Harvard Law School’s Private Law Workshop: Nathan Oman, Reconsidering Contractual Consent

Post by Patrick Goold

How important is consent in contract law? Less important than many suppose, says Professor Nathan Oman. At the first HLS Private Law Workshop of the new academic year, Oman presented his current work in progress, Reconsidering Contractual Consent: Why We Shouldn’t Worry Too Much About Boilerplate and Other Puzzles. In this thought-provoking article, Oman argues that robustly voluntary consent to obligations is far less important to the normative defense of contract law than is often assumed.

Oman’s analysis begins with a puzzle. Normative theories of contract tend to suggest that party consent is necessary to justify enforcing contractual obligations. For autonomy theorists, holding parties accountable for commitments to which they have not meaningfully consented interferes with their ability to self-govern. For economists, consent is an important indication that the transaction makes both parties better off. But here’s the paradox: contract law regularly does not require meaningful party consent before enforcing obligations. Many situations exist wherein courts uphold agreements where the parties are almost wholly ignorant of the terms – boilerplate terms providing a familiar example.

Rather than argue that current contract doctrine is defective, Oman claims we must fundamentally rethink the normative justification for contract enforcement. The inability of efficiency and autonomy theorists to explain contractual enforcement where consent is thin shows that some other value must justify the practice. Oman claims instead that contracts are enforced because they are important tools for solving complex organizational problems in markets.  In this theory, contracts are a kind of decentralized legislative process, used by parties to regulate issues as diverse as artisanal cheese production and business partnerships. The benefit of such private legislation over regulation is that market agents can produce a greater variety of solutions to the problems they face than government agencies. The good news is contracts perform this role, and are worth enforcing, even if one of the party’s consent is close to a formality.

Of course, consent still does play a role in this theory. It can help prevent the unilateral imposition of obligations. It also provides a feedback function, as parties cannot be expected to consistently sign on to lousy solutions to their problems. Still, if other mechanisms exist to fulfill these roles, then there is no downside to enforcing the contract despite the lack of meaningful consent. Boilerplate, often much criticized by academics, provides an example. Boilerplate quite helpfully resolves organizational problems, while other feedback mechanisms exist to ensure that the underlying organizational solutions are not fundamentally flawed. We should not be worried, therefore, that often no one really reads the fine print!

The article was a great start to this year’s Private Law Workshop. And I for one shall certainly try to worry less the next time I am faced with an iTunes User Agreement update!