INNOVATION IN
DIGITAL CONTRACTS on research by
DAV I D H O F F M A N Professor of Law
DAVID HOFFMAN
In an article in a recent issue of the University of Chicago Law Review, University of Pennsylvania Law School professor Dave Hoffman challenges widely-held notions about the purpose and function of digital fine print — like the iTunes Software License Agreement and social media privacy policies — by closely examining the work of companies that have decided to make their fine print into something consumers can actually understand. The conventional wisdom holds that while consumers may hurriedly click “Agree” on digital terms and conditions while on their way to using the products and websites, no one actually reads them. Why then do companies bother deploying them at all? As Hoffman explains, the traditional answer has been that this digital fine print operates as an “option” for the firms using it: while it may not do much to police consumers’ behavior on the front end, businesses can use the fine print to enforce norms of conduct by punishing the most egregious consumer misconduct. However, Hoffman argues, the “option” theory of fine print is incomplete. Several well-known sharing-economy digital firms, including Tumblr, Kickstarter, Etsy, Airbnb, and Bumble, have in recent years revised their fine print in ways designed to make it more easilyunderstood and accessible for non-lawyers, and thus more likely to be read and — potentially — complied with. Interviewing lawyers at these innovative firms, Hoffman discovered what motivated them to reconceive what is typically boilerplate contractual language, and what, if anything, has resulted from the revisions. In the article, “Relational Contracts of Adhesion,” Hoffman proceeds through a series of case studies based upon those interviews. Those case studies yield insights into a previously-underexamined category of fine print, which firms not only use to influence consumer behavior but also to define the parameters of the relationship with consumers. In some cases, firms also sought to use the fine print to signal what kind of companies they want to be: transparent, socially-conscious, or perhaps even light-hearted. Both Tumblr and Kickstarter “created simple, easy-to-read summaries of each section of [their] terms of use,” and provided these translations to clarify what might otherwise have been impenetrable legal jargon. Etsy transformed its previously-generic terms of use into a more colloquial set of “house rules” that feature “a distinctive look and feel” with “[s]ection and paragraph headers … in plain and clear English: ‘Be honest with us,’ ‘Let’s be clear about our relationship,’ ‘Rights you grant Etsy,’ and ‘Don’t steal our stuff.’” In addition, Hoffman writes, “Etsy explains why it needs the rights it does, particularly the intellectual property rights it takes.”
“[Some digital contracts] might be changing user behavior by drawing on practices (of reciprocity, informality, and trust) traditionally sourced to __ 28
individualized, negotiated, off-line deals.”
