Some Realities of Online Contracting

Internet commerce has led to novel forms of contracting that raise challenging legal and regulatory questions. For instance, many online sellers do not present standard form terms until after consumers purchase their product, or place them in inconspicuous links, making it hard for buyers to read them and comparison shop. Regulators and consumer advocates fear that this practice undermines the notion of assent, making consumers vulnerable to seller exploitation. Recent proposals seek to curb the potential for seller abuse through increasing contract disclosure and prohibiting certain onerous dispute resolution clauses, such as forum selection clauses. If such interventions are developed in the absence of clear evidence of advantage-taking, however, they risk distorting efficient business practices or imposing unnecessary costs. In addition, certain regulations, such as increased disclosure, might simply be ineffective. This article reviews new empirical evidence on these questions from studies of software End User License Agreements and discusses the policy implications of this evidence.