The Power of Shopping
posted by Nate Oman
With the holidays upon us, I figured that now would be a good time to do a post on shopping and its importance for contract theory. As everyone who survived a first year contracts course can tell you, one of the central problems for contract law is what has been variously labeled as boilerplate, contracts of adhesion, and fine print. What we are talking about here are all of those contracts that one is offered on a take-it or leave-it basis that no one ever reads. In true late-New-Deal-lets-find-a- new-frontier-for-saying-o h-my-heck- the-corporations- are- taking-over-the-world-FDR-come-and- save-us fashion Friedrich Kessler wrote an influential article (“Contracts of Adhesion — Some Thoughts About Freedom of Contract,” 43 Colum. L. Rev. 629 (1942)) arguing that boiler plate represented a form of private law making that corporations imposed on helpless consumers. Such private law making, he argued, was illegitimate in a democratic society, where law making ought to be democratically accountable (or at the very least accountable to the FTC). Shopping, however, leaves me somewhat doubtful about Kessler’s claim.
It seems to me that what motivates Kessler’s concern is a particular view of what constitutes a legitimate contract. What he clearly has in mind is a deal where both parties dicker over all of the terms of the agreement. In other words, he sees bargaining as the sine qua non of legitimate contracts, and the absence of bargaining as being ipso facto suspect. Res ipsa loquitor. What Kessler does not appreciate, however, is that shopping can act as a substitute for bargaining.
I never dicker with my supermarket over the price of milk. Yet this hardly means that I am powerless before the supermarket and that it can impose whatever price and terms it wishes to on helpless me. The fact that there are four or five supermarkets more or less equidistant from my house keeps them in line. If Safeway gouges me for milk or acts like a jerk when I try to return a sour jug of egg nog, I will take my business down the road, and Safeway knows it. It keeps prices reasonable, and makes them reasonably polite and easy to work with.
On the whole, I find the holidays stressful and annoying. I am a practicing Mormon, and I find the uber-commercialization of Christmas religiously distasteful. I hate flying in December, and I still do it every year. One nice thing about the holiday shopping orgy, however, is that it makes me feel powerful. Everywhere I go, I see one huge corporation after another groveling — literally — for my business. They know that I have options, and this fact gives me courage when I go to the Target exchange desk. Compared with the power that I have as a shopper, I feel basically helpless in the face of the government. The “customer service” desk at the Virginia Department of Motor Vehicles sucks compared to Target (and Target isn’t all that good). They feel no anxiety about my ability to take my business elsewhere.
In short, Kessler — in my view — was mistaken (or at least partially mistaken) for seeing my take-it or leave-it contract with a corporation as evidence of powerlessness and the FTC as a reflection of my power. I do not feel that my ability to cast a vote in an election gives me any real influence over the government. On the other hand, when I opened the Washington Post on Sunday and saw the mountains of advertising, I felt a surge of control and power. Why? Because I am a shopper, and the Fortune 500 tremble before me!