Postette: Useful Contracts Tools Or Toys?

Contract Law Basics and Tips

I recently stumbled upon a couple of contracts products. One is TOSAmend, which allows you to mark up online terms of service before agreeing to them in the hope that you’ll be able to form a contract on more favorable terms. The other is PocketNDA, a small notebook of form non-disclosure agreements for those times when lunch conversation gets serious. What do you think, are these useful contracts tools or mere novelties?

4 comments… add one
  • Victoria Picciafuoco Jan 3, 2012 Link Reply

    When I first stumbled into TOSAmend, a couple of months ago, I didn’t take it seriously, although it definitely highlighted a huge legal painpoint of the internet. Now they have a legal opinion supporting the legality of the tool, and I still have some objections.
    TOSAmend’s idea comes from the frustration of disagreeing with the terms of use set by a company, and not being able to do anything about it. The proposed solution, though, does not give any incentive to the user to read the TOS, but rather reject them in toto, assuming that consumer law is better and more favorable to him. This is not a good incentive, in my opinion, since:
    – the company will still collect my information and do everything that’s in the TOS, and I will still have no idea about it.
    – if the network effect of TOSamend kicks in and everybody starts using it, actually making all TOS useless, the potential liability of the company will go up, and so the price of the service I’m buying.I personally would prefer a transparent, fairer standard that everybody knows about, instead of a trick that (only superficially) reverse the negotiation power of the parties. Somebody in another blog post suggested a sort of “incoterms” for TOS. Many say that writing TOS in plain English would improve the readership rate. Let’s start with that! I had this conversation with Prof Eigen, who wrote the opinion for TOSAmend, and he disagrees, with some good points: he argues that being armed with the ability to edit will make people more likely to spend more time reading contracts, and he thinks a lot of people don’t read terms and conditions because they think– what’s the point? I have to sign anyway, and I can’t change the terms, so why bother?PoketNDA also looks like a novelty designer game, rather than a serious tool, but also embodies another painpoint: the “easy NDA” environment that’s the tech industry nowadays, as depicted by this post by Fred Wilson: must admit that notebook looks pretty well done, and I might buy one just for some funny moments in boring business talks!

    • Brian Rogers Jan 3, 2012 Link Reply

      Veronica: Thanks for stopping by. My favorite comments to Fred’s post (besides signing reception desk NDAs as Mickey Mouse) were Chris Swan’s and Sam Tresler’s, although I didn’t read all 300+ comments!

      Some of the folks commenting on Fred’s post also mentioned the disclaimers and legalese we put all over the place, including at the bottom of emails. Contract formation requires mutual agreement, and courts have really strained to find actual agreement in a lot of instances. Although courts have enforced TOS as long as the people “agreeing” to them have notice and have ostensibly consented, it’s clear to everyone that it’s a legal fiction when no one reads the TOS and all TOS are adhesion contracts.

      I liked Coco’s suggestion in the comments to my Should Consumers Read Online Terms of Service? post about adopting some type of Incoterms standards, and I’ve considered whether the standardized approach taken by Creative Commons would work more generally on TOS. Ultimately, I suppose consumer risk of overreaching TOS is backstopped by such legal doctrines as unconsionability, but unless courts extend that doctrine to businesses and other areas where it doesn’t currently apply, the backstop isn’t available in a lot of situations.

      You make a good point about the cost benefits to consumers of website owners’ ability to enforce their TOS. The costs of increased business risk would ultimately find their way back to consumers. Plus, just as the sanctity of contracting is important to economic activity generally, the enforceabilty of TOS is important to transactions to which TOS apply. But there must be a better solution than the legal fictions we’re living with.

  • Bradley B. Clark Jan 3, 2012 Link Reply

    Brian – here’s my pithy comment about the TOSAmend issue: there’s no mutual assent and therefore no binding contract.

    Why not create a program (or a browser extension) that automatically amends every website’s TOS you visit in some manner (perhaps just jurisdiction or choice of law) so that there is never a meeting of the minds and no contract?

    Presumably, neither side would then have a breach-of-contract claim whereas without the “amendment” there would be a contract in favor of the website.

    • Brian Rogers Jan 3, 2012 Link Reply

      Bradley: Interesting thoughts. Although the UETA allows for contracting through computers without human interaction, if changes aren’t communicated, they’re not going to be effective. If proposed revisions are aren’t going to be received by anyone at the website owner who can consider them, you might as well click “I agree” with your fingers crossed.

      In any case, although you might not have a contract at any point during the “executory” period, at some point, you have a contract-related claim, even if it’s along the lines of quantum meruit.

      If article 2 of the UCC applies, the battle of the forms provisions of section 2-207 will ensure there’s a contract.

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