The SECOLA (Society of European Contract Law) congress was this year devoted to the failure of contracting in respect of the financial crisis of last years. Various speakers discussed European and national regulations of the financial market and how gaps and unclarities in them might have contributed to the worsening of the financial crisis.
One of the most interesting presentations was given by Omri Ben-Shahar, professor at the University of Chicago Law School, on the failure of mandated disclosure. Last year he published an interesting article in the European Review of Contract Law: "The Myth of Opportunity to Read in Contract Law". In this article he explains why, according to him, there should not be a legal obligation on the service providers and sellers to present, prior to the conclusion of the contract, standard contract terms that will bind the consumers who do business with them. It has been widely researched that consumers tend not to read the standard contract terms, even if they are given them and have a theoretically unlimited time to read them. Why then do we insist to obligate service providers to deliver these standard contract terms to the consumers? The well accepted argument is - 'so that the consumers have a possibility to read these contract terms if they want to use it. Omri Ben-Shahar in his article is sceptical about the positive value of leaving this opportunity open (e.g. he mentions that while most of the consumers will not make use of it, the courts might then easier dismiss consumers' arguments as to the unfairness of a clause by saying that they did not do enough to prevent it prior to the conclusion of the contract). Still, he considered then certain forms of disclosure that could be effective, e.g. labeling. In his presentation at the SECOLA congress Omri Ben-Shahar presented shortly his new article on the failure of mandated disclosure in which he goes even further with his conclusions, basically rejecting the possibility of information duties having any positive effect for the consumers. He talked about regulatory failure, putting more and more information duties on the professional parties, while the behavioral research shows that the consumers are overloaded with information and don't know what to do with it.
I, like many others, were fascinated by his speech and the discussion that followed afterwards. Still, I cannot help but remain hopeful as to the future of the information duties. Why not work on the form of information first before he completely dismiss it? We could make information forms more legible and more approachable. Of course, that might be a naive view but it feels like we would open a Pandora's box if we just let the professional parties to reveal whatever they wanted to, without any directions nor boundaries. Anyways, I am looking forward to the forthcoming article by Omri Ben-Shahar.