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Intuitive Formalism in Contract

This Article starts with the proposition that most American contracting is consumer contracting, posits that consumer contracting has particular and even peculiar doctrinal features, and concludes that these features dominate the lay understanding of contract law. Contracts of adhesion constitute the bulk of consumer experience with contract law. It is not hard to see that someone discerning the nature of contract law from a sample composed almost entirely of boilerplate terms and conditions would come quickly to the conclusion that contract law is highly formal.

Within the realm of potentially enforceable deals (i.e., those that are supported by consideration and not illegal or unconscionable), modern contract doctrine upholds agreements when the parties have objectively manifested assent. This is the contract law of the first‐year Contracts course, and it is, more or less, why contracts existed in the cases Hadley v. Baxendale, Hawkins v. McGee, and Embry v. Hargadine, McKittrick Dry Goods Co. These three canonical cases each involve oral manifestations of assent: respectively, the contracts are based on the carrier’s promise that the crankshaft would be delivered by noon the next day; the doctor’s promise of a one‐hundred percent good hand; and the employer’s response to his anxious employee, “You’re alright. Go get your men out.” For everyone who knows the doctrine of assent, these are relatively easy cases for finding contracts, because the evidence suggests that the parties, in fact, communicated to each other their agreement. However, these cases might startle a large percentage of the nonattorney population, for the simple reason that they are oral and not written contracts.

What accounts for this misperception of contract law? Americans are not contract naïfs. On the contrary, most people enter into numerous legally binding agreements every year, if not every month or week. These are the agreements we make with Amazon, PayPal, Comcast, Apple, AT&T, and Visa, to name a few—in other words, these are the contracts we enter into regularly as consumers. Consumer contracts share key features: they are formal, assent is memorialized (either by signature or by clicking “I agree”), parties neither negotiate nor read their terms, and they are almost universally enforceable and, when litigated, enforced. This is the contract law that individuals encounter every day.

As such, perhaps we should not be surprised that this is what most people think that contract law is. Emerging evidence indicates that most people think contracting means signing the paperwork and that contract law is about the form of consent rather than the content to which parties are consenting. This “intuitive formalism” deserves our empirical and normative attention because it has real implications for how consumers behave in their deals and how they interact with their legal system.