by Tom Stilp JD, MBA/MM, LLM, MSC
In an empirical study, a group of scholars found that out of 500 contracts, 99.6% were highly complex and unlikely to be understood by most consumers (Benoliel and Becher, 2019).
In a prior In the Loop article (“What is Boilerplate and Why Do We Have It?”), we noted certain contract terms in boilerplate do not even need to make sense to the consumer, as long as the attorneys can use it, and the courts can interpret it.
According to Richard Epstein who coined the term, “rational ignorance,” most consumers do not read the contract to economize on the use of their time (Epstein, 2006, p. 237). But can consumers dispute adverse terms in a contract
the consumer did not read?
That is, can a consumer say the contract was too long, boring and unduly complicated and, therefore, the consumer did not read it?
The law would say “no.” If failing to read a contract would be a defense for nullifying the contract, then the consumer would have a “perverse incentive” to avoid reading the contract at all (Korobkin, 2003, p. 1269).
Benoliel and Becher admit: “Perfectly readable contracts, however, may yet use legal terms of art that are incomprehensible to the average consumer” (Benoliel and Becher, 2019, p. 2295). Lawyers are familiar with contract language, especially in commercial contracts, and can quickly summarize essential terms that a client needs to know.
Having read, prepared and litigated thousands of contracts over the last three decades, we understand “reading the unreadable.”
