Management
Judith Wright
Deciphering Digital Contracts Just Because They Can Doesn’t Mean They Should Each year, my students at the Kelley School of Business are required to select a contract they are a party to and read it to the last word. For most, it’s the first time they’ve ever read a contract from beginning to end. In the assignment, they are tasked with analyzing exactly what they’ve agreed to.
When we buy online, we download an app or access a retail website, which asks us to first agree to terms and conditions. Think about that for a minute: Imagine being stopped at the door at Target and asked to sign a multi-page contract in order to gain access to shop in the store.
One of the basic tenets of contract law is that people are expected to enter into contracts in good faith. That means we consider the terms carefully before we commit, so we understand what we are agreeing to. Once the agreement is in effect, all parties are expected to follow the terms of the contract and to perform as promised. As I tell my students, “A deal is a deal.”
But when online, we impatiently click ‘I Agree’ to get on with our important transaction. What exactly are we agreeing to?
Blind Acceptance Over recent years, I have seen an increasing trend in the use of extremely one-sided provisions that some companies bury within the terms and conditions of their online contracts. While the businesses are clearly looking out for their best interests, some of the terms they present to consumers (who usually agree blindly) are borderline unconscionable. Before I share some of the terms my students have found, let’s consider a few statistics on the contract literacy and buying methods of our society: •
A 2017 survey by Deloitte found that 91% of consumers accept terms and conditions without reading them.
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The survey found an even higher blind acceptance rate of 97% for users between ages 18 to 34.
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Last year, more than 2 billion people purchased goods or services online.
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This year, online retail sales are projected to top $5.4 trillion worldwide.
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Terms and Conditions Let’s start with one of the popular rideshare companies many of my students use. According to Uber’s website, ev-
the bottom, “By continuing, I confirm and agree that I have read the Terms and Conditions and the Privacy Policy.” Agreeing to follow the guidelines is one of those terms. In one simple press of a forward arrow, the consumer accepts, in all, some 20,000+ words of contract terms. Provisions like: •
Uber isn’t providing the consumer with a ride, rather it is helping the consumer find a ride with an independent driver.
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Uber makes no promises as to the suitability, safety or ability of a driver and expressly states that consumers ride at their own risk.
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Riders who request a car seat agree that neither Uber nor the driver is responsible for the safety of the seat provided.
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Any disputes between Uber and consumers will be resolved by arbitration. (Add another 48 pages of arbitration rules the consumer has agreed to.) One notable dispute includes a claim against Uber arising out of an accident. This is intended to preclude consumers from suing Uber in the local court system.
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And, of course, Uber can change the terms at any time. Simply said, continued use of the app constitutes the consumer’s acceptance of those changes.
Imagine being stopped at the door at Target and asked to sign a multi-page contract in order to gain access to shop in the store.
It’s fair to guess that few, if any, consumers took the time to read any of the Uber terms of use while standing on a eryone with an Uber account agrees to follow the Uber community’s guidelines. street corner, downloading the app for first-time use. Likewise, fairly frequent How exactly does that agreement occur? updates to the terms go unnoticed by First, to use Uber, one must download Uber users. the app onto a cell phone. In setting up an Uber account, the consumer enters a Here are some other terms my students phone number and credit card informa- have found in their contracts: tion, then enters their name. When ad• A gym limited its liability for all vancing from that screen, it says along claims to an amount equal to the February • March 2022 • Hamilton County Business Magazine
