Wrap Contracts This page intentionally left blank Wrap Contracts FOUNDATIONS AND RAMIFICATIONS Nancy S. Kim 3 1 Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide . Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offi ces in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Th ailand Turkey Ukraine Vietnam Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016 © Nancy S. Kim 2013 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. Library of Congress Cataloging-in-Publication Data Kim, Nancy S. Wrap contracts : foundations and ramifi cations / Nancy S. Kim pages cm Includes bibliographical references and index. ISBN 978-0-19-933697-5 ((hardback) : alk. paper) 1. Contracts. 2. Adhesion contracts. I. Title. K840.K55 2013 346.02'2—dc23 2013000756 9 8 7 6 5 4 3 2 1 Printed in the United States of America on acid-free paper Note to Readers Th is publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is based upon sources believed to be accurate and reliable and is intended to be current as of the time it was written. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Also, to confi rm that the information has not been aff ected or changed by recent developments, traditional legal research techniques should be used, including checking primary sources where appropriate. (Based on the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.) You may order this or any other Oxford University Press publication by visiting the Oxford University Press website at www.oup.com Dedication To my parents, Yeun Soo and Mi Wha Kim, with gratitude. This page intentionally left blank Contents Acknowledgments ix 1. Introduction 1 2. Why Enforce Contracts? 6 A. Individualistic/Deontic Th eories 9 B. Consequentialist Th eories 10 C. Multivalue Th eories of Contract Law 1 3 3. Contracts and Contract Law in Societal Context 1 7 A. Contract Law and Evolving Business Needs 20 B . Contracts of Adhesion 2 6 C . Function, Fluidity, and Instructive Contracts 3 0 4. Th e Rise of Wrap Contracts: Th e Early Cases 3 5 A. Shrinkwraps 36 B. Clickwraps 39 C. Browsewraps 41 5. Contract Terms as Sword, Shield, and Crook 44 A. Contract as Shield 4 4 B . Contract as Sword 4 8 C. Contract as Crook 50 vii viii Contents 6. Problems of Form 53 A. Is a Wrap Contract Just Another Contract of Adhesion? 53 B. Sadistic Contracts 62 7. Problems of Substance 7 0 A. Wrap Contracts and Norm Shift ing 71 B. Getting Something for Nothing: Th e Old Bait and Switch 76 C. Th e Limits of Unconscionability and the Problem of Other Laws 87 8. Th e Sense and Nonsense of Wrap Contract Doctrine 9 3 A. Notice and Wrap Contract Formation 9 3 B. An Outline of Wrap Contract Doctrine 109 C. A New Kind of Judicial Activism 111 9. Form, Function, and Notice 1 26 A. What is a Notice? 130 B. Intent and Consent in Contracts, Torts, and Property 135 C. Contract Functionalism 140 10. Contracts in Wonderland 1 47 A. Contract Law and the Right of Publicity 155 B. Wrap Contracts and Federal Laws 162 C. Terms of Disservice 169 11. Reshaping Wrap Contract Doctrine 1 74 A. Imposing a Duty to Draft Reasonably 176 B . Tailoring Assent 1 92 C. Contract Form, Function and Doctrinal Rules 200 D. Reinvigorating the Doctrine of Unconscionability 203 12. Conclusion 2 11 t able of cases 215 index 219 Acknowledgments This book is the culmination of years of research and writing in the area of con- tracts and technology. Th e analysis and ideas in this book build upon and further develop work which previously appeared in the following publications: Th e Duty to Draft Reasonably and Online Contracts , in Commercial Contract Law: A Transatlantic Perspective , ch. 8 (Cambridge University Press, 2013) Contract’s Adaptation and the Online Bargain , 79 U. Cin. L. Rev. 1327 (2011) Wrap Contracts and Privacy (Proceedings of the Intelligent Information Privacy Management Symposium, AAAI Press, 2010) Bargaining Power and Background Law , 12 V and. J. Ent. & Tech. L. 93 (2009) Website Proprietorship and Online Harassment , 2009 Utah L. Rev. 993 Th e Soft ware Licensing Dilemma , 2008 Byu L. Rev. 1103 Internet Challenges to Business Innovation , 12 J. Internet L. 3 (August 2008) Mistakes, Changed Circumstances and Intent , 56 U. Kan. L. Rev. 473 (2008) Clicking and Cringing , 86 Or. L. Rev. 797 (2007) Martha Graham, Professor Miller, and the Work-for-Hire Doctrine: Undoing the Judicial Bind Created by the Legislature , 13 J. Intell. Prop. L. 337 (2006) Evolving Business and Social Norms and Interpretation Rules: Th e Need for a Dynamic Approach to Contract Disputes , 84 Neb. L. Rev. 506 (2005) Th ere are many people who have helped in diff erent ways with this book. ix