price of information, see Wikipedia, http://www.wikipedia.org (last visited Feb. 6, 2007), a vast information collection assembled at near-zero cost and free to information consumers.
191. The point is not that Wikipedia itself is interesting or useful. Rather, the point is that it was assembled in the face of what ought to be insurmountable transaction costs. Please note that references to Wikipedia in this Article are used only for purposes of demonstrating the use of these terms within the computer-literate community of search optimizers, and not, as it were, for the truth of the matter asserted.
192. See aul Boutin, You Are What You Search, SLATE, Aug. 11, 2006, http://www.slate.com/ id/2147590.
193. Id. (setting forth different types of search profiles from AOL user data);
194. see also Valleywag, http://www.valleywag.com/tech/aol/aol-creepy- user-watch-volume-9-193364.php (last visited Feb. 6, 2007) (serving as a clearinghouse for AOL user-profile information).
195. See, e.g., The Factory Oulet, Selecting the Right Size Pool Table for Your Home, http://www.thefactoryoudet.com/pool-table/table-size.asp (last visited Feb. 6, 2007).
196. A simple example involves computer searches using "spell checking" software. The spellchecker is limited in its ability to search context: If the word "for" is misspelled "fore," it will go undetected because the computer has not yet been told that that is an incorrect use of the term.
197. See generally Wikipedia, Search Optimization, http://en.wikipedia. org/wiki/Search_ engine_optimization (last visited Feb. 6, 2007) (providing an overview of search engine optimization).
198. Id. ("Search engine optimization . . . as a subset of search engine marketing seeks to improve the number and quality of visitors to a website . . . [by making the search results] 'natural'. . . .").
199. See, e.g., AddPro.com, http://www.addpro.com (last visited Feb. 6, 2007);
200. BuildTraffic.com, http://www.buildtraffic.com (last visited Feb. 6, 2007);
201. Ultimate Promotion, ProSubmit, http://ultimatepromotion.com (last visited Feb. 5, 2007);
202. Submit Express, http:// www.submitexpress.com (last visited Feb. 6, 2007).
203. The latter task commonly is referred to as categorizing the "metadata." See, e.g., Wikipedia, Metadata, http://en.wikipedia.org/wiki/Metadata (last visited Feb. 6, 2007).
204. See, e.g., Gentry v. eBay, Inc., 121 Cal. Rptr. 2d 703, 708-09 (Ct. App. 2002). Plaintiffs alleged that eBay was responsible for categorizing items under the subcategory "SPORTS: Autographs;" and that, as a result, eBay was liable for memorabilia that was not in fact autographed. Id. The court noted that the individual sellers of the items were the ones who had set the search categories of the memorabilia and, thus, were the parties bound by those search categories. Id.
205. Id. at 823-24. In describing how eBay operates, the court noted: Members who wished to place an item for sale on eBay would themselves choose the main category (e.g., "Sports") and subcategories (e.g., "Autographs") under which their item would be listed for sale. Thereafter, the Website would prompt the seller to provide other information, including the title and description of the item. eBay requested that the court take judicial notice under Evidence Code section 452, subdivision (h) of the fact "[a] user listing an item for sale on eBay's web site selects the category and subcategory under which her item will appear on eBay's web site."
206. Id. (alteration in original).
207. Id.
208. Id. at 824. This is consistent with courts' general practice of deeming an internet service provider immune from suit where it does not select the content on its website but merely acts as a forum or conduit.
209. See, e.g., Carafano v. Metrosplash.com, Inc., 339 F.3d 1119, 1125 (9th Cir. 2003) (holding that a matchmaker website's structure of information and searches did not make it responsible for the content of its users);
210. Green v. Am. Online, 318 F.3d 465, 470-71 (3d Cir. 2003) (upholding AOL's immunity from a third party's transmission of defamatory messages and a program designed to disrupt the recipient's computer);
211. Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1098 (W.D. Wash. 2004) (holding service provider Amazon.com immune from suit over third-party content posted in its zShops.com forum).
212. See, e.g., Carafano, 339 F.3d at 1124-25. The court noted: We also note that, as with eBay, Matchmaker's decision to structure the information provided by users allows the company to offer additional features, such as "matching" profiles with similar characteristics or highly structured searches based on combinations of multiple choice questions. Without standardized, easily encoded answers, Matchmaker might not be able to offer these services and certainly not to the same degree.
213. Id.
214. Of course, while the positive aspects of websites are well publicized and searchable, negative aspects routinely are hidden deep in non-optimized contracts. Terms of Service are not optimized but are binding. Under a search theory of contract, it may well be that the nonoptimization of terms of service would serve as grounds for discounting the provisions.
215. See Ann Bartow, Remarks at the Privacy and Security Session, Colloquium on the Digital Frontier: The Buffalo Summit 2001 (Nov. 3, 2001), in 50 BUFF. L. REV. 703, 723-24 (2002) (indicating that if companies have privacy policies "they must at least comply with their own policies," and when a party voluntarily adopts that policy, she is bound).
216. See, e.g., Foster-Gwin, Inc. v. Fallwell, No. C 01-03068 WHA, 2001 U.S. Dist. LEXIS 18151, at *7 (N. D. Cal. Nov. 5, 2001). A description of eBay's ground rules for contracts with third parties states: 3.1 Online Auctions. Although we are commonly referred to as an online auction web site, it is important to realize that we are not a traditional "auctioneer." Instead, our site acts as a venue to allow anyone to offer, sell, and buy just about anything, at anytime, from anywhere, in a variety of formats, including a fixed price format and an auction-style format commonly referred to as an "online auction." We are not involved in the actual transaction between buyers and sellers. As a result, we have no control over the quality, safety, or legality of the items advertised, the truth or accuracy of the listings, the ability of sellers to sell items or the ability of buyers to buy items. We cannot ensure that a buyer or seller will actually complete a transaction.
217. Id.
218. See Gentry v. eBay, Inc., 121 Cal. Rptr. 2d 703, 707-09 (Ct. App. 2002) (noting that eBay provides such tools in order to "better enable users to place items for sale on its site").
219. And, of course, negotiation in most modern contracts is a legal fiction and is entirely unilateral.
220. See Katz, supra note 8, at 16.
221. Id. at 29.
222. See Gentry, 121 Cal. Rptr. 2d at 708-09 (discussing how sellers describe and categorize their products).
223. See, e.g., Douglas G. Baird & Robert Weisberg, Rules, Standards, and the Battle of the Forms: A Reassessment of § 2-207, 68 VA. L. REV. 1217, 1251 (1982) ("The cost of off-the-rack provisions is that they supply, or allow courts to supply, inefficient terms in some cases. But many who extoll the virtue of the Code for supplying terms whenever the parties do not reach explicit agreement do not appreciate this cost.");
224. Daniel Keating, Exploring the Battle of the Forms in Action, 98 MICH. L. REV. 2678, 2689 (2000) ("[A]n even more fundamental concern with the default mechanism of the current battle of the forms is not that it favors buyers, but rather that it yields terms that may be in neither party's interest.").
225. Baird & Weisberg, supra note 172, at 1249-50.
226. See, e.g., U.C.C. §2-207 (2003). Comment 5 to UCC section 2-207 states: Examples of clauses which involve no element of unreasonable surprise and which therefore are to be incorporated in the contract unless notice of objection is seasonably given are: . . . a clause providing for interest on overdue invoices or fixing the seller's standard credit terms where they are within the range of trade practice and do not limit any credit bargained for; [and] a clause limiting the right of rejection for defects which fall within the customary trade tolerances for acceptance "with adjustment" or otherwise limiting remedy in a reasonable manner.
227. Id. at cmt. 5 (citing id. §§ 2-718, -719).
228. Id. § 1-303(d)-(g) (2005).
229. Id. § 2-207 (2003).
230. Id. § 1-303(d)-(g) (2005).
231. See, e.g., Air Safety v. Teachers Realty Corp., 706 N.E.2d 882, 884-86 (Ill. 1999);
232. Eichengreen v. Rollins, Inc., 757 N.E.2d 952, 958 (Ill. App. Ct. 2001).
233. See generally Marie Adornetto Monahan, Survey of Illinois Law: Contracts - The Disagreement Over Agreements: The Conflict in Illinois Law Regarding the Parol Evidence Rule and Contract Interpretation, 27 S. ILL. U. L.J. 687 (2003).
234. See U.C.C. § 1-303(d) (2005) (indicating that trade usage and course of dealing should be used to construe contract terms).
235. Id. § 2-207(1)-(2) (2003). The pre-revision Article 2 of the UCC reads, in part: (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. (2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given within a reasonable time after notice of them has been received.
236. Id.
237. See U.C.C. § 2-207 (2005). As of the time of this Article, no state has adopted the approved revisions of Article 2. Revised section 2-207 still determines that a contract may be formed out of records that might otherwise be inadequate to create a contract, even when additional or differing terms are offered.
238. See id.
239. See generally Alex Devience, Jr., The Renewed Search for the "Bargain in Fact" Under the U.C.C. Section 2-207: Battle of the Forms, Part II?, 9 DEPAUL BUS. L.J. 349 (1997);
240. Victor P. Goldberg, The "Battle of the Forms": Fairness, Efficiency, and the Best-Shot Rule, 76 OR. L. REV. 155 (1997);
241. Keating, supra note 172, at 2688-90;
242. Daniel T. Ostas & Frank P. Darr, Redrafting U.C.C. Section 2-207: An Economic Prescription for the Battle of the Forms, 73 DENV. U. L. REV. 403 (1996).
243. Of course, scholars adopting the traditional law-and-economics approach might criticize the above analysis on more-or-less libertarian grounds: The parties are being forced into an agreement to which neither had consented. This view is mired in the negotiation model of contract. If we do believe that parties painstakingly and solely negotiate contractual provisions, then of course we ought not to enforce a searched but non-negotiated deal. I cheerfully concede to the critics in this minute percentage of cases.
244. SeeDaitom, Inc. v. Pennwalt Corp., 741 F.2d 1569, 1579 (10th Cir. 1984) (finding that where a buyer's purchase order contained different terms than those contained in seller's offer, the "knockout rule" applied and operated to cancel out the different terms);
245. Richardson v. Union Carbide Indus. Gases, Inc., 790 A.2d 962, 966-67, 969 (N.J. Super. Ct. App. Div. 2002) (noting that the knockout rule was adopted for conflicting terms in contracts governed by New Jersey's UCC and holding that the application of that rule to a contract regarding the purchase of furnace parts meant that conflicting indemnification provisions were not part of the contract);
246. Flender Corp. v. Tippins Int'l, Inc., 830 A.2d 1279, 1287 (Pa. Super. Ct. 2003) (holding that differing terms regarding the arbitrability of a dispute in an offer and an invoice between the purchaser and seller caused both terms to be knocked out).
247. See supra note 180.
248. See Keating, supra note 172, at 2689.
249. See supra note 180.
250. See Hertzog v. Hertzog, 29 Pa. 465, 467 (1857) ("All five contracts grow out of the intentions of the parties to transactions.").
251. U.C.C. § 2-716 (2003).
252. See id. §§ 2-712,-706.
253. Id.;
254. see also id. § 2-610 (discussing remedies in the context of anticipatory repudiation).
255. See id. § 2-712(3) ("Failure of the buyer to effect cover within this section does not bar him from any other remedy.").
256. See id. § 2-712.
257. See GILLETTE & WALT, supra note 64, at 331. ("[Substitute transactions] enable the party to avoid having a trier of fact determine market price - a determination that is sometimes cosdy to prove.").
258. Id. at 332 ("Fixing damages by resale or cover can be costly to the aggrieved party, however . . . . At the same time, by fixing its damages the seller avoids incurring the costs of proving market price.").
259. Katz, supra note 131, at 385.
260. Id. at 383 ("The international nature of CISG transactions affects relative transaction costs in a number of overlapping ways. It is . . . more costly to communicate information before and during exchange (especially when the greater risk of miscommunication is counted as a cost) . . . .").
261. Id. ("It is . . . more costly to monitor the performance and reliability of contractual partners [in CISG transactions], and more costly to litigate and setde disputes.").
262. Id. at 386 ("In general, greater relational investment, by reducing the substitutability of alternative contractual partners, also favors the greater use of specific performance.").
263. See, e.g., Warren E. Agin Sc Scott N. Kumis, A Framework for Understanding Electronic Information Transactions, 15 ALB. L.J. SCI. & TECH. 277, 299 (2005) (discussing courts' application of Article 2 to off-the-shelf contracts but reluctance to do the same for softwarecustomization deals);
264. see also Hill v. Gateway 2000, Inc., 105 F.3d 1147, 1149 (7th Cir. 1997) (applying UCC to a software-licensing case);
265. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1452 (7th Cir. 1996) (same).
266. Glen O. Robinson, Personal Property Servitudes, 71 U. CHI. L. REV. 1449, 1474 n.89 (2004) ("Although UCLTA was adopted in two states, Virginia and Maryland, such has been the fury of opposition to its enactment elsewhere that the National Conference of Commissioners on Uniform State Laws has now abandoned efforts to promote its further adoption." (citing Michael Wanecke, UCITA Drafters Ditch Licensing Act as Ahead of Its Time, Politically DOA, 8 ELECTRONIC COM. & L. REP. 771 (2003)));
267. see also Radin, supra note 51, at 1129 (noting that only two states, Maryland and Virginia, have passed the UCITA).
268. See ProCD, 86 F.3d at 1451.
269. See, e.g., Wikipedia, Client-server, http://en.wikipedia.org/wiki/ Client_server (last visited Feb. 6, 2007) (defining client server).
270. See Davidson & Assoes, v. Jung, 422 F.3d 630, 642 (8th Cir. 2005) (construing a software license as preventing subsequent users of software from playing online video game).
271. See id. at 640.
272. Id. at 640-42.
273. See Radin, supra note 51, at 1143 ("Computer programs are both text and machine. They are text when considered as code statements, they are machines when considered as devices for accomplishing a task.").
274. Id. at 1144. Radin discusses this interchange ability: The functionality that is supplied can be customized: for example, manufacturing computers to order. Content (textual products) can also be customized, geared toward the users' tastes or political views. In the same way, customization of terms and conditions is possible. Instead of a take-it-or-leave-it set of fine print terms, a website could offer a menu of choices for various clauses, and the user could check boxes for which ones were desired. One might choose the warranty disclaimer (free) or the two-year warranty (pay $1 extra); one might choose to accede to the arbitration clause (free) or the clause allowing litigation in one's home state (pay $2 extra).
275. Id.
276. Id. at 1139.
277. Id. ("In the 'contract as product' view, the contract is part of the product, part of the collection of functional components, and not a separate text about that collection.").
278. See, e.g., Olga Kharif, iRise: Real Promise in Simulations, BUS. WK. ONLINE, Feb. 2, 2005, http://www. businessweek.com/technology/content/feb2005/tc2005022_4709_tc024.htm.
279. See, e.g., James Bessen, Open Source Software: Free Provision of Complex Public Goods 23 (July 2005) (unpublished manuscript, on file with the Iowa Law Review), http://www. researchoninnovation.org/opensrc.pdf (noting that software "customers have highly disparate needs" and software is complex).
280. See, e.g., Ian Ayres, The Possibility of Inefficient Corporate Contracts, 60 U. CIN. L. REV. 387, 400 (1991). Ayres notes: The potential inefficiency of signaling was eloquendy captured by Dr. Seuss in his parable about the Sneetches. High-status Sneetches had stars on their bellies and low-status Sneetches did not. As the tale unfolds, vast inefficiencies are created as the low-status Sneetches try to match the high-status ones by affixing stars to their bellies and the high-status Sneetches try to further distinguish themselves by removing their stars.
281. Id.
282. Distinctions between puffing and statements constituting express warranties are notoriously difficult for courts to parse. Compare Olin Mathieson Chem. Corp. v. Moushon, 235 N.E.2d 263, 264-65 (Ill. App. Ct. 1968) (holding that a statement that a product would please the user was mere puffing), with Redmac, Inc. v. Computerland of Peoria, 489 N.E.2d 380, 382-84 (111. App. Ct. 1986) (holding that a statement that a product would arrive free of defect was to be considered an express warranty).
283. For a more complete treatment of the role of engineer statements in litigation, see generally Donovan Bezer, Your Programmer Promised It Would Work! How Software Engineers' Well-Intentioned Statements Can Hurt When Their Employers Sue, 26 RUTGERS L. REC. 2 (2002).