Shmuel I. Becher (Victoria University of Wellington) & Tal Zarsky (University of Haifa - Faculty of Law) have posted Minding the Gap on SSRN. Here is the abstract:
The digital world has become part of our DNA. The way e-commerce, human behavior and law interact and affect one another has come to be of enormous significance. Among other things, the internet equips consumers with a variety of platforms to share information of a volume unimaginable before. As part of this development, online information flows allow consumers to learn about businesses and their contracts efficiently and quickly. Consumers can become informed by coming across the impressions that other, experienced, consumers share and spread. Potentially, consumers may familiarize themselves with the contents of contracts through the experiences of other consumers.
Online and offline, relations between consumers and businesses are most frequently governed by consumer standard form contracts. For decades such contracts have been assumed one-sidedly biased against consumers. Consumer Law seeks to alleviate this bias and empower consumers. Legislatures, consumer organizations, scholars and judges constantly look for ways to protect consumers from unscrupulous firms and unfair behaviors.
From a legal perspective, consumers–businesses relations are administered by standardized contracts. Nonetheless, firms do not always follow these contracts in practice. Sometimes there is significant disparity between what the written contract stipulates and what consumers experience de facto. Interestingly, firms often deviate from the written contract in favor of consumers (“the Gap”). In other words, firms often take a lenient approach despite the stringent written contracts they draft. This essay examines whether, counter-intuitively, policy makers should add firms’ leniency to the growing list of firms’ suspicious behaviors.
Many legal regimes seek ways to cope with unfair contract terms in consumer contracts. Naturally therefore consumer law should enable, if not encourage, firms’ lenient practices. Firms’ willingness to deviate from their strict contracts to benefit consumers seems like a sensible approach. Apparently, such behavior should not be second-guessed.
However, this essay asks whether, counter-intuitively, consumer law should sanction firms that create a Gap and exploit it. The essay proposes that firms’ lenient approach, coupled with online tools and human psychology, may occasionally have surprising and harmful qualities. It illustrates how technological changes can turn the Gap into a key component in consumers' understanding, or perhaps misunderstanding, of consumer contracts. It examines when firms’ leniency should be considered manipulative or exercised in bad faith. It then explores whether firms should be allowed to enforce the written contract even if they deliberately and consistently deviate from it.
The main contribution of this essay is threefold: First, it points to the Gap and examines its origins. Second, it illustrates how the Gap complicates the interplay between reputation, conduct, trust and the need to protect consumers. It asserts that at the end of the day the Gap may blend into a toxic mix that distorts consumers’ perception and undermine rational decision-making. Third, it identifies key questions policy makers and courts should consider in respect of this said Gap.
