The psychology of contract precautions

University of Chicago Law Review

Volumn 80, Issue 1, 2012, Pages 395-444

  Hoffman, David A ^a   Wilkinson Ryan, Tess ^b  

^a TEMPLE UNIVERSITY   (United States)

^b UNIVERSITY OF PENNSYLVANIA LAW SCHOOL   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84875953403     PISSN: 00419494     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (214)

1. Market Street Associates Limited Partnership v Frey, 941 F2d 588, 594 (7th Cir 1991).
2. See Restatement (Second) of Contracts § 90 (1979) (providing a remedy for parties who reasonably relied on representations made by parties under an otherwise unenforceable agreement);
3. Marco J. Jimenez, The Many Faces of Promissory Estoppel: An Empirical Analysis under the Restatement (Second) of Contracts, 57 UCLA L Rev 669, 671, 687-98 (2010) (examining over three hundred promissory estoppel cases over a twenty-six-year period to determine how judges conceive of equitable claims).
4. See, for example, Hoffman v Red Owl Stores, Inc, 133 NW2d 267, 275 (Wis 1965) (allowing damages in equity where the defendant encouraged the plaintiff to rely on its unenforceable promise).
5. See, for example, Williams v Walker-Thomas Furniture Co, 350 F2d 445, 449 (DC Cir 1965) (holding that a contract can be invalidated if the terms are unreasonably favorable to one party and the other party's choice to enter the contract was not meaningful).
6. See, for example, Peevyhouse v Garland Coal & Mining Co, 382 P2d 109, 114 (Okla 1962) (awarding damages equal to the diminution in market price of land where performance would be more costly than the value of the completed contract).
7. 941 F2d 588 (7th Cir 1991).
8. See Oliver Hart and John Moore, Contracts as Reference Points, 123 Q J Econ 1, 5-13 (2008);
9. Ernst Fehr, Oliver Hart, and Christian Zehnder, Contracts as Reference Points-Experimental Evidence, 101 Am Econ Rev 493, 518-22 (2011);
10. Yuval Feldman, Amos Schurr, and Doron Teichman, Reference Points and Contractual Choices: An Empirical Examination *25, 28 (working paper, Jan 21, 2012), online at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1989556 (visited Mar 3, 2013) (finding that framing payoffs as losses tends to encourage self-serving interpretation of contract language).
11. David Horton, The Shadow Terms: Contract Procedure and Unilateral Amendments, 57 UCLA L Rev 605, 630-31 (2010);
12. David Horton, Arbitration as Delegation, 86 NYU L Rev 437, 458-59 (2011).
13. Oren Bar-Gill and Kevin Davis, Empty Promises, 84 S Cal L Rev 1, 37 (2010).
14. Peter A. Alces and Michael M. Greenfield, They Can Do What!? Limitations on the Use of Change-of-Terms Clauses, 26 Ga St U L Rev 1099, 1101-06, 1145 (2010).
15. See Bar-Gill and Davis, 84 S Cal L Rev at 20 (cited in note 12) ("[M]ost consumers are imperfectly informed or imperfectly rational, and as a result they misperceive the risk of unilateral modifications.");
16. Horton, 57 UCLA L Rev at 648 (cited in note 11) ("[T]here is growing acceptance that bounded rationality prevents even informed adherents from making welfare-maximizing choices.").
17. See Horton, 57 UCLA L Rev at 646-48 (cited in note 11) (attributing inefficiency in consumers' decisions to the failure to read the terms at issue, unreasonable optimism, and irrationality).
18. See, for example, Omri Ben-Shahar and Carl E. Schneider, The Failure of Mandated Disclosure, 159 U Pa L Rev 647, 665 (2011);
19. Omri Ben-Shahar, The Myth of the 'Opportunity to Read' in Contract Law, 5 Eur Rev Contemp L 1, 13-21 (2009);
20. Ronald J. Mann and Travis Siebeneicher, Just One Click: The Reality of Internet Retail Contracting, 108 Colum L Rev 984, 998-1001 (2008).
21. See, for example, Robert A. Hillman and Maureen O'Rourke, Defending Disclosure in Software Licensing, 78 U Chi L Rev 95, 106-08 (2011).
22. 499 US 585 (1991).
23. See David Campbell, A Relational Critique of the Third Restatement of Restitution § 39, 68 Wash & Lee L Rev 1063, 1112 (2011) (explaining that a potential plaintiff may wish to minimize the risk of loss from breach by obtaining additional insurance or contracting with multiple suppliers);
24. Stephen M. Bainbridge, Privately Ordered Participatory Management: An Organizational Failures Analysis, 23 Del J Corp L 979, 1009 (1998) ("[M]anagers . . . are tasked with monitoring the organization's members. Management meters the marginal productivity of each member and responds as necessary to prevent shirking.").
25. See also Terrance L. Brennan, Construction Insurance: A General Perspective, 15 Construction Law 1, 45 (1995) (emphasizing the importance in construction of insuring against delays).
26. But see Alan Schwartz, The Case for Specific Performance, 89 Yale L J 271, 277 (1979) ("[W]hen the promisor's performance must be rendered over time, as in construction or requirements contracts, it is costly for the promisee to monitor a reluctant promisor's conduct.").
27. See, for example, George S. Geis, An Experiment in the Optimal Precision of Contract Default Rules, 80 Tulane L Rev 1109, 1149-55, 1158 (2006) (arguing that default rules could be mapped onto efficient precautions parties take during negotiations).
28. See, for example, Shipping Insurance Coverage (Shipsurance), online at http://www.shipsurance.com/shipping-insurance.asp (visited Mar 3, 2013).
29. See Steve Thel and Peter Siegelman, You Do Have to Keep Your Promises: A Disgorgement Theory of Contract Remedies, 52 Wm & Mary L Rev 1181, 1231 (2011).
30. Impracticability is often cited as an example of the interplay between the promisee's insurance (or lack of it) and the promisor's discharge. See Richard A. Posner and Andrew M. Rosenfield, Impossibility and Related Doctrines in Contract Law: An Economic Analysis, 6 J Legal Stud 83, 92 (1977).
31. See Howard Kunreuther, Robert Meyer, and Erwann Michel-Kerjan, Overcoming Decision Biases to Reduce Losses from Natural Catastrophes, in Eldar Shafir, ed, Behavioral Foundations of Public Policy 398, 401-08, 411 (Princeton 2013).
32. See Howard Latin, "Good" Warnings, Bad Products, and Cognitive Limitations, 41 UCLA L Rev 1193, 1219 (1994) (explaining that manufacturers heavily invest in branding in order to create a positive reputation on which consumers will rely);
33. Oren Bar-Gill, The Behavioral Economics of Consumer Contracts, 92 Minn L Rev 749, 755-56 (2008);
34. Bruce Lyons and Judith Mehta, Contracts, Opportunism and Trust: Self-Interest and Social Orientation, 21 Camb J Econ 239, 250 (1997);
35. Campbell, 68 Wash & Lee L Rev at 1112 (cited in note 19).
36. But see Campbell, 68 Wash & Lee L Rev at 1112 (cited in note 19) ("Now, if the risk of idiosyncratic loss is high, the potential plaintiff may pay the higher price for [the good for which the party is contracting], because the extra security, and ultimately extra precaution, will be of value to him.").
37. See Lucian Arye Bebchuk and Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J L, Econ, & Org 284, 286, 296 (1991).
38. See also FedEx Express Terms and Conditions: U.S. Shipments 6 (FedEx Oct 2, 2012), online at http://images.fedex.com/us/services/pdf/SG-TermsCond-US- 2012.pdf (visited Mar 3, 2013): The declared value of any package represents our maximum liability in connection with a shipment of that package, including, but not limited to, any loss, damage, delay, misdelivery, nondelivery, misinformation, any failure to provide information, or misdelivery of information relating to the shipment. It is the shipper's responsibility to prove actual damages. Exposure to and risk of any loss in excess of the declared value is assumed by the shipper. You may transfer this risk to an insurance carrier of your choice through the purchase of an insurance policy. Contact an insurance agent or broker if you desire insurance coverage. WE DO NOT PROVIDE INSURANCE COVERAGE OF ANY KIND.
39. See Francesco Parisi, Barbara Luppi, and Vincy Fon, Optimal Remedies for Bilateral Contracts, 40 J Legal Stud 245, 249 (2011) (explaining that in some bilateral contracts parties who do not trust that the other contracting party will perform have an incentive to withhold performance rather than invest in the contract);
40. Amitai Aviram, Regulation by Networks, 2003 BYU L Rev 1179, 1185.
41. For a useful summary of the literature on optimal precautions, see Richard Craswell, The "Incomplete Contracts" Literature and Efficient Precautions, 56 Case W Res L Rev 151, 159-62 (2005).
42. For a classic statement of the indeterminacy position, see Eric A. Posner, Economic Analysis of Contract Law after Three Decades: Success or Failure?, 112 Yale L J 829, 836-39 (2003).
43. Typically in the literature, authors take promisors' precautions to be investments to avoid breach, while the promisees' precautions are the amount that it relies on the bargain. See, for example, George M. Cohen, The Fault Lines in Contract Damages, 80 Va L Rev 1225, 1234-35 (1994).
44. See, for example, Steven Shavell, Damage Measures for Breach of Contract, 11 Bell J Econ 466, 469-70 (1980).
45. See Robert Cooter, Unity in Tort, Contract and Property: The Model of Precaution, 73 Cal L Rev 1, 12-13 (1985) (describing the effect as a result of externalizing the costs of breach).
46. For a helpful summary and critique of the literature, see Ofer Grosskopf and Barak Medina, Regulating Contract Formation: Precontractual Reliance, Sunk Costs, and Market Structure, 39 Conn L Rev 1977, 1985-95 (2007).
47. For two classic papers, see Richard Craswell, Precontractual Investigation as an Optimal Precaution Problem, 17 J Legal Stud 401, 402, 420 (1988) (addressing the effect of various damage measures on the parties' incentives to gather information prior to contracting);
48. Lucian Arye Bebchuk and Omri Ben-Shahar, Precontractual Reliance, 30 J Legal Stud 423, 424 (2001).
49. But see Anglia Television Ltd v Reed, [1972] 1 QB 60, 64 (Ct App 1971).
50. See, for example, Juliet P. Kostritsky, Bargaining with Uncertainty, Moral Hazard and Sunk Costs: A Default Rule for Precontractual Negotiations, 44 Hastings L J 621, 635-41 (1993);
51. G. Richard Shell, Opportunism and Trust in the Negotiation of Commercial Contracts: Toward a New Cause of Action, 44 Vand L Rev 221, 251-64 (1991).
52. Richard Craswell, Contract Remedies, Renegotiation, and the Theory of Efficient Breach, 61 S Cal L Rev 629, 652 (1988).
53. Richard Craswell, Instrumental Theories of Compensation: A Survey, 40 San Diego L Rev 1135, 1163-65 (2003) (discussing both selection and risk investigation as a form of precaution).
54. See, for example, Omri Ben-Shahar, Contracts without Consent: Exploring a New Basis for Contractual Liability, 152 U Pa L Rev 1829, 1851-52 (2004) ("[T]he noretraction regime improves the parties' incentives to make precontractual investments.");
55. Cohen, 80 Va L Rev at 1251-55 (cited in note 30) (discussing how courts might infuse promisee's fault into doctrine as a way of setting optimal precautions).
56. See Melvin A. Eisenberg, Disclosure in Contract Law, 91 Cal L Rev 1645, 1649- 56 (2003).
57. See Tess Wilkinson-Ryan, Do Liquidated Damages Encourage Breach? A Psychological Experiment, 108 Mich L Rev 633, 637, 655, 663-64 (2010).
58. See Bruno S. Frey, Does Monitoring Increase Work Effort? The Rivalry with Trust and Loyalty, 31 Econ Inq 663, 664-66 (1993).
59. See Armin Falk and Michael Kosfeld, The Hidden Costs of Control, 96 Am Econ Rev 1611, 1611, 1617-22 (2006).
60. Daylian M. Cain, George Loewenstein, and Don A. Moore, The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest, 34 J Leg Stud 1, 5-7, 12-14, 17 (2005);
61. Daylian M. Cain, George Loewenstein, and Don A. Moore, When Sunlight Fails to Disinfect: Understanding the Perverse Effects of Disclosing Conflicts of Interest, 37 J Consumer Rsrch 836, 849-51 (2011).
62. See Cain, Loewenstein, and Moore, 34 J Leg Stud at 5-6 (cited in note 45) ("Indeed, it is even possible that disclosure could sometimes increase rather than decrease trust, especially if the person with the conflict of interest is the one who issues the disclosure.").
63. Sunita Sah, George Loewenstein, and Daylian M. Cain, The Burden of Disclosure: Increased Compliance with Distrusted Advice *6 (working paper, Dec 7, 2011), online at http://papers.ssrn.com/sol3/papers.cfm?abstract-id= 1615025 (visited Mar 3, 2013).
64. Daniel Kahneman, Jack L. Knetsch, and Richard Thaler, Fairness as a Constraint on Profit Seeking: Entitlements in the Market, 76 Am Econ Rev 728, 729 (1986).
65. Hart and Moore, 123 Q J Econ at 2, 10-11 (cited in note 8).
66. Fehr, Hart, and Zehnder, 101 Am Econ Rev at 494 (cited in note 8) ("A flexible contract is good in that parties can adjust to the state of nature, but bad in that there can be a lot of aggrievement and shading.").
67. See also Hart and Moore, 123 Q J Econ at 4 (cited in note 8) ("A flexible contract has the advantage that parties can adjust the outcome to the state of the world, but the disadvantage that any outcome selected will typically cause at least one party to feel aggrieved and shortchanged, which leads to a loss of surplus from shading.").
68. Fehr, Hart, and Zehnder, 101 Am Econ Rev at 498 (cited in note 8) (giving experimental buyers the ability to choose either a rigid contract, under which the price is fixed at the time of contracting, or a flexible contract, under which the buyer can, at the time of exchange, choose from a range of prices).
69. Fehr, Hart, and Zehnder, 101 Am Econ Rev at 499 (cited in note 8).
70. See also Feldman, Schurr, and Teichman, Reference Points and Contractual Choices at *28 (cited in note 8) (finding similar results in experiments focusing on the parties' interpretation of their contractual commitment).
71. For more details regarding Amazon's Mechanical Turk, see Amazon Mechanical Turk (Amazon Web Services), online at http://aws.amazon.com/mturk (visited Mar 3, 2013).
72. Nonparametric tests of statistical significance like the one used here (the Wilcoxon test) are common when sample sizes are small and when the distribution is nonnormal. The tests are typically less powerful but more robust than parametric tests like the t- or F-statistics. One study reported here uses a small sample. For consistency, we report the p-values generated by the nonparametric test in all three studies. See Robert Rosenthal and Ralph L. Rosnow, Essentials of Behavioral Research: Method and Data Analysis 403-04 (McGraw-Hill 3d ed 2008).
73. Subjects may even think that adding a rider is impermissible. Professor Larry Cunningham has noted that one of the most prevalent misconceptions about contracts is that they cannot be modified. See Lawrence A. Cunningham, Contracts in the Real World: Stories of Popular Contracts and Why They Matter 170-71 (Cambridge 2012) (correcting the misconception that "contracts cannot be changed once they are made").
74. See Kevin E. Davis, The Demand for Immutable Contracts: Another Look at the Law and Economics of Contract Modifications, 81 NYU L Rev 487, 496 (2006) (suggesting that one problem with creating incentives for renegotiation is that renegotiating incurs additional costs while "redistribut[ing], rather than creat[ing], value").
75. See Hart and Moore, 123 Q J Econ at 12 (cited in note 8).
76. See Chris Guthrie, Prospect Theory, Risk Preference, and the Law, 97 Nw U L Rev 1115, 1118 (2003).
77. Cass R. Sunstein, Terrorism and Probability Neglect, 26 J Risk & Uncertainty 121, 123 (2003).
78. See Alan Schwartz, Julie Goldberg, and Gordon Hazen, Prospect Theory, Reference Points, and Health Decisions, 3 Judgment & Dec Making 174, 176 figure 1 (2008) (depicting the prospect theory value function).
79. See Richard Thaler, Mental Accounting and Consumer Choice, 4 Mtkg Sci 199, 201-02 (1985).
80. In terms of utility, contracts are almost certainly mixed gains because people are typically getting something that they want more than they want the money. See David D. Friedman, Law's Order: What Economics Has to Do with Law and Why It Matters 18- 19 (Princeton 2000) (explaining that based on rational-choice theory, economic legal analysis understands the way a contracting party values a given exchange based on her willingness to enter into the transaction).
81. However, the mixed-gain analysis is not necessarily a perfect fit here because people may not think of their own benefit in monetary terms. See, for example, Robert D. Rowe and Lauraine G. Chestnut, The Value of Visibility: Economic Theory and Applications for Air Pollution Control 10, 80-81 (Abt 1982).
82. See Russell Korobkin, The Endowment Effect and Legal Analysis, 97 Nw U L Rev 1227, 1228-29 (2003) (defining the "status quo bias").
83. For classic demonstrations of how the status quo bias may in general motivate contracting parties to prefer preexisting form terms, see Russell Korobkin, Inertia and Preference in Contract Negotiation: The Psychological Power of Default Rules and Form Terms, 51 Vand L Rev 1583, 1605-07 (1998);
84. Russell Korobkin, The Status Quo Bias and Contract Default Rules, 83 Cornell L Rev 608, 633-66 (1998).
85. See Korobkin, 97 Nw U L Rev at 1280 (cited in note 78) ("[T]he endowment effect is not obviously 'irrational' behavior: a preference for what one has over what one does not have, or for what one is accustomed to compared to the unknown, is no more troublesome than a preference for chocolate ice cream over vanilla.");
86. William Samuelson and Richard Zeckhauser, Status Quo Bias in Decision Making, 1 J Risk & Uncertainty 7, 33- 35 (1988).
87. See Korobkin, 83 Cornell L Rev at 624 (cited in note 80) (explaining that rational choice theory cannot account for the status quo bias).
88. See, for example, Tao Chen, Ajay Kalra, and Baohong Sun, Why Do Consumers Buy Extended Service Contracts?, 36 J Consumer Rsrch 611, 611 (2009) ("Although most consumer magazines and experts advocate consumers not buy [extended service contracts] because they provide little value, it is intriguing that the demand for [extended service contracts] remains high.").
89. Stewart Macaulay, Non-contractual Relations in Business: A Preliminary Study, 28 Am Soc Rev 55, 58-60 (1963).
90. David Charny, Nonlegal Sanctions in Commercial Relationships, 104 Harv L Rev 373, 391-425 (1990).
91. For a more in-depth look at promissory morality, see Claire A. Hill and Erin Ann O'Hara, A Cognitive Theory of Trust, 84 Wash U L Rev 1717, 1755-56 (2006) (discussing contract law's role in promoting optimal trust).
92. See Jody S. Kraus, The Correspondence of Contract and Promise, 109 Colum L Rev 1603, 1635 (2009).
93. See generally Kevin M. Teeven, Origins and Scope of the American Moral Obligation Principle, 46 Cleve St L Rev 585 (1998).
94. See Tess Wilkinson-Ryan and Jonathan Baron, Moral Judgment and Moral Heuristics in Breach of Contract, 6 J Empirical Legal Stud 405, 420-23 (2009).
95. See Leon Festinger, A Theory of Cognitive Dissonance 18-31 (Stanford 1957).
96. See Yuval Feldman and Doron Teichman, Are All Contractual Obligations Created Equal?, 100 Georgetown L J 5, 26-27 (2011) (hypothesizing that "the process of contracting, so long as it is the outcome of free choice, could lead to a deeper commitment to the contracts' terms");
97. Stephanie Stern, Temporal Dynamics of Disclosure: The Example of Residential Real Estate Conveyancing, 2005 Utah L Rev 57, 86 (arguing that late disclosures in real estate contracts will be ignored because buyers are invested in the deal going forward);
98. Shmuel I. Becher, Behavioral Science and Consumer Standard Form Contracts, 68 La L Rev 117, 131-32 (2007) (arguing that individuals are less likely to take care with terms after they have decided to enter a contract).
99. See Danuta Ehrlich, et al, Postdecision Exposure to Relevant Information, 54 J Abnormal & Soc Psych 98, 101 (1957).
100. See William N. Goetzmann and Nadav Peles, Cognitive Dissonance and Mutual Fund Investors, 20 J Fin Rsrch 145, 152-53 (1997).
101. Goetzmann and Peles, 20 J Fin Rsrch at 145, 150-52 (cited in note 94).
102. See Raymond S. Nickerson, Confirmation Bias: A Ubiquitous Phenomenon in Many Guises, 2 Rev Gen Psych 175, 177-78 (1998).
103. See, for example, Uriel Haran, A Person-Organization Discontinuity in Contract Perception: Why Organizations Can Get Away with Breaking Contracts but Individuals Cannot *23 (unpublished manuscript, 2012), online at http://law.huji.ac.il/upload/ HaranContractBreach.pdf (visited Mar 3, 2013).
104. See, for example, Zev J. Eigen, The Devil in the Details: The Interrelationship among Citizenship, Rule of Law, and Form-Adhesive Contracts, 41 Conn L Rev 1, 18-19 (2008).
105. Consider Robert A. Hillman and Jeffrey J. Rachlinski, Standard-Form Contracting in the Electronic Age, 77 NYU L Rev 429, 480-82 (2002) (discussing ways in which firms could encourage consumers to fail to read their contracts online).
106. See Anthony M. Balloon, From Wax Seals to Hypertext: Electronic Signatures, Contract Formation, and a New Model for Consumer Protection in Internet Transactions, 50 Emory L J 905, 934 (2001) ("That a signature is the central formality in contract formation- particularly in a consumer transaction-cannot be overstated. Most consumers equate their signature with being bound to the terms of an agreement.").
107. See Kathleen C. Engel and Patricia A. McCoy, Turning a Blind Eye: Wall Street Finance of Predatory Lending, 75 Fordham L Rev 2039, 2043-45, 2080 (2007) (including in its definition of predatory lending nonfraudulent forms of nontransparency between brokers or lenders and consumers).
108. This is not, of course, a new insight. See, for example, Erin Ann O'Hara, Choice of Law for Internet Transactions: The Uneasy Case for Online Consumer Protection, 153 U Pa L Rev 1883, 1925 (2005) (exploring social and psychological forces that reduce the likelihood that consumers will protect themselves by reading their agreements).
109. See Michael Braunstein and Hazel Genn, Odd Man Out: Preliminary Findings Concerning the Diminishing Role of Lawyers in the Home-Buying Process, 52 Ohio St L J 469, 471 (1991) (citing a survey in which the most commonly articulated reason for home buyers hiring a lawyer was for the lawyer to "protect" the buyer).
110. But see Florencia Marotta-Wurgler, Competition and the Quality of Standard Form Contracts: The Case of Software License Agreements, 5 J Empirical Legal Stud 447, 473-74 (2008).
111. Erin Ann O'Hara, Trustworthiness and Contract, in Paul J. Zak, ed, Moral Markets: The Critical Role of Values in the Economy 173, 187 (Princeton 2008).
112. See also Restatement (Second) of Contracts § 205, comment c.
113. That said, there are of course strands of good faith doctrine written into the negotiation process. For example, courts will routinely "fix" illusory contracts by implying some reasonable set of reciprocal obligations into the parties' terms. See, for example, Wood v Lucy, Lady Duff-Gordon, 118 NE 214, 214-15 (NY 1917);
114. Palisades Properties, Inc v Brunetti, 207 A2d 522, 531 (NJ 1965).
115. See Joseph M. Perillo, Calamari and Perillo on Contracts § 11.39 at 417 (West 6th ed 2009).
116. See David A. Hoffman, The Best Puffery Article Ever, 91 Iowa L Rev 1395, 1420- 27 (2006).
117. See Kellye Y. Testy, An Ode to Odorizzi, excerpted in Randy E. Barnett, Contracts: Cases and Doctrine 1018, 1019 (Aspen 4th ed 2008);
118. Jon Hanson and David Yosifon, The Situational Character: A Critical Realist Perspective on the Human Animal, 93 Georgetown L J 1, 14 (2004) (describing undue influence and duress as "very narrow doctrines").
119. Perillo, Contracts § 9.7 at 284 (cited in note 111) (discussing business compulsion).
120. See, for example, United States v Stump Home Specialties Manufacturing, Inc, 905 F2d 1117, 1122 (7th Cir 1990) (arguing that modifications ought not be policed by good faith or consideration doctrines but rather unconscionability or duress);
121. Levine v Blumenthal, 186 A 457, 458 (NJ 1936).
122. See Perillo, Contracts § 4.9 at 164 (cited in note 111);
123. Restatement (Second) of Contracts § 89(a).
124. See Brian Construction and Development Co v Brighenti, 405 A2d 72, 76 (Conn 1978) (holding a contract modification binding where one party would have been forced to incur unforeseen expenses under the initial contract).
125. See Aditi Bagchi, Managing Moral Risk: The Case of Contract, 111 Colum L Rev 1878, 1924 n 148 (2011).
126. See, for example, Wilkinson-Ryan and Baron, 6 J Empirical Legal Stud at 420- 23 (cited in note 90).
127. See Horton, 57 UCLA L Rev at 623-36 (cited in note 11);
128. Bar-Gill and Davis, 84 S Cal L Rev at 8-16 (cited in note 12) (providing evidence of the scope of the unilateral modification problem).
129. See, for example, Catherine J.K. Sandoval, Disclosure, Deception, and Deep- Packet Inspection: The Role of the Federal Trade Commission Act's Deceptive Conduct Prohibitions in the Net Neutrality Debate, 78 Fordham L Rev 641, 692-93 (2009) (explaining that many jurisdictions do not permit unilateral contract modification in the absence of additional consideration);
130. Bar-Gill and Davis, 84 S Cal L Rev at 19-26 (cited in note 12).
131. Ron Lieber, After Outcry, Verizon Abandons $2 Fee, NY Times B1 (Dec 31, 2011).
132. Tara Siegel Bernard, Bank of America Drops Plan for Debit Card Fee, NY Times A1 (Nov 2, 2011).
133. See Lieber, Verizon Abandons $2 Fee, NY Times at B1 (cited in note 123) (describing the online petition that caused Verizon to revoke the proposed policy);
134. Bernard, Bank of America Drops Plan for Debit Card Fee, NY Times at A1 (cited in note 124) (noting dissatisfied customers' responses to the proposal).
135. See, for example, Eric A. Zacks, Unstacking the Deck? Contract Manipulation and Credit Card Accountability, 78 U Cin L Rev 1471, 1475 (2010);
136. Russell Korobkin, Behavioral Economics, Contract Formation, and Contract Law, in Cass R. Sunstein, ed, Behavioral Law and Economics 116, 117-20 (Cambridge 2000).
137. Of course, these are not actually competing explanations. See, for example, Becher, 68 La L Rev at 138-40 (cited in note 92).
138. Alces and Greenfield, 26 Ga St U L Rev at 1100 (cited in note 13).
139. See, for example, Charles L. Knapp, Opting Out or Copping Out? An Argument for Strict Scrutiny of Individual Contracts, 40 Loyola LA L Rev 95, 126-35 (2006) (arguing for more rigorous judicial standards in evaluating "rolling contracts").
140. See UCC § 2-209(1) (ALI 1962).
141. 105 F3d 1147 (7th Cir 1997).
142. See also ProCD, Inc v Zeidenberg, 86 F3d 1447, 1451-53 (7th Cir 1996).
143. In reality, the Hills agreed to a sale on the phone. See Hill, 105 F3d at 1148.
144. See Klocek v Gateway, Inc, 104 F Supp 2d 1332, 1339 (D Kan 2000)
145. stating that UCC § 2-207, which governs the inclusion of additional terms in acceptance or confirmation of a contract, applies even when there is only one written form;
146. Perillo, Contracts § 2.12 at 64 (cited in note 111) (describing the reasoning in Hill as flawed because according to the UCC the terms in the box constituted additional terms that do not become part of a contract).
147. For a summary of this debate, see generally Robert A. Hillman, Rolling Contracts, 71 Fordham L Rev 743 (2002).
148. ALI, Principles of the Law: Software Contracts § 2.02 & comments e-h (2009);
149. Hillman and O'Rourke, 78 U Chi L Rev at 106-08 (cited in note 17).
150. Hillman and O'Rourke, 78 U Chi L Rev at 106 (cited in note 17).
151. See, for example, M. Ryan Calo, Against Notice Skepticism in Privacy (and Elsewhere), 87 Notre Dame L Rev 1027, 1062 (2012) (arguing that changes in website design can make reading terms more likely).
152. See, for example, Ben-Shahar and Schneider, 159 U Pa L Rev at 651 (cited in note 16);
153. Ben-Shahar, 5 Eur Rev Contemp L at 13-21 (cited in note 16);
154. Mann and Siebeneicher, 108 Colum L Rev at 998-1001 (cited in note 16).
155. See Hillman and Rachlinski, 77 NYU L Rev at 436 (cited in note 104) ("The consumer, engaging in a rough but reasonable cost-benefit analysis of these factors, understands that the costs of reading, interpreting, and comparing standard terms outweigh any benefits of doing so and therefore chooses not to read the form carefully or even at all.");
156. Florencia Marotta-Wurgler. Will Increased Disclosure Help? Evaluating the Recommendations of the ALI's "Principles of the Law of Software Contracts," 78 U Chi L Rev 165, 173-82 (2011);
157. Florencia Marotta-Wurgler, Does Contract Disclosure Matter?, 168 J Inst & Theoretical Econ 94, 108-10 (2012);
158. Ben-Shahar and Schneider, 159 U Pa L Rev at 671-72 (cited in note 16);
159. Yannis Bakos, Florencia Marotta-Wurgler, and David R. Trossen, Does Anyone Read the Fine Print? Testing a Law and Economics Approach to Standard Form Contracts *36-37 (NYU Center for Law, Economics and Organization Working Paper No 09-40, Oct 6, 2009), online at http://papers.ssrn.com/sol3/ papers.cfm ?abstract-id=1443256 (visited Mar 3, 2013).
160. See, for example, Alan M. White and Cathy Lesser Mansfield, Literacy and Contract, 13 Stan L & Pol Rev 233, 237-38 (2002) (explaining that 96 percent of Americans do not have the requisite literacy skills to extract and compute credit cost information from contract and disclosure documents).
161. See Ben-Shahar and Schneider, 159 U Pa L Rev at 738-40 (cited in note 16).
162. See also Calo, 87 Notre Dame L Rev at 1035-44, 1066-67 (cited in note 139);
163. Ben-Shahar and Schneider, 159 U Pa L Rev at 696-702 (cited in note 16).
164. Hill, 105 F3d at 1149.
165. 104 F Supp 2d 1332 (D Kan 2000).
166. See Perillo, Contracts § 2.18 at 71 (cited in note 111).
167. See Klocek, 104 F Supp 2d at 1341.
168. See also Rogers v Dell Computer Corp, 138 P3d 826, 831 (Okla 2005).
169. For the case on which these facts are loosely based, see Sun Printing & Publishing Assn v Remington Paper & Power Co, 139 NE 470, 470 (NY 1923).
170. See Perillo, Contracts § 2.9(a)(4) at 53 (cited in note 111).
171. But see Nancy S. Kim, Clicking and Cringing, 86 Or L Rev 797, 848 (2007);
172. Marotta-Wurgler, 168 J Inst & Theoretical Econ at 108-10 (cited in note 141).
173. See Kim, 86 Or L Rev at 836-48 (cited in note 152) (summarizing the difference between browsewrap and clickwrap cases).
174. A more conventional (but related) argument holds that consumers can be induced to enter contracts online without even knowing that they are doing so, as the process lacks the ordinary off-line formalities. Becher, 68 La L Rev at 164-66 (cited in note 92).
175. Restatement (Second) of Contracts § 90.
176. See, for example, Daniel A. Farber and John H. Matheson, Beyond Promissory Estoppel: Contract Law and the "Invisible Handshake," 52 U Chi L Rev 903, 929-30 (1985);
177. Edward Yorio and Steve Thel, The Promissory Basis of Section 90, 101 Yale L J 111, 129-30 (1991).
178. Robert A. Hillman, Questioning the "New Consensus" on Promissory Estoppel: An Empirical and Theoretical Study, 98 Colum L Rev 580, 618 (1998).
179. See also Jimenez, 57 UCLA L Rev at 701-02 (cited in note 2) (arguing that courts justify themselves in terms of both promise and reliance).
180. See Charles L. Knapp, Reliance in the Revised Restatement: The Proliferation of Promissory Estoppel, 81 Colum L Rev 52, 53 (1981) ("[P]romissory estoppel . . . has become perhaps the most radical and expansive development of this century in the law of promissory liability.") (quotation marks omitted);
181. Grant Gilmore, The Death of Contract 64-76 (Ohio State 1974).
182. Tess Wilkinson-Ryan and David A. Hoffman, Breach Is for Suckers, 63 Vand L Rev 1003, 1039-40 (2010).
183. See Restatement (Second) of Contracts § 90 (making enforceable a promise that the "promisor should reasonably expect to induce action or forbearance") (emphasis added);
184. Stewart v Cendant Mobility Services Corp, 837 A2d 736, 742 (Conn 2003).
185. See John J. Chung, Promissory Estoppel and the Protection of Interpersonal Trust, 56 Cleve St L Rev 37, 50-51 (2008) (discussing the differences between trust and reliance).
186. Wilkinson-Ryan and Hoffman, 63 Vand L Rev at 1040 (cited in note 159).
187. See Sidney W. DeLong, The New Requirement of Enforcement Reliance in Commercial Promissory Estoppel: Section 90 as Catch-22, 1997 Wis L Rev 943, 959 (noting that some courts suggest that promisees must demonstrate that they believed a promise legally enforceable to obtain relief under § 90).
188. 133 NW2d 267 (Wis 1965).
189. For an extended argument against the Hoffman holding and against treating it as a typical promissory estoppel case, see Robert E. Scott, Hoffman v. Red Owl Stores and the Myth of Precontractual Reliance, in Douglas G. Baird, ed, Contracts Stories 62, 82 (Foundation 2007).
190. Hoffman, 133 NW2d at 269.
191. For a discussion of why survey responses might not track actual behavior, see Guthrie, 97 Nw U L Rev at 1156-59 (cited in note 71) (discussing external validity concerns typical of prospect theory research);
192. Yuval Feldman, Attitudes and Behavior, in David S. Clark, ed, Encyclopedia of Law & Society: American and Global Perspectives 102, 102-04 (Sage 2007) (discussing concerns with survey experiments).
193. See Feldman and Teichman, 100 Georgetown L J at 46 & n 209 (cited in note 92).
194. See, for example, Dan Simon, In Praise of Pedantic Eclecticism: Pitfalls and Opportunities in the Psychology of Judging, in David Klein and Gregory Mitchell, eds, The Psychology of Judicial Decision Making 131, 143 (Oxford 2010).
195. See, for example, Gabriele Paolacci, Jesse Chandler, and Panagiotis G. Ipeirotis, Running Experiments on Amazon Mechanical Turk, 5 Judgment & Dec Making 411, 415-17 (2010);
196. David G. Rand, The Promise of Mechanical Turk: How Online Labor Markets Can Help Theorists Run Behavioral Experiments, 299 J Theoretical Bio 172, 175-76 (2012).
197. Paolacci, Chandler, and Ipeirotis, 5 Judgment & Dec Making at 412 (cited in note 171).
198. See Brad M. Barber and Terrance Odean, Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment, 116 Q J Econ 261, 264-66 (2001) (summarizing studies that find that men are more risk seeking than women).
199. See Paolacci, Chandler, and Ipeirotis, 5 Judgment & Dec Making at 412-13 (cited in note 171) (surveying various motivations that Mechanical Turk users gave for using the service and noting that 32.3 percent said they used it for "killing time").
200. See Daniel M. Oppenheimer, Tom Meyvis, and Nicolas Davidenko, Instructional Manipulation Checks: Detecting Satisficing to Increase Statistical Power, 45 J Exp Soc Psych 867, 869-70 (2009).
201. See, for example, Feldman and Teichman, 100 Georgetown L J at 47 (cited in note 92).
202. In an interesting experiment, Professors Raymond Fisman, Shachar Kariv, and Daniel Markovits observe that even one semester's worth of law school education may change students' distributional preferences in the Dictator Game, a game in which one player (the dictator) is free to divide a sum of money with another player however she sees fit. See Raymond Fisman, Shachar Kariv, and Daniel Markovits, Exposure to Ideology and Distributional Preferences *3-4 (working paper, July 19, 2009), online at http://emlab.berkeley.edu/~kariv/FKM- II.pdf (visited Mar 3, 2013).
203. See, for example, Macaulay, 28 Am Soc Rev at 55 (cited in note 85);
204. Daniel Keating, Exploring the Battle of the Forms in Action, 98 Mich L Rev 2678, 2695-2704 (2000);
205. Russell J. Weintraub, A Survey of Contract Practice and Policy, 1992 Wis L Rev 1, 13-30.
206. Daniel Markovits and Alan Schwartz, The Myth of Efficient Breach: New Defenses of the Expectation Interest, 97 Va L Rev 1939, 1954 n 32 (2011).
207. David V. Snyder, The Law of Contract and the Concept of Change: Public and Private Attempts to Regulate Modification, Waiver, and Estoppel, 1999 Wis L Rev 607, 654.
208. See Chris Guthrie and Jeffrey J. Rachlinski, Insurers, Illusions of Judgment & Litigation, 59 Vand L Rev 2017, 2047 (2006) (reporting that decision makers at insurance firms were less prone to anchoring, framing, and self-serving biases).
209. As an example, it's well established that certain kinds of apologies will provoke settlements, though such apologies must be perceived to be genuine to be effective. See Jennifer K. Robbennolt, Apologies and Legal Settlement: An Empirical Examination, 102 Mich L Rev 460, 482-90 (2003) (finding that the acceptance rate for settlements increased from 52 percent under no apology to 73 percent under a full apology).
210. This is not to say that they might not learn about such remedies indirectly through the actions of creditors for example. Consider Mark P. Gergen, A Theory of Self-Help Remedies in Contract, 89 BU L Rev 1397, 1397-1401 (2009) (discussing self-help rules).
211. See, for example, George S. Geis, Empirically Assessing Hadley v. Baxendale, 32 Fla St U L Rev 897, 921-49 (2005).
212. See, for example, Paul H. Robinson and John M. Darley, Intuitions of Justice: Implications for Criminal Law and Justice Policy, 81 S Cal L Rev 1, 18-31 (2007).
213. See, for example, Christopher Slobogin, Some Hypotheses about Empirical Desert, 42 Ariz St L J 1189, 1193-98 (2011) (arguing that individuals either won't notice a departure from ordinary intuitions about punishment or won't care).
214. See also Donald Braman, Dan M. Kahan, and David A. Hoffman, Some Realism about Punishment Naturalism, 77 U Chi L Rev 1531, 1566-68 (2010) (arguing that individuals' views about the morality of punishment are culturally contingent).