15 July 2014

More on Standard Form Contracts: Moral Sensibilities

Earlier this month I posted about colleague Kenny Ching's new article, What We Consent to When We Consent To Form Contracts: Market Price (you can read what I wrote here). Now I've read another excellent article on the same topic, this one by Tess Wilkinson-Ryan titled A Psychological Account of Consent to Fine Print (download here). (If you think her name sounds familiar, I posted about another of Wilkinson-Ryan's articles two months ago here.)

In any event, while Kenny approached the extent of the binding nature of a form contract that is not read from a normative perspective, Wilkinson-Ryan looks at the phenomenon from the ground up, so to speak. Among other questions she examines is why people who unthinkingly sign such contracts feel a moral obligation to abide by them. At this point she brings up the phenomenon of mortgagors continuing to pay mortgages on homes they purchased when their value has fallen far below the amount of the mortgage debt. I addressed the normative implication of such promises here and here. This phenomenon puzzles Wilkinson-Ryan but nonetheless,
Surveys of homeowners and experimental questionnaire studies both offer evidence that homeowners do not walk away from their mortgages because they consider their loan obligations to be morally binding contracts.
Indeed, some surveys report the same sense of moral obligation with respect to unread terms: "when contract terms are clear and unambiguous, questionnaire participants report that breach of a standard form contract is no less morally problematic than breach of a negotiated contract." The results of other surveys is more mixed on the sense of moral obligation with respect to unread terms of contracts. Thus, Wilkinson-Ryan conducted her own extensive survey of attitudes toward the moral obligation toward standard form contracts.

In short--and this is much condensed--the only statistically variable was the length of the contract but that only in connection with the expectation that the consumer should read the contract. And, remarkably, this variable had no effect on the sense of moral obligation to perform:
Even though subjects reported that it is unreasonable to expect a consumer to read a 15-page contract, they nonetheless felt that the non-reading consumer was as responsible for his non-readership as the consumer who had only two pages of terms to wade through.
Wilkinson-Ryan goes on to explore the why's of such moral sensibilities and her insights are fully worth reading. But you'll have to do that on your own. My take-away is slightly different: Why do contracts scholars work to find a reason to reduce the normative obligation of consumers below their own sense of moral obligation? There is, I believe, a good reason but I'd like to hear from the scholars active in this area before I propose an answer.

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