ProCD v Zeidenberg and Cognitive Overload in Contractual Bargaining

University of Chicago Law Review

Volumn 77, Issue SPEC. ISSUE, 2010, Pages 1181-1194

  Posner, Eric A ^a  

^a UNIVERSITY OF CHICAGO   (United States)

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[No Author keywords available]

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EID: 78649920808     PISSN: 00419494     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (43)

1. For the academic literature on these contracts, see, tor example, Stewart Macaulay, Freedom from Contract: Solutions in Search for a Problem?, 2004 Wis L Rev 777, 802-19 (arguing that access to arbitration is of little use in many consumer transactions while noting that the general public is aware of the existence of unfavorable contract terms lurking in tiny disclaimers or inside boxes);
2. Clayton P. Gillette, Rolling Contracts as an Agency Problem, 2004 Wis L Rev 679, 683-84 (arguing that rolling contracts "should be considered binding as long as the process through which they emerged was one in which the nonreading, nonparticipating buyer was virtually represented in a manner that satisfies the same objectives as personal assent");
3. Roger C. Bern, "Terms Later" Contracting: Bad Economics, Bad Morals, and a Bad Idea for a Uniform Law, Judge Easterbrook Notwithstanding, 12 J L & Pol 641, 643-44 (2004) (disparaging ProCD as "devoid of legal, economic, and moral sanction" for reasons including "increase[d] information asymmetry" and the abandonment of "impartial treatment of parties");
4. Russell Korobkin, Bounded Rationality, Standard Form Contracts, and Unconscionability, 10 U Chi L Rev 1203,1265 (2003) (arguing that terms inaccessible until after purchase may be procedurally unconscionable due to the presence of unequal bargaining power between the seller and the buyer, who must incur additional costs to return the product);
5. Jean Braucher, Delayed Disclosure in Consumer E-Commerce as an Unfair and Deceptive Practice, 46 Wayne L Rev 1805,1852-62 (2000) (discussing the ways in which disclosing terms after, rather than before, sale may mislead consumers).
6. See, for example, Williams v Walker-Thomas Furniture Co, 350 F2d 445, 449 (DC Cir 1965) ("[W]hen a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his consent, was ever given to all the terms.").
7. -908 F Supp 640 (WD Wis 1996), revd,
8. ProCD, Inc v Zeidenberg, 86 F3d 1447 (7th Cir 1996).
9. ProCD, 86 F3d at 1449-50.
10. ProCD, 908 F Supp at 655.
11. See ProCD, 86 F3d at 1450-51.
12. Id.
13. -105 F3d 1147 (7th Cir 1997).
14. Id at 1149.
15. ProCD, 86 F3d at 1452.
16. Id.
17. Hill, 105 F3d at 1148.
18. Hill does not discuss the clause, but a different case involving the same clause provides the details. See Brower v Gateway 2000, Inc, 676 NYS2d 569, 570-71 (NY App 1998).
19. Mill, 105 F3d at 1150.
20. Id.
21. Id.
22. ProCD, 86 F3d at 1452 (emphasis omitted).
23. Richard A. Epstein, ProCD v. Zeidenberg; Do Doctrine and Function Mix?, in Douglas G. Baird, ed, Contracts Stories 94,110-11 (Foundation 2007).
24. -105 F3d at 1150.
25. See, for example, Frank H. Easterbrook, Contract and Copyright, 42 Houston L Rev 953, 955-56 (2005).
26. Hill, 105 F3d at 1149.
27. Law professors either agree with the district court or argue that the case should be treated under UCC § 2-207, which produces pretty much the same result. The terms in the form would be treated as an offer to modify the contract that the buyer has no reason to accept. See, for example, Braucher, 46 Wayne L Rev at 1821-23 (cited in note 1).
28. The district court was also troubled that the clause was inconspicuous, and one reading of the case is that a more conspicuous incorporation clause would be enforceable. See ProCD, 908 F Supp at 654.
29. We might imagine that the unrestricted version includes more generous warranties, choice of law and arbitration clauses more favorable to the buyer, and so forth-where the cost to the seller is clearer.
30. See George Akerlof, The Market for "Lemons": Quality Uncertainty and the Market Mechanism, 84 Q J Econ 488, 489-92 (1970) (modeling transactions with information asymmetries about the quality of goods).
31. See text accompanying note 14.
32. Putting aside the unconscionability and related doctrines.
33. A similar concern is that it is not realistic to expect buyers to return goods when they disapprove of the contract terms. However, this is just a way of saying that it is not likely that they will be bothered by terms that can realistically be expected to be in a contract.
34. This problem is minimal if either no one reads contracts or a few people read them but fail to instill discipline in the market by doing so. See Omri Ben-Shahar, The Myth of the "Opportunity to Read" in Contract Law, 4 Eur Rev Cont L 1, 2-7 (2009) (arguing that the focus on the readability of contracts obscures the real issue-oppressive terms).
35. Epstein, Doctrine and Function at 110 (cited in note 18).
36. See id at 111-12.
37. There are too many such articles to cite here. For a sense of the debate, see Macaulay, 2004 Wis L Rev at 802-04 (cited in note 1).
38. For an approving discussion of the copyright portion of Judge Easterbrook's opinion, see Randal C. Picker, Easterbrook on Copyright, 11 U Chi L Rev 1165, 1177-79 (2010).
39. -118 NE 214 (NY 1917).
40. Id at 214 (holding that a promise to exert best efforts was implied by the terms of an exclusive marketing agreement).
41. See, for example, DeFontes v Dell, Inc, 984 A2d 1061, 1071 (RI 2009) (concluding that "the ProCD line of cases is better reasoned and more consistent with contemporary consumer transactions" than the cases that have rejected it);
42. M.A. Mortenson Co, Inc v Timberline Software Corp, 998 P2d 305, 313 (Wash 2000).
43. See Florencia Marotta-Wurgler, Are "Pay Now, Terms Later" Contracts Worse for Buyers? Evidence from Software License Agreements, 38 J Legal Stud 309, 333-41 (2009).