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Contracting in modern world

di - 13 Novembre 2012
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The inefficient outcome of this phenomenon, lies in the fact that consumers might prefer a different combination of clauses, for example a combination characterized by a greater balancing of all clauses governing the relationship.
In this chapter, in which we seek to present the most credible reconstruction of the salient aspects of mass contracting, we considered it our duty to cite this notion developed by noted American jurists long ago, because we are convinced that it more than any others succeeds in providing an explanation for the presence of so many inequitable clauses in the general contract conditions, even though noted authors have criticized this reconstruction, including very recently[15].
But it is possible also another explanation of the presence of inequitable clauses in standard form contracts. We have seen that consumers are dissatisfied by these contracts. An entrepreneur could write a clause that establishes that all harsh clauses in his standard form contract are ineffective. This policy should give optimal results because consumers would be sure that will not suffer the consequences of harsh clauses. But in the markets we do not see the emergence of these kinds of clauses. There must be a convincing explanation because it would be in the interest of the entrepreneur to introduce such a clause. We can understand why these clauses do not appear if we consider the distinction elaborated by Law and Economics scholar about legal disposition. This distinction is that one between standards and rules. In the economic literature a standard is a legal disposition very vague, that needs an intense work of interpretation to become clarified. Rules, instead, are legal dispositions very precise, that do not leave space for various interpretations. For example a legal disposition that says hat near the school the driver must be diligent is a standard. A legal disposition that states shat near a school the speed must not be over 50km per hour is a rule. The distinction between vague and precise legal dispositions can be used also for standard and rule. Clauses. Can have a similarity to a standard rule because is vague and must be clarified and we can have a clause that is like rule because it is precise and does not leave space for interpretation. Well, the problem in a market where there is the tendency to introduce harsh clauses, is that a clause that states that inequitable clauses are ineffective is like a standard. It needs to be clarified by judges, and it can have different interpretations. The entrepreneur could need to bear many costs. If all entrepreneurs would use this clause the problem of cost would be different, but here there is the possibility that entrepreneurs do not use the clause because they can behave as free riders. Standard clauses that have been clarified are public goods in economic sense. Everyone can use them without limiting the use of a second person – and, this is the most important aspect. It is not possible to exclude a subject to make use of the good. If this is a situation of a clause, for an entrepreneur he will not use the standard we describe because he will wait that other do it and then he can have the benefits of the clause. But if all entrepreneurs behave in this way the efficient standard clause does not emerge.

d. Affirmation of a new contract model.
We stated previously that a unique feature of the phenomenon of mass contracting is represented by the affirmation of a model of exchange that recapitulates uno actu the conclusion and execution of the contractual relationship, i.e., a model characterized mainly by the simultaneously between the contract’s conclusion and execution of the services.
This phenomenon seems mainly the result of mass production. Mass production, in fact, involving the standardization of products, has made the acquisition by firms of prior commitments by consumers for acquisition of the goods less necessary. The standardized product, not having been made to meet the particular demands of an individual consumer, but being aimed at broad categories of potential buyers, can be produced even in the absence of specific orders from consumers. Instead, once it is produced, the personalized product may be of interest only to the consumer for whose needs it was adapted; but the standardised product, being produced with standard characteristics adapted to the needs of broad categories of consumers, can be sold indifferently to anyone belonging to those categories.
However, this explanation of the phenomenon of the uno actu recapitulation of the contract’s conclusion and execution, while it certainly appears able to justify the willingness of companies not to seek preliminary promises from consumers, does not seem capable of offering an explanation for the other aspect of the phenomenon in question, an aspect consisting of the tendency of businesses to require of consumers the immediate execution of the counter-service.
We shall now try to provide an explanation for this phenomenon.
The contract’s legally binding nature is provided by legal systems in order to remove a situation of the “prisoner’s dilemma” type which would impede the implementation of a mutually advantageous exchange between two parties. There are particular expedients that make it possible to remove this type of impediment to exchanges with no need for the legal effectiveness attributed to the contract by law.
Indeed, a plausible method for avoiding fraudulent behaviors is to make the exchanges more simultaneous.
In modern states, the legally binding nature of the contractual agreement is universally recognised, albeit within limits that differ from one legal system to another. The existence of the legal constraint ought to discourage opportunistic behaviours, and in any case the possibility of undertaking the legal actions that derive from the legal constraint ought to ensure remedies of restitution or compensation in the case of non-performance.
The guarantee thus given to the parties making the exchanges should exclude the need to rely on those other expedients indicated above.

Note

15.  See R. Posner e L. Bebchuk, supra note 5. In fact R. Coase, The Choice of Institutional Framework: A Comment, 17 J. Law Econ. 493 (1974), albeit for somewhat different reasons (regulator’s lack of jurisdiction, market’s ability to function) had previously rejected the theory by which the public authorities should intervene in contractual clauses of standard contracts to avoid a phenomenon of adverse selection.

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