Outlaw contract terms in consumer contracting: mispricing, market inefficiency and the overconsumption of risk
by Larry R. Pounders Jr.
International Journal of Private Law (IJPL), Vol. 5, No. 2, 2012

Abstract: US contract law is designed for sophisticated counterparties. The law has largely failed to accommodate the idiosyncrasies of modern consumer transactions. The trend towards expansion of nominal 'choice' in consumer contracting effectively eliminates effective decision making which is overwhelmed by rational ignorance. The article concludes that shrinking the bargaining range in consumer contracts by increasing mandatory default terms (especially risk-based terms) would increase market efficiency. The article demands reversal of current trends in law; demanding it leave the wild west of anything goes consumer contracting and embrace structured transactions which force internalisation of certain risks until information asymmetries equilibrate.

Online publication date: Sat, 20-Sep-2014

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