By Matthew Kalhofer
The unfair and deceptive terms and conditions agreements that are included in most online transactions, have adversely affected the consumer seeing as it is the consumer who is generally the less educated of the parties to the transaction, acquiescing to such terms and conditions. Industry practice has begun to shift towards favoring the merchant when it comes to ensuring that their warranties and waivers are enforced. Analyzing the contractual relationships between merchants and their consumers, in addition to understanding the communicative and digital technology that is available to ensure the consumer is equitably notified, will ensure that merchants are held accountable for attempting to ‘slip-in’ different terms and conditions – even after the basis of the bargain has already been agreed to. Technology such as, “AI Pre-Screening Technology”—a development which can provide notifications regarding any unconscionable or other imperative information by weighing the risks and advising of the next steps to mitigate the risks of such agreements. This technology could serve as a great tool in creating a more transparent forum for conducting both written and online agreements. It is the basic technology available that allows for merchants to either, over the telephone or online, articulate the terms and conditions in a consistent and understandable manner for the average consumer. This legal issue has led to progressive discussions regarding whether consumers are legally bound under these circumstances, seeing as the merchant will in many circumstances have legal counsel in generating larger, and even smaller scale, consumer agreements.
Legislative History & Generally Contract Principles Demand Equitable and Transparent Contractual Formation Practices:
Both federal law and the Uniform Commercial Code – adopted in some form by every state in the United States – forbid the unfair and deceptive business practices involved in online transactions, in an effort to promote industry standards that are transparent, equitable, and in accord with the principles of good faith dealings.
Federal Trade Commission
In 1975, the United States Congress passed the Magnuson-Moss Warranty Act, and subsequently designated regulatory power to the Federal Trade Commission regarding consumer product warranties under federal jurisdiction. This Act requires merchants of consumer products to provide consumers with clear and detailed information about warranty coverage. Technology can play an extremely large role in the effectiveness of equitably notifying the consumer of any additional terms or conditions that may constitute a warranty, which the consumer receives in the packaging of the product or at any point after the ‘basis of the bargain’ has already been established. Similar legislative initiatives have become an important tool in protecting the average consumer from these unfair and deceptive business practices, and such initiative is evidenced at the state level, as well as exhaustively throughout the Uniform Commercial Code.
Unfair, Deceptive or Abusive Acts or Practices (UDAP)
These basic contract principles and industry standards were adopted as an additional legislative initiative intended to protect the consumer at the state level by banning “unfair and deceptive” acts and practices. Although the UDAP only applies to transactions involving consumer goods, some states have begun to apply these principles to commercial transactions. Emphasizing the different technology available to communicate this information in a far more accessible and understandable way, will allow for a uniform initiative that is rooted in technological resources which ensure the fluidity and legality of these business transactions.
Uniform Commercial Code “Good Faith”
The Uniform Commercial Code (UCC) is the codification of the most commonly accepted contractual principles that has been adopted in some form by almost every state in the nation. Not only has the modern codification placed significant emphasis on the necessity of good faith, the UCC has also placed significant importance on facilitating equitable contractual obligations and has even dedicated an entire section of the UCC to the idea of good faith. This principle is envisioned to be at the very heart of every merchant and sellers’ intentions when drafting the terms and conditions that are sought to be imposed on the consumer.
Legislative initiatives can utilize contemporary technology such as the “AI Pre-Screening Technology” to facilitate the future of equitable business transactions by allowing the consumer to place themselves on a more equal playing field in circumstances where the seller or manufacturer draws their UCC lances.
Student Bio: Matthew Kalhofer is a second-year law student at Suffolk University Law School. He currently serves as a staff member on the Journal of High Technology Law. Matthew received his Bachelor of the Arts in Political Science from The University of Rhode Island.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.