Skip to main content
SpringerLink
Log in

Unconscionability of E-contracts: A Comparative Study of India, the United Kingdom, and the United States

Liverpool Law Review volume 43, pages 339–360 (2022)Cite this article

Abstract

Adhesion contracts have a strong likelihood of being unconscionable. The laws and principles are further complicated by the introduction of electronic contracts, specifically electronic consumer contracts. The paper touches upon the duty to read doctrine in contracts and electronic contracts. While the doctrine of unconscionability has evolved it has been playing catch up with the demands of consumers. This paper compares the application of this doctrine in the United States (US), the United Kingdom (UK), and India. The paper also proposes recommendations for consumers and the development of laws.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Notes

  1. ‘You can FINALLY—ANONYMOUSLY—safely and securely download, swap and trade music, movies, software, everything … KAZANON makes you TOTALLY ANONYMOUS and INVISIBLE—NO ONE WILL EVER KNOW YOUR REAL IDENTITY, LOCATION or IP ADDRESS … NO MORE FEAR of a lawsuit or prosecution just for downloading your favourite music!’ (Odysseus Marketing 2003).

  2. The survey found that 543 participants who joined the fictitious social network spent fifty-one seconds on average reading the Terms of Service policies, with a ninety-three percent acceptance rate.

  3. Earl of Ardglasse v Muschamp (1684) 1 Vern 237; 23 ER 438, 438–9 (Lord Guilford); Earl of Aylesford v Morris (1873) LR 8 Ch App 484, 489–90 (Lord Selborne LC).

  4. While the traditional bargained out document was evidence of the understanding, the same cannot be said of the standard form document which is pre-printed and represents the wishes of the seller. Merely because a buyer signs a standard form document, that does not necessarily imply that he has acquainted himself with all the terms of the contract, and consequently accepted them.

  5. Margaret Radin, while emphasizing the responsibility of the contract drafter states, ‘… I think that deployment of boilerplate—in cases where it is found to offend whatever standards are developed for it—should be an intentional tort. Those who draw up and deploy boilerplate know exactly what they are doing and are fully aware of its effects, and indeed intend those effects.’ (Radin 2013: 215).

  6. Radin states seven reasons (not understanding, no other business alternative, unaware of T&C, trust the company, trust the enforcement system, no negotiating power, will not need legal remedy) on why a user might not read T&C (Radin 2013: 12). Easy to accept default options (Thaler and Sunstein 2008: 7–8). Classical conditioning effect (Petty et al. 1993: 341). People do not fail to read T&C because of ‘mere laziness’ (Rakoff 1983: 1226). Even when users read the policies they often did not agree with their meaning (McRobb 2006: 224).

  7. Because the drafters of these contracts know not only that their forms will not be read, but also that it is reasonable for consumers to sign them unstudied, a reasonable drafter should have no illusion that there has been true assent to these terms (Meyerson 1993: 1265). If the drafter of a form contract should know that a particular term was not read by the promisor, it may be argued that it is unreasonable to think the promisor meant to bind himself to that term, even if he signed the agreement, clicked ‘I agree’, or somehow manifested his assent to the form (Barnett 2002: 629). Mik argues that legal intention presupposes a certain level of understanding of the implications of one’s actions. This distinction becomes relevant when a single click can create a contractual relationship and when the very existence of a contract could hinge on the user’s contention that he did not intend any consequences. It is, however, overly simplistic to state that it suffices to intend to click without realising the possible legal implications. (Mik 2016: 82–84).

  8. See Hines v Overstock.com, Inc., 668 F. Supp. 2d 362 (E.D.N.Y. 2009), Fteja v Facebook, 841 F.Supp.2d 829 (S.D.N.Y. 2012),

  9. Hines v Overstock.com, Inc., 668 F. Supp. 2d 362 (E.D.N.Y. 2009). The court sided with the consumer who was charged a restocking fee of 30 USD upon returning a vacuum that she bought on the website. The court stated that ‘… [the customer] lacked notice of the Terms and Conditions because the website did not prompt her to review the Terms and Conditions and because the link to the Terms and Conditions was not prominently displayed so as to provide reasonable notice of the Terms and Conditions. Very little is required to form a contract nowadays—but this alone does not suffice.’

  10. L'Estrange v F. Graucob Ltd. 2 K. B. 394 (1934), Bihar State Electricity Board v Green Rubber Industries, (1990) 1 SCC 731.

  11. See ABN Amro Bank N.V. v Royal & Sun Alliance Insurance plc and others [2021] EWCA Civ 1789, Parker v South Eastern Railway [1877] 2 CPD 416, Levison v Patent Steam Carpet Cleaning [1978] QB 69, Beatson, J., et al. Anson's Law of Contract. 31st ed., Oxford University Press, 2020,188.

  12. Higgins & Co Lawyers Ltd v Evans, [2020] 1 WLR 141, Green Deal Marketing Southern Ltd v Economy Energy Trading Ltd and others, [2019] EWHC 507 (Ch), Qantas Cabin Crew (UK) Ltd v Lopez and another, UKEAT/0106/12/SM.

  13. Uttarakhand Power Corpn. Ltd. v ASP Sealing Products Ltd., (2009) 9 SCC 701, Bharathi Knitting Co. v DHL Worldwide Express Courier, (1996) 4 SCC 704, Ferro Alloys Corpn. Ltd. v A.P. State Electricity Board, 1993 Supp (4) SCC 136.

  14. § 2–302. Unconscionable contract or Clause.

    (1) If the court as a matter of law finds the contractor any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

    (2) When it is claimed or appears to the court that the contractor any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

  15. See Williams v Walker Thomas Furniture Co. (350 F.2d. 445C D.C. Cir 965).

  16. If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.

  17. UCC § 2–302 cmt. 1. available at: https://law.justia.com/codes/ohio/2006/orc/jd_130215-53d7.html#:~:text=(A)%20If%20the%20court%20as,limit%20the%20application%20of%20any

  18. Williams v Walker-Thomas Furniture Company, 350 F.2d 445 (D.C. Cir. 1965), 449.

  19. For further discussion see Craswell, R. (2010). Two Kinds of Procedural and Substantive Unconscionability. UC Berkeley: Berkeley Program in Law and Economics. Retrieved from https://escholarship.org/uc/item/0hf7v16t

  20. Uniform Commercial Code § 2–302, Comment 1.

  21. State ex rel. AT & T Mobility, LLC v Wilson, 703 S.E.2d 543 (2010), 578.

  22. Section 111. Unconscionable contract or term.

    (a) If a court as a matter of law finds the contract or any term thereof to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable term, or it may so limit the application of any unconscionable term as to avoid any unconscionable result.

    (b) If it is claimed or appears to the court that a contract or any term thereof may be unconscionable, the parties must be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

  23. 636 F. Supp. 1569 (D. Kan. 1986).

  24. 302 N.Y.S.2d 390, 393–94 (Civ. Ct. 1969).

  25. Carnival Cruise Lines, Inc. v Shute, 499 U.S. 585 (1991) 595.

  26. (1992) 607 A.2d 703.

  27. 306 F.3d 17 (2d Cir. 2002).

  28. Ibid at 30.

  29. Bess v DirecTV, Inc., 885 N.E.2d 488, 497–98 (Ill App. Ct. 2008).

  30. Under the sliding scale approach, the two prongs are viewed in tandem, permitting the court to make a finding of unconscionability if the overall weight of the facts and circumstances favours intervention.

  31. Unfair Contract Terms Act 1977 available at: https://www.legislation.gov.uk/ukpga/1977/50.

  32. Lloyds Bank Ltd v Bundy [1975] 1 QB 326.

  33. Ibid para 339.

  34. Multiservice Bookbinding Ltd v Marden, [1979] 1 Ch 84, 110.

  35. Ibid para 110.

  36. [1983] 1 WLR 87.

  37. Ibid para 94–95.

  38. [1985] AC 686.

  39. Consumer Rights Act 2015 available at: https://www.legislation.gov.uk/ukpga/2015/15/introduction.

  40. Small print’ is marked by poor layout, densely phrased paragraphs, and legal jargon. The Law Commission opined that all small print terms should be assessable for fairness (The Law Commission and The Scottish Law Commission Report 2013: 3).

  41. R and S Pilling t/a Phoenix Engineering v UK Insurance Ltd, [2019] UKSC 16, Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67.

  42. Section 62 (1) An unfair term of a consumer contract is not binding on the consumer.

  43. Heller v Uber Technologies 2020 SCC 16 (the Canadian court placed heavy reliance upon common law doctrine of unconscionability, holding that equitable doctrine allows contracts obtained by the abuse of unequal bargaining powers to be set aside by the courts.).

  44. Uber BV and others v Aslam and others [2021] UKSC 5.

  45. Ibid para 68.

  46. Ibid para 71.

  47. Ibid para 68.

  48. [2021] UKSC 40.

  49. Ibid para 27.

  50. 103rd Law Commission of India Report on Unfair Terms in Contract available at: https://lawcommissionofindia.nic.in/101-169/Report103.pdf.

  51. 199th Law Commission of India Report on Unfair (procedural & substantive) Terms in Contract available at: https://lawcommissionofindia.nic.in/reports/rep199.pdf.

  52. (1986) 3 SCC 156.

  53. Ibid para 91.

  54. Id.

  55. Ibid para 112.

  56. Ibid para 102.

  57. Ibid Para 82.

  58. Ibid para 89.

  59. [1991] Supp (1) SCC 600.

  60. Ibid Para 281.

  61. (1995) 5 SCC 482.

  62. Supra note 84.

  63. Ibid Para 47.

  64. Not issuing proper bill, refuse return or withdraw of defective goods, disclosing a customer’s information.

  65. (2019) 5 SCC 725.

  66. Ibid para 6.7.

  67. 2021 SCC OnLine SC 1207.

  68. (2021) 3 SCC 241.

  69. Supra note 110 at 274.

  70. 2022 SCC OnLine SC 416.

  71. ELM was first developed in 1980 by Cacioppo and Petty (1984). It is a theoretical framework that explains how recipients’ cognitive processes relate to a given piece of information affecting their understanding of the message. ELM suggests that an individual’s motivation and capability to process information determines whether they invest any effort in analysing the message. From the results of the study, it appears that simplification of T&C to make them more readable and understandable may not be able to achieve its goal in real-world settings (Robinson and Zhu 2020: 8).

  72. But both the length of the contract and that of the clickable section should be limited to a reasonable word count, in the same way, that the agreement should be limited to reasonable fonts and colours. By requiring users to separately assent to any further terms, including crook provisions, the user retains a degree of power that they do not currently have (Gamarello 2015: 24–25).

  73. Document-engineering is an approach by Robert J. Glushko and Tim McGrath outlined in their book that synthesises ‘complementary ideas from separate disciplines’, including information and systems analysis, electronic publishing, business process analysis and business informatics, and user-centred design (Glushko and McGrath 2008). The document-engineering approach uses both ‘document analysis’ that analyses text and ‘task analysis’ that analyses data and objects. It seeks to provide a spectrum of solutions addressing document and process specifications that could lead to a better comprehension of the adhesion contract (Cornelius 2019: 12).

  74. The tool can be accessed here: http://claudette.eui.eu/use-our-tools/index.html.

  75. It is an experimental scientific project dedicated to automated compliance assessment of T&C and privacy policies of online service providers which is a tool for the automatic detection of potentially unfair clauses in contracts.

  76. The list of legal rationales is employed by the underlying memory-augmented neural network (MANN model). Such a memory brings two important benefits to model representational capabilities: (1) the memory can act as an auxiliary tool to handle complex reasoning such as capturing long-term dependencies; (2) the memory can be employed to inject external domain knowledge directly into the model for different purposes, mainly interpretability, transfer learning and context conditioning.

References

  • Angelo, A.H., and E.P. Ellinger. 1992. Unconscionable contracts: A comparative study of the approaches in England, France, Germany, and the United States. Loyola of Los Angeles International and Comparative Law Review 14: 455.

    Google Scholar 

  • Bar, On., and Elazari Amit. 2019. Unconscionability 2.0 and the IP boilerplate: A revised doctrine of unconscionability for the information age. Berkeley Technology Law Journal 34: 567.

    Google Scholar 

  • Bar-Gill, Oren, and Kevin Davis. 2010. Articles empty promises. Southern California Law Review 83: 47.

    Google Scholar 

  • Barnes, Richard L. 2005. Rediscovering subjectivity in contracts: Adhesion and unconscionability. Louisiana Law Review 66: 67.

    Google Scholar 

  • Barnett, Randy E. 2002. Consenting to form contracts. Fordham Law Review 71: 627.

    Google Scholar 

  • Beatson, J., et al. 2020. Anson’s law of contract, 31st ed. Oxford: Oxford University Press.

    Book  Google Scholar 

  • Becher, Shmuel I. 2008. Asymmetric information in consumer contracts: The challenge that is yet to be met. American Business Law Journal 45: 723–774.

    Article  Google Scholar 

  • Benoliel, Uri, and Shmuel I. Becher. 2019. The duty to read the unreadable. Boston College Law Review. https://doi.org/10.2139/ssrn.3313837.

    Article  Google Scholar 

  • Cacioppo, John T., and Richard E. Petty. 1984. The Elaboration likelihood model of persuasion. In NA—Advances in consumer research, vol. 11, ed. Thomas C. Kinnear, 673–675. Provo: Association for Consumer Research.

    Google Scholar 

  • Clapperton, Dale. 2009. Electronic contracts: A law unto themselves? Media International Australia 130 (1): 102–111. https://doi.org/10.1177/1329878X0913000112.

    Article  Google Scholar 

  • Cornelius, Kristin B. 2018. Standard form contracts and a smart contract future. Internet Policy Review. https://doi.org/10.14763/2018.2.790.

    Article  Google Scholar 

  • Cornelius, Kristin B. 2019. Zombie contracts, dark patterns of design, and ‘documentisation.’ Internet Policy Review. https://doi.org/10.14763/2019.2.1412.

    Article  Google Scholar 

  • DiMatteo, Larry A., and Bruce Louis Rich. 2006. A consent theory of unconscionability: An empirical study of law in action. Florida State University Law Review. 33: 1067.

    Google Scholar 

  • Eisenberg, M. 2009. The principle of unconscionability. Berkeley: Berkeley Program in Law and Economics.

    Google Scholar 

  • Fort, Jeffrey C. 1978. Understanding unconscionability: Defining the principle. Loyola University Chicago Law Journal 9: 765.

    Google Scholar 

  • Friedrich, Kessler. 1943. The contracts of adhesion-some thoughts about freedom of contract role of compulsion in economic transactions. Columbia Law Review 43: 629.

    Article  Google Scholar 

  • Gamarello, Thomas. 2015. The evolving doctrine of unconscionability in modern electronic contracting. Law School Student Scholarship 2015: 647.

    Google Scholar 

  • Gardner, J. 2021. Being conscious of unconscionability in modern times: Heller v Uber technologies. The Modern Law Review 84: 874–885. https://doi.org/10.1111/1468-2230.12616.

    Article  Google Scholar 

  • Gluck, George. 1979. Standard form contracts: The contract theory reconsidered. The International and Comparative Law Quarterly 28 (1): 72–90.

    Article  Google Scholar 

  • Glushko, R.J., and T. McGrath. 2008. Document engineering: Analyzing and designing documents for business informatics and web services. Cambridge: The MIT Press.

    Google Scholar 

  • Hillman, Robert A. 2017. Consumer internet standard form contracts in India: A proposal. National Law School of India Review 29: 70–85.

    Google Scholar 

  • Hillman, Robert A., and Jeffrey J. Rachlinski. 2002. Standard form contracting in the electronic age. New York University Law Review 77: 429.

    Google Scholar 

  • Katz, Avery. 1990. Your terms or mine? The duty to read the fine print in contracts. The RAND Journal of Economics 21 (4): 518–537. https://doi.org/10.2307/2555466.

    Article  Google Scholar 

  • Kornhauser, Lewis A. 1976. Unconscionability in standard forms. California Law Review 64: 1151.

    Article  Google Scholar 

  • Leff, Arthur Allen. 1967. Unconscionability and the Code. The Emperor’s New Clause. University of Pennsylvania Law Review 115 (4): 485–559. https://doi.org/10.2307/3310882

  • Liepina, Ruta, Federico Ruggeri, Francesca Lagioia, Marco Lippi, Kasper Drazewski and Paolo Torroni. 2020. Explaining potentially unfair clauses to the consumer with the CLAUDETTE tool. NLLP@KDD. Accessed from https://api.semanticscholar.org/CorpusID:221014488

  • Liew, Ying Khai, and Debbie Yu. 2021. The unconscionable bargains doctrine in England and Australia: Cousins or siblings? Melbourne University Law Review 45 (1): 206.

    Google Scholar 

  • Lonegrass, Melissa T. 2012. Finding room for fairness in formalism—The sliding scale approach to unconscionability. Loyola University of Chicago Law Journal 44: 4.

    Google Scholar 

  • Mann, Ronald J., and Travis Siebeneicher. 2008. Just one click: The reality of internet retail contracting. Columbia Law Review 108 (4): 984–1012.

    Google Scholar 

  • McCullough, Colleen. 2016. Unconscionability as a coherent legal concept. University of Pennsylvania Law Review 164: 779–825.

    Google Scholar 

  • McRobb, Steve. 2006. Let’s agree to differ: Varying interpretations of online privacy policies. Journal of Information, Communication and Ethics in Society 4: 215–228. https://doi.org/10.1108/14779960680000294.AccessedonOctober05.

    Article  Google Scholar 

  • Meyerson, Michael I. 1993. The reunification of contract: The objective theory of consumer form contracts. University of Miami Law Review 47: 1263.

    Google Scholar 

  • Mik, Eliza. 2016. Contracts governing the use of websites. Singapore Journal of Legal Studies 2016: 70–94.

    Google Scholar 

  • Mislove, Alan, and Christo Wilson. 2020. A practitioner’s guide to ethical web data collection. In The Oxford handbook of networked communication, ed. Brooke Foucault Welles and Sandra González-Bailón, 538–558. Oxford: Oxford University Press.

    Google Scholar 

  • Mohan, MP Ram., and Anmol Jain. 2020. Exclusion clauses under the Indian contract law: A need to account for unreasonableness. NUJS Law Review 13 (4): 1.

    Google Scholar 

  • Moringiello, Juliet M., and William L. Reynolds. 2010. Electronic contracting cases 2009–2010. The Business Lawyer 66: 175–181.

    Google Scholar 

  • Nehf, James P. 2005. Shopping for privacy online: consumer decision-making strategies and the emerging market for information privacy. University of Illinios Journal of Law, Technology and Policy 2005: 55.

    Google Scholar 

  • Petty, Richard E., Duane T. Wegener, Leandre R. Fabrigar, Joseph R. Priester, and John T. Cacioppo. 1993. Conceptual and methodological issues in the elaboration likelihood model of persuasion: A reply to the Michigan State critics: Specifying the ELM. Communication Theory 3: 336–362. https://doi.org/10.1111/j.1468-2885.1993.tb00078.x.AccessedonOctober4.

    Article  Google Scholar 

  • Radin, Margaret Jane. 2012. Boilerplate: The fine print, vanishing rights, and the rule of law. Princeton: Princeton University Press.

    Book  Google Scholar 

  • Rakoff, Todd D. 1983. Contracts of adhesion: An essay in reconstruction. Harvard Law Review 96: 1173. https://doi.org/10.2307/1341009.AccessedonOctober4.

    Article  Google Scholar 

  • Robinson, Eric P., and Yicheng Zhu. 2020. Beyond ‘I agree’: Users’ understanding of web site terms of service. Social Media + Society. https://doi.org/10.1177/2056305119897321.

    Article  Google Scholar 

  • Susser, Daniel. 2019. Notice after notice-and-consent: Why privacy disclosures are valuable even if consent frameworks aren’t. Journal of Information Policy 9: 37–62. https://doi.org/10.5325/jinfopoli.9.2019.0037.

    Article  Google Scholar 

  • Swaminathan, Shivprasad. 2019. Contractual unfairness: Another way of skinning the cat. Indian Law Review 3 (3): 299–308. https://doi.org/10.1080/24730580.2019.1699312.

    Article  Google Scholar 

  • Thaler, Richard H., and Cass R. Sunstein. 2008. Nudge: Improving decisions about health, wealth, and happiness. New Haven: Yale University Press.

    Google Scholar 

  • The Law Commission and The Scottish Law Commission Report. 2013. UNFAIR TERMS IN CONSUMER CONTRACTS: Advice to the Department for Business, Innovation and Skills available at: https://www.lawcom.gov.uk/app/uploads/2015/06/unfair_terms_in_consumer_contracts_advice.pdf

  • Tofaris, Stelios. 2020. The regulation of unfair terms in Indian contract law: Past, present and future. In Studies in the contract laws of Asia III: Contents of contracts and unfair terms, ed. M. Chen-Wishart and S. Vogenauer, 111–134. Oxford: Oxford University Press.

    Chapter  Google Scholar 

  • Wilkinson-Ryant, Tess. 2017. The perverse consequences of disclosing standard terms. Cornell Law Review 103: 61.

    Google Scholar 

  • Zhang, Mo. 2008. Contractual choice of law in contracts of adhesion and party autonomy. Akron Law Review 41: 52.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. O.P. Jindal Global University, Sonipat, India

    Dharmita Prasad

  2. Symbiosis International (Deemed) University, Pune, India

    Pallavi Mishra

Authors
  1. Dharmita Prasad
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Pallavi Mishra
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Dharmita Prasad.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and Permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Prasad, D., Mishra, P. Unconscionability of E-contracts: A Comparative Study of India, the United Kingdom, and the United States. Liverpool Law Rev 43, 339–360 (2022). https://doi.org/10.1007/s10991-022-09306-6

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10991-022-09306-6

Keywords

search

Navigation