TransparencyEnhancing

Technology

Computers, Consumers, and Consent

Innis Walker

Master of Laws in Law and Information Technology, Course D Thesis

Stockholm University

Supervisor: Christine Kirchberger

All rights reserved by the author. For use contact: inniswalker-at-googlemail.com.

Version 1. May 2013.

Spring 2013

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Contents

Prologue: a picture of the past and a vision for the future ................................................................... 3

Methodology .................................................................................................................................... 4

Setting the scene: App functionality ................................................................................................ 5

Act I: The Need for Transparency – law and principles ...................................................................... 6

1. Seller liability under English Common Law of contract .............................................................. 6

1.1 The doctrine of notice: are terms brought to consumer’s attention? ....................................... 6

1.2 TED and 21st century notice.................................................................................................... 7

2. Seller liability under consumer legislation .................................................................................... 8

2.1 Unfair Terms (Articles 3, 4 and Annex to UTD) .................................................................... 9

2.2 Transparency of language and contracting environment (Article 5, UTD) .......................... 11

2.3 Misleading act or omission (Articles 6 and 7, UCPD) ......................................................... 12

2.4 Generally unfair commercial practice (Article 5, UCPD) .................................................... 15

2.5 Conclusions regarding seller liability ................................................................................... 16

3. Arguments of Principle ............................................................................................................... 16

3.1 Promoting party autonomy.................................................................................................... 16

3.2 Economic principles .............................................................................................................. 19

3.3 Access to justice .................................................................................................................... 21

3.4 Conclusions regarding arguments of principle ..................................................................... 23

Act II: Some challenges of implementing a technological solution to a legal problem .................... 25

1. Retrieval of contract data ............................................................................................................ 25

1.1. Recognising terms displayed on page .................................................................................. 25

1.2. Retrieving linked terms ........................................................................................................ 26

1.3. Websites without obviously linked terms ............................................................................ 26

1.4. The wider context of term retrieval functionality ................................................................ 26

2. Identifying “key” terms ............................................................................................................... 28

2.1. Ranked list prepared in advance by humans ........................................................................ 28

2.2. Computer-executed ranking: Designing rules for determining rank order .......................... 29

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2.3. Harnessing the strength of the machine: Probability, machine learning, and big data ........ 29

2.4. Knowing when to display “key” terms ................................................................................ 31

3. Translation .................................................................................................................................. 32

3.1. The pros: Legal language as a cooperative subject for translation ...................................... 32

3.2. Contextual meaning: the challenge of automating translation ............................................. 33

3.3. Further challenges in defining meaning: Fuzzy terms v solid rules .................................... 35

3.4. Machine learning and statistical prediction as a solution? ................................................... 35

Act III: Final reflections on TED ....................................................................................................... 37

BIBLIOGRAPHY .............................................................................................................................. 39

Books ............................................................................................................................................. 39

Articles ........................................................................................................................................... 39

Cases (EU, UK, USA).................................................................................................................... 42

EU Legislation ............................................................................................................................... 43

UK Legislation ............................................................................................................................... 43

Policy Documents .......................................................................................................................... 43

Online resources ............................................................................................................................. 44

Contract terms ................................................................................................................................ 45

Personal Correspondences ............................................................................................................. 45

Annexed documents ....................................................................................................................... 46

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Prologue: a picture of the past and a vision for the future

Being a consumer has changed since advent of the Internet. We perhaps frequent virtual storefronts

more than physical ones, enter into contracts more than ever before (almost every visit to a website

involves a contract of some sort, perhaps unwittingly), and often agree to terms we do not read.

Unfortunately, the default rules that govern contractual relationships have not matched the pace of

technological progress. In this thesis I shall demonstrate that these rules lag behind our

technological reality, that this faltering harms consumers, sellers, and societies alike, and that a

solution is not beyond our grasp. I achieve this by considering (Act I) specific areas of online seller

liability partly arising from the gaps between laws and technical reality and how such gaps also curb

the achievement of jurisprudential and social objectives. After considering these factors, I will then

(Act II) exemplify one possible solution in which technology bridges the trenches it has dug.

Whereas technology currently enslaves consumers, it can empower them; whereas technology

currently disenfranchises consumers, it can emancipate them; whereas technology currently

confounds consumers, it can enlighten them; we only need bid it do so. As this thesis demonstrates,

our technological past need not be our future.

Consumers face an increasingly difficult task contracting online. A recent study reported that just

reading all the privacy policies (not even terms and conditions of sale/use) which consumers are

subjected to would take around 201 hours per year at a cost to the average US Internet user of

$3,534 annually1. This issue of overwhelming volume is compounded by the complexity of the

reading involved – with comparable Flesch-Kincaid scores to that of a scientific journal,

comprehendible (broadly) only to those who read at college level or higher2. Furthermore, contracts

are growing in length3, further impeding self-interested consumers.

At the same time, technology has developed from fixed-line dial-up to mobile broadband, from the

limited search engines of old to accurate, predictive search engines built on a multitude of sensory

inputs which sketch the user’s search profile4. We live in the era of big data, where companies and

computer programs map user behaviour to offer functionality, services, and adverts adapted to that

user. So why is the platform for consumer contracting stuck in the mid-90s? Why is the technology

deployed in consumer contracting no more complex than HTML in its simplest form? 1 A McDonald & L Cranor, ‘The Cost of Reading Privacy Policies’, (2008) 4 I/S: A Journal of Law and Policy for the Information Society 543; M Masnick, ‘To Read All of the Privacy Policies You Encounter, You ‘d Need to Take a Month Off From Work Each Year’, TechDirt, http://www.techdirt.com/articles/20120420/10560418585/to-read-all-privacy-policies-you-encounter-youd-need-to-take-month-off-work-each-year.shtml 2 F Marotta-Wurgler & R Taylor, ‘Set in Stone? Change and innovation in consumer standard-form contracts’, (2013) New York University Law Review 240 at 253 3 Ibid 4 See e.g. E Pariser, The Filter Bubble: What the Internet is hiding from you. ( London: Viking: 2011)

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Methodology

Objective of the paper: The aim of this thesis is to demonstrate a need and explore one potential

avenue for developing browser-based technology to assist consumers in discovering and

understanding seller’s standard terms. For ease, this transparency-enhancing technology shall be

called TED. First, legal, economic and normative factors shall be considered in demonstrating a

need for such technology, often by comparing current practice to a perfect world and hence how

TED could improve this dissonance. Implementation exploration shall consider information

retrieval, ranking of term importance, and knowledge acquisition for translation functions as well as

how TED might function in its technical environment.

Limitations on topic: This thesis shall only address online consumer contracts made on standard

terms, i.e. pre-drafted contracts prepared by sellers acting in the course of trade and presented to

civilians acting outside of their trade in a purely consumptive capacity in transactions made via the

Internet.

Research methodology: Need is explored through exposition of liability for sellers under both

classical contract law and contemporary consumer law via standard legal research methods. More

academic, principle-based arguments draw from a combination of academic legal sources and

author insights. In completing the thesis, implementation was researched through a combination of

academic legal informatics sources and also through correspondence with some IT experts.

Target audience: This thesis targets online sellers and regulators as predominant gears of change.

To a large extent, support of both of these parties will determine the fate of such technology.

Consumer credit providers can also play an important role in pressurizing sellers to change habits.

Limitations of the analysis: Undertaking a broad, all-inclusive analysis risks superficially

addressing some debates worthy of deeper analysis. As an interdisciplinary analysis, it may betray

the author’s lack of in-depth technical education. Hence, advice was sought on technological issues

from qualified professionals. Lastly, TED pursues legal perfection in e-contracting; rather than legal

sufficiency via myths that only perpetuate the legal dissonance. Should courts take a more

facilitative view of the law, this might undermine the analysis; however, simply exposing these

situations might also be an important function for this thesis.

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Setting the scene: App functionality

Before addressing the need for TED and some developmental aspects, a brief explanation of its

functionality and business environment is required. TED shall offer two separate, equally important

functionalities: firstly, TED retrieves and analyses the terms of agreement, highlighting terms likely

to be unpleasant, surprising, or influential to the consumer. TED does not seek to narrow the

consumer’s judgement in these matters, but rather augments the consumer’s vision, enabling them

to fully appreciate the true nature of the bargain – particularly where it diverges from their wishes

or expectations. These terms are, with no effort on the consumer’s part, placed in a predominant

spot in their web-browser at the appropriate point in the contracting process to offer a bona fide

opportunity to examine “key” terms.

But simply highlighting is not enough: consumers are also at a knowledge disadvantage5, so TED

seeks to augment consumers’ ability to understand the terms of their agreement. In doing so, TED

must offer explanations of not just legal words, but also plain language contextualization of whole

phrases or terms. This could be facilitated by the homogenizing effect of standard terms usage in

consumer contracts, examined in depth later on. However, it should be noted that this

standardization may be faltering, and time will tell whether truly standard term contracts continue to

be the pervasive norm6. Again, translation should be seen as augmented fact-gathering rather than

providing any form of legal advice to the consumer. Whilst translation necessarily imbues the

definition with some form of the author’s bias at the expense of reader’s autonomy, TED challenges

autonomy no more than if the consumer were to consult a legal dictionary, and perhaps TED’s

potential for learning and self-development through collection of training data from a wide base of

sources offers a less biased platform than that of a standard legal dictionary.

As a business model, TED would be best managed as a non-profit – since its objectives are

primarily social and it needs to be seen as seller-neutral. This is not to say that TED could not

generate income. In its initial stages, TED could seek government funding as a social initiative.

Alternatively, TED could offer certification of transparency to sellers – i.e. that their contract is

readable and translatable by TED, thus enables consumers as regards contractual transparency – in

return for a fee and seller cooperation. This would gain traction if heavily supported by government

campaigns and demanded by consumer groups and consumer credit providers CCPs, perhaps

forcing de facto industry acceptance of TED and TED Certification. CCPs could also be targeted for

funding, as the technology clearly benefits them (see later). Costs could be minimized by seeking

5 J Maxeiner, ‘Standard Terms Contracting in the Global Electronic Age: European alternatives’, (2003) 28 Yale Journal of International Law 109 at 136; B Keirsbilck, ‘The Interaction Between Consumer Protection Rules on Unfair Contract Terms and Unfair Commercial Practices’, (2013) 50 Common Market Law Review 247 at 252 6 Correspondence with Florencia Marotta-Wurgler of 17/05/2013

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pro bono advice from UK lawyers, and perhaps gathering click data for the identification of “key”

terms and complex translation via a computer game aimed at lawyers. Hence, whilst a non-profit

setup enables TED’s impartiality, it need not solely leech off state funding. And over time, as TED

increasingly gathers click data – perhaps from new sources such as the game suggested above– the

initially high start-up investments in legal advice and programme development will likely decline,

as TED becomes increasingly self-sufficient and capable of gathering data through lower cost

methods (e.g. through the game). TED is a 21st century answer to a 20th century legal problem; a

technological solution for the constraints of the flesh, which could help propel consumers into a

more commercially-aware network society.

Act I: The Need for Transparency – law and principles

The need for transparency shall be considered thusly: (1) Seller liability under contract at Common

Law; (2) Seller liability under consumer law; and (3) Reasons of principle (predominantly academic

arguments with a wider social perspective) for supporting development of TED.

1. Seller liability under English Common Law of contract

1.1 The doctrine of notice: are terms brought to consumer’s attention?

Incorporation of standard terms is usually achieved by sellers in the contracting process via

checkbox, or presenting an “I agree” button with a statement. However under English common law,

the doctrine of notice requires that particularly onerous or usual terms be brought to the consumer’s

attention7. Further, notice must be determined for each term independently; the more undesirable or

irregular the term, the more a seller must do to bring that specific term into the consumer’s

attention8. For the most egregious of terms this may even require the term be “printed in red ink

with a red hand pointing to it”9. Lady Hale confirmed that this continues to represent the position in

the 21st century, that each term must be weighed individually along a gradated scale of notice10.

Thus sellers wishing to incorporate their terms into consumer agreements must be aware that the

more detrimental or unexpected the individual term is, the more overt their act of notification must

be. Although the modern trend may be to challenge such terms on the grounds of unfairness rather

7 Interfoto Picture Library v Stiletto Visual Programmes Ltd [1989] QB 433 at 436-437, as per Dillon LJ 8 Ibid at 443C, as per Bingham, LJ. 9 Spurling v Bradshaw [1956] 1 WLR 461 at 466, as per Denning, LJ (obiter); cited in Interfoto v Stietto at 436-437 10 O’Brien v MGN [2002] CLC 33 at 39-40 (para 22-23)

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than non-incorporation11, O’Brien confirmed that the doctrine of reasonable notice continues to

apply in light of developments in consumer law12.

1.2 TED and 21st century notice

But does the modern consumer contracting environment match the notice requirements based on an

individual assessment of how onerous or surprising each term is to a consumer? Where Facebook

would have a consumer agree to licence out all IPRs over their content royalty-free on Facebook’s

behalf13, how surprising or onerous is this? And is a miniscule link to terms at the foot of the page

“extraordinary” enough highlight that specific term? Does the addition of an “I agree” checkbox

before the link really increase this visibility of one term over another? Is it enough even to provide

the full terms in a plaintext box on that page for the user to scroll through prior to clicking an “I

agree” button, with no term highlighting or red hand pointing to specific terms as envisioned by

Lord Denning14? Furthermore, given the earlier statistics about the cost (time and money) of

reading all privacy policies alone, can we seriously be surprised if consumers do not read all the

terms? And if not, what effect does this have on how surprising such terms ought to be? Perhaps,

the test then ought to be what the reasonable consumer might speculate?

Some might argue that under classical contract law, a party’s signature on a contract’s face bound

them to terms therein, even if not read15. However, (1) is clicking “I accept” really the same as a

signature? (2) Is the ‘signature’ really on the ‘face’ of the contract as the terms are likely stored in a

different digital location? And (3) how applicable are draconian classical principles in our modern

consumer-oriented contract law system16? L’Estrange is nearly 100 years old, yet the doctrine of

notice was confirmed in 200117. Thus presuming we reject this thread of argument, it is

questionable whether online sellers currently do enough to bring terms to the attention of consumers

and thus incorporate their terms. Although this online incorporation has not been tested per se in the

11 C Riefa & J Hörnle, ‘The Changing Face of Electronic Consumer Contracts’, in L Edwards & C Waelde (eds.), Law

and the Internet, (3. ed.) (Oxford: Hart: 2011) at 111 12 E.g. Unfair Contract Terms Act 1977, Unfair Terms in Consumer Contracts Regulations 1999, and the Consumer Protection from Unfair Trading Regulations 2008. 13 See s.2 ‘Sharing Your Content and Information’ in Facebook’s Statement of Rights and Responsibilities, 2012, http://www.facebook.com/legal/terms 14 Spurling v Bradshaw 15 C Riefa & J Hörnle at 109; citing L’Estrange v Graucob Ltd [1934] 2 KB 394. 16 R Brownsword & G Howells, ‘When Surfers Start To Shop: Internet commerce and contract law’, (1999) 19 Legal Studies 287 at 292; J Spencer, ‘Signature, Consent, and the rule in L’Estrange v. Graucob’, [1973] 32(1) Cambridge Law Journal 104; and recently in E Peden & J Carter, ‘Incorporation of Terms by Signature: L’Estrange rules’ (2006) 21 Journal of Contract Law 96 17 O’Brien v MGN [2001] EWCA Civ 1279

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UK since Beta v Adobe18, sellers should not mistake non-engagement on the part of the court with

active endorsement. Courts and regulators, for their part, perhaps also ought to undertake a

comprehensive assessment of the conflicting law in this area.

Without legal clarification, sellers should beware of liability in this area and seek to avoid this

through risk averse solutions – such as TED – which help avoid liability before it arises. This is

achieved by making onerous or unexpected terms particularly visible to consumers at the

appropriate point in the contracting process. But perhaps even providing the full text on the page

immediately prior to contracting may not be enough to distinguish one particularly onerous term

from another. TED can solve this by separating such terms from the body of the contract, making

them prominently and separately visible. Sellers then ought to be protected against future claims of

non-incorporation due to lack of reasonable notice, satisfying the courts at little comparative

expense. Had the automated ticket dispenser in Thornton19 presented such a notice to the consumer,

or the sellers in Interfoto suggested to the consumers that they might wish to check over clauses X,

Y, and Z, the court ought to have found in the seller’s favour instead. And comparatively, these

measures would cost little to bona fide companies operating without deceitful intention. Is the low-

cost preventive solution surely not a better choice than the expensive remedial one?

2. Seller liability under consumer legislation

Online sellers might also be open to liability under consumer protection rules regarding unfair

contract terms or those prohibiting unfair commercial practices. These two regimes have an

interesting interplay, which cannot be fully explored in this thesis. But as Keirsbilck demonstrates, a

finding of unfairness under one regime ought not ipso facto mean unfairness under the other; rather

that the grounds for such a finding under one regime often involve similar considerations of fact and

circumstance as under the other, thus influencing assessment under the latter20. A consumer can be

widely defined as “a person acting outside of their trade or profession”, thus excluding merchants

acting in a personal capacity, but including hobbyists who make a profit from trading in their

hobbies21. The following seller behaviour may prompt liability: (1) Defining the content of

obligations – most obviously influences the relationship; (2) Language choices in contract drafting

– can enable or impede consumer understanding; (3) Contract presentation choices –display and

18 Beta Computers (Europe) Ltd v Adobe Systems (Europe) Ltd 1996 SLT 604 19 Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 20 B Keirsbilck at 253-254; Case C-453/10, Perenicova and Perenic v SOS Financ spol sr.o at 42-46 21 J Puplava, ‘Use and Enforceability of Electronic Contracting’ (2007) 16 Michigan State Journal of International Law 153 at 185

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structure of terms influences their transparency; and (4) Designing of contracting environments –

can facilitate or hinder contractual transparency. These may influence the following heads of claim:

1. Unfairness of contract terms (93/13/EEC22, Arts. 3 and 4; UK UTCC23 Regulations 1999,

Regs. 5 and 6)

2. Lack of linguistic or contextual transparency (93/13/EEC, Art. 5; UK UTCC Regulations

1999, Reg. 7)

3. Misleading act or omission (2005/29/EC24, Arts. 6 and 7; UK CPUT25 Regulations 2008,

Reg. 5 and 6)

4. Generally unfair commercial practice (2005/29/EC, Art. 5; UK CPUT Regulations 2008,

Reg. 3)

2.1 Unfair Terms (Articles 3, 4 and Annex to UTD)

Two sub-heads of claim may be relevant herein: (A) terms deemed unfair on examination; (B)

terms presumed unfair unless proven otherwise.

A) Article 3 UTD – Standard terms which imbalance rights and obligations to detriment of the

consumer

Terms drafted in advance by sellers26 which run contrary to “good standards of commercial

morality and practice” relating to both the substance and presentation of the terms27, and which

significantly disadvantage the consumer as regards their rights and obligations vis-à-vis the seller

under the contract are likely to be considered unfair terms28. The “good faith” and “significant

disadvantage” should be considered separately, but overlap again to some degree29. Should a term

fall outside of this definition, it may still be open to question under the general test for unfairness30.

Since consumer contracts are likely to fall within Article 3 by virtue of Article 3(2), the general test

need only be raised, not discussed at length.

22 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (UTD) 23 Unfair Terms in Consumer Contracts Regulations 1999, No. 2083 24 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer practices in the internal market (UCPD) 25 Consumer Protection from Unfair Trading Regulations 2008, No. 1277 26 UTD Art. 3(2), UTCCR Reg. 5(2) 27 Director General of Fair Trading v First National Bank [2001] UKHL 52, at para 13-17; Office of Fair Trading, OFT 311, ‘Unfair Contract Terms Guidance: Guidance for the unfair terms in consumer contracts “regulations 1999’, Sept 2008, available at http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft311.pdf at 9 28 UTD Art. 3(1); UTCCR Reg. 5(1) 29 Director General of Fair Trading v First National Bank at para 37 30 Art. 4, UTD; Reg. 6, UTCCR

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In most online consumer environments, expediency, ease of use, and economy31 have prompted

sellers to draft terms in advance and present consumers with these as a take-it-or-leave-it part of the

offer of the product (contract-as-product)32. Hence, terms which offer sellers significant benefits at

the expense of the consumer (where this contradicts principles of moral business practice) are liable

to be struck out by a court. Particularly where these terms limit a seller’s fiscal responsibility, e.g.

as regards consequential losses to the consumer or third parties, losing the protection of such

clauses could precipitate significant consequential liability for a seller.

TED can certainly play a role in reducing this potential for liability by increasing the transparency

of consumer contracting. Sellers who could demonstrate that their website actively supports TED’s

transparency-enhancing features – which increase the visibility of terms so consumers become

aware and offer alternative explanations so that consumers can become informed – could surely

help convince a court that the requirements of commercial morality and practice have, in fact, been

met; and thus the seller should not be held liable. Sellers also ought to beware of the danger of viral

effects poisoning their terms as a result of their reuse of standard terms. Due to such reuse (of

linguistic expressions and whole terms in pursuit of economy and legal stability33), a single

judgement striking down a single term in a single contract might be clearly felt many miles from its

legal epicentre. Should the term be examined by a court under the general rules for unfairness,

demonstrating that the seller invested in certification of and cooperation with transparency-

enhancing measures could surely go a long way towards demonstrating the circumstances of the

contract’s conclusion were fair, and the consumer ought to be bound by their decision, particularly

where a market for substitutes exists? Lastly, as shall be discussed later in the “arguments of

principle”, forgiving seller liability where consumers are properly informed of the existence of such

terms, and then choose to ignore such a warning, is perhaps more appropriate than seller liability, as

it more accurately embodies the principle of autonomy which underpins contract law.

B) Annex (i) UTD – Grey-listed practices - Standard terms and irrevocability

The legislation also provides an indicative, non-exhaustive list of types of term which are likely to

be considered unfair34. In particular, (i) prohibits: “irrevocably binding the consumer to terms with

which he had no real opportunity of becoming acquainted before the conclusion of the contract”.

31 G Howells & S Weatherill, Consumer Protection Law. (2nd ed.) (Aldershot: Ashgate: 2005) at 19 32 M J Radin, ‘Humans, computers, and binding commitment’, (2000) 75 Indiana Law Journal 1125 at 1126; J Nehf, ‘BOOK REVIEW: European Fair Trading Law: The unfair commercial practices directive’ (2007) 35 International Journal of Legal Information 305 at 306-307 33 M J Radin at 1150; G Howells & S Weatherill at 19 34 Annex; UTCCR 1999, Schedule 2

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This appears to differ from the sentiment of Article 3 only in so far as the first two words,

“irrevocably binding”. Given the operation of mandatory cooling off periods35, can consumer

contracts really be said to be “irrevocably binding”, particularly given that many sellers will happily

process returns for goods in resale condition – although this lacks a unilateral power of revocation

on the seller’s part. But in any case, it may provide another head of claim under which an aggrieved

might exploit to force a seller to endure a perhaps costly legal battle. TED offers a quick and simple

way to dispatch any lingering doubts, ensuring the consumer is presented with ample opportunity to

become acquainted with the terms and their meaning prior to clicking “I agree”; avoiding seller

liability thereunder.

2.2 Transparency of language and contracting environment (Article 5, UTD)

Sellers must also draft terms transparently, in plain, intelligible language36 and giving the consumer

the chance to examine all the terms37. Doing their best under the circumstances will not be

enough38. Intelligibility is to be judged as read by a consumer, not a lawyer39 and need not entail a

complete understanding of every word but at least the opportunity to appraise themselves of the

terms prior to contracting so they do not come as a surprise40.Sellers must ensure both linguistic

clarity and wider transparency of the contracting process to avoid liability thereunder41.

Many online retailers are likely to be guilty of failing to ensure that, widely defined, their

contracting documents and environments attain what is a high standard for transparency under the

UTD. Besides notice-based-arguments regarding visibility of terms, the language of much of

standard terms contracting is still dense, verbose ‘legalese’42 – although there is some indication

that this may be changing, at least amongst privacy policies43. Despite linguistic changes, policy

length may provide arguably as strong a deterrent44. Hence, perhaps even if presented with the

terms, the consumer does not truly have the opportunity to engage with them on an equal academic

footing.

35 Article 9, Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights 36 Art. 5, UTD; Reg. 7, UTCCR 37 Recital 20 38 See the language of Article 5 – use of the imperative, “must always be” 39 OFT 311 at 10 40 Ibid at 87 (19.9) 41 Ibid at 86 (19.8); Law Commission/Scottish Law Commission, ‘Unfair Terms in Consumer Contracts: Advice to the department of business, innovation and skills’ March 2013 available http://lawcommission.justice.gov.uk/docs/unfair_terms_in_consumer_contracts_advice_summary-web.pdf at ss.33-34 42 F Marotta-Wurgler & R Taylor at 253 43 Correspondence with F Marotta-Wurgler of 17/05/2013 – regarding her forthcoming article on the subject. 44 F Marotta-Wurgler & R Taylor at 253

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It is precisely these shortcomings that TED seeks to address. Linguistic clarity is addressed by the

translation functionality, augmenting the consumer’s own legal knowledge with TED’s ability to

translate single words or phrases they do not understand, or even putting the effects of the whole

term in context to help the consumer understand how it applies to them. Arguably, the evolution of

legal language has preferred legal certainty at the expense of generic readability/comprehensibility;

stability over simplicity45. Perhaps it is even the case that some level of verbosity and linguistic

complexity is required to repel future legal challenge46. If this is true, TED may be able to provide a

unique bridge between the lawyer’s quest for stability and the regulator’s quest for informed

consumption, acting as a legal babel fish and allowing both to coexist. TED also better enables

wider transparency by highlighting important terms and providing visible, easy access for

consumers to contract terms prior to contracting. Given the decreasing visual real estate in which

modern consumer contracting environments operate, ensuring that contract terms are displayed

effectively but concisely should surely be of concern for sellers and regulators alike. Ensuring a

profitable and consumer-equitable future for electronic contracting is important for all parties

involved, and thus TED’s functionalities will perhaps become only more important over time.

2.3 Misleading act or omission (Articles 6 and 7, UCPD)

Despite sharing a similar nexus47, the UCPD is perhaps wider than the UTD, including sellers’

(‘traders’) behaviour towards the consumer in the contracting process beyond simply unfairness of

the terms. However, its high expectations for a well-informed, reasonably circumspect, average

consumer may fail to reflect the reality of consumer behaviour, leaving the UCPD comparatively

toothless48. A question to be considered throughout this subsection is: What separates an act or an

omission? Is the display of a link to contract terms at the foot of the page an act or a failure to act

enough (omission)? For completeness, this thesis argues both perspectives in the alternative.

A) Misleading Acts (Article 6, UCPD)

45 C Williams, ‘Legal English and Plain Language: an introduction’, (2004) 1 ESP Across Cultures 111 46 Ibid 47 B Keirsbilck; S Orlando, ‘The Use of Unfair Contractual Terms as an Unfair Commercial Practice’, (2011) 7(1) European Review of Contract Law 25 48 H Micklitz, ‘The General Clause on Unfair Practices’, in G Howells, H Micklitz, & T Wilhelmsson, European Fair

Trading Law. (Aldershot: Ashgate: 2006) at 111; T Wilhelmsson, ‘Misleading Practices’, in G Howells, Micklitz, & T Wilhelmsson, European Fair Trading Law. (Aldershot: Ashgate: 2006) at 131-135; J Trzaskowski, ‘User-Generated Marketing – Legal Implications When Word-of-Mouth Goes Viral’, (2011) 19(4) International Journal of Law and Information Technology 348 at 375-376

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A seller who provides information likely to deceive the “average consumer”49 as to their rights or

risks under the contract or as to the rights/obligations of the seller, is likely liable for misleading

behaviour where the consumer’s behaviour is altered50. Online sellers engage in the act of providing

information in various forms: they (vicariously) choose the language for their contract terms, they

(vicariously) choose the content and structure of the contract terms, and importantly they design the

environment for contracting, within which information about the bargain is exchanged – each of

which may be grounds for liability where it influences consumer behaviour.

As described above, perhaps the choice to use verbose ‘legalese’ is not a choice per se but a

requirement for successful contract design. However this does not absolve the seller of their

responsibilities under Article 6, UCPD. Thus, they remain liable to the extent that the chosen

language deceives the consumer as to the effect of the term and influences their behaviour. As

stated before, TED can help facilitate coexistence of the lawyer’s need for term certainty and the

regulator’s expectation that the consumer not be misled by term language or its misunderstanding.

This is achieved by offering a translative functionality which the consumer can draw upon to clarify

their reading and understanding of a given term. The seller’s choice of term structure and

presentation may also mislead a consumer. For example, key information may be “hidden in plain

sight” amongst a dense jungle of other terms, or provided only as a sub-clause rather than a

standalone term (highlighting its importance). TED counteracts this by analysing the contract and

presenting consumers with key terms in a separate, highly visible, easily-digestible window overlaid

upon the final agreement page – where the consumer is most likely to engage with the information.

Key terms are highlighted from the noise, rather than hidden within it.

Orlando advances an interesting argument regarding the overlap of unfair terms and misleading

acts: a seller who includes a term which they know or ought to have known to be unfair engages in

a deceptive act since, despite being de jure unenforceable, such terms usually fool unsuspecting,

trusting consumers into de facto compliance51. To the extent that consumer contracts contain terms

like Facebook’s surreptitious attempt to insert the grant of a royalty-free, assignable licence in their

favour over users’ media52, one is forced to conclude that at least some sellers are knowledgeable

and willing participants and ought to be liable based on Orlando’s conceptualization. Although TED

is not intended to furnish consumers with legal advice about clause enforceability, by bringing the

“key” clauses to consumers’ attention and offering translation into layman’s terms TED hopefully

increases the chances that consumers will become aware of such clauses, triggering a common

49 See Article 2(k) for definition of average consumer; with problems described above 50 Article 6(1), Article 6(1)(c), Article 6(1)(f), Article 6(1)(g), UCPD; Reg. 5(2), Reg. 5(4),CPUTR 51 S Orlando at 261 52 s.2 ‘Sharing Your Content and Information’ in Facebook’s Statement of Rights and Responsibilities

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sense reaction against such ‘unfair’ terms. Perhaps for sellers, supporting TED might act as an

indication of good faith intention not to deceive – thus where such unenforceable terms slip through

the gaps, sellers can perhaps avoid Orlando’s argument by disproving constructive knowledge.

Since constructive knowledge is essentially a balancing act, demonstrating a policy of openness and

support for a transparent contracting platform could surely help contribute to this end.

Lastly, choices made by sellers when constructing the contracting environment, such as whether to

make specific reference to the contract terms with a checkbox signifying assent and whether this

box is pre-ticked, may also deceive a consumer by disguising the importance of consumers reading

and understanding these terms. Redesigning the entire electronic contracting environment could be

a cumbersome task with the potential to upset consumers used to prior shopping habits. Supporting

TED, on the other hand, is a much easier way to help ensure that potentially deceptive website

design is tolerated by courts on the grounds that the seller has acted to rectify this, by supporting the

implementation of technology which helps make terms more visible and comprehendible to the

average consumer, whereas ‘deception’ implies absence of bona fides is required on the part of the

seller. Thus, TED can acts to the seller’s benefit by offering mitigating circumstances where sellers

might otherwise be liable for providing misleading information; demonstrating that where such

misleading information was disclosed, the seller did this unintentionally and in good faith, and

therefore damages ought to be mitigated.

B) Misleading Omissions (Article 7, UCPD)

Whereas the above subsection argued that sellers make active choices to provide consumers with

misleading information, this subsection considers the flipside of the coin: sellers perhaps do not do

enough to positively deceive the consumer, but have omitted, hidden, or provided unintelligibly or

ambiguously, material information that the average consumer needs to make an informed decision

in context53. Online shops for mobile devices might be offered some leeway given their reduced

visual real estate in which to convey all the necessary information54. “Materiality” includes both

that the information is required to make an informed decision55 (which will vary with product and

53 Article 7, UCPD; Regulation 6, CPUTR 54 Ibid; Office of Fair Trading, OFT 1008, ‘Consumer Protection From Unfair Trading: Guidance on the UK regulations (May 2008) implementing the unfair commercial practices directive’, (2008) at 35 (7.19) 55 Recital 14, UCPD

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medium56), and materiality in terms of its actual effect on consumer behavior57. Similarly to the

ECD, sellers are also required to provide minimum information in invitations to treat58.

For our purposes, sellers may omit material information by omitting material content or by failing

to appropriately communicate included content. Seller liability for omission of content would

include things such as failing to describe important aspects of the product or provide all the terms of

agreement, but these are not within the purview of TED’s application as they are perhaps less

commonplace issues. Rather, TED primarily addresses the problem of omissions in communication,

where the seller provides the consumer with information, but in a non-transparent way which makes

it difficult for the consumer to gather and comprehend all the facts upon which their decision will

be based. For example, non-transparent drafting of the contract might omit important warnings

about the effect of terms required by the average consumer to understand precisely how onerous the

clause is, or drown out important terms in amongst a sea of small print. Ambiguous or unintelligible

contract language could also trigger seller liability to the extent the consumer cannot understand its

meaning. Additionally, failing to display the links to contract information in a clear and transparent

manner might also have deleterious effects for seller liability.

TED tackles these communication breakdowns by implementing new channels for transmission of

this information. Increased visibility of key terms ensures consumers are aware of “material” terms.

Offering literal and contextual translation compounds this effect by ensuring that data transmitted

to the consumer becomes information via its being understood, thus avoiding liability on grounds of

lack of linguistic clarity. Particularly where courts have discretion, sellers demonstrating pro-

transparency behaviour, such as supporting TED’s implementation, might be able to tip this

balance in their favour.

2.4 Generally unfair commercial practice (Article 5, UCPD)

Given the preceding analysis of seller liability under the specific rules regarding misleading acts

and omissions, application of the general prohibition shall not be discussed at length. It suffices for

our purposes to note that while courts seem to implicitly accept current click-wrap/browse-wrap as

not “contravening the requirements of professional diligence”59, technological development might

56 OFT 1008 at Ibid at 33 (7.16), 37 (7.33); H Collins, ‘Harmonization By Example: EU laws on unfair commercial practices’, (2010) 73(1) Modern Law Review 89 at 107 57 H Collins at 106 58 Article 7(4), UCPD; Reg. 6(4), CPUTR 59 Article 5(2), UCPD; Reg. 3(3), CPUTR. See Beta v Adobe

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be expected to influence these standards, perhaps leaving those who fail to engage with

transparency-enhancing technology open to future liability.

2.5 Conclusions regarding seller liability

Sellers must therefore beware of the risk under English common law that their terms will not be

incorporated, and also that incorporated terms may be struck down under contemporary consumer

law on account of unfairness or lack of transparency. Furthermore, sellers should also be wary of

liability under unfair commercial practices legislation as a result of active choices in term, contract,

and website design, and also where they fail to provide the consumer with the appropriate

information required to make their decision. TED was presented as a potential solution for each.

Whilst the preceding section discussed a need for TED from the practical perspective of seller

liability, the proceeding section shall take a more academic perspective, demonstrating how new

technology can better reconcile some of the underlying objectives of our legal system.

3. Arguments of Principle

3.1 Promoting party autonomy

A) TED helps overcome the challenges of classical autonomy

Autonomy, a central pillar of English contract law, classically adhered to strict free market

principles, allowing parties to contract with whomever they like, on terms of their own choosing60.

Courts would not interfere in contracting beyond determining whether a “meeting of minds” had

occurred between the parties61. Responsibility for preventing morally reprehensible contract terms

was placed on consumer’s shoulders (caveat emptor), on the grounds that consumers were better

placed to protect their interests than courts on their behalf62 – similar to contemporary US courts’

position63. The essence of classical autonomy was that contracting parties made their own decisions.

As argued above, in the online context it is doubtful whether the classical “meeting of minds” can

truly be established: consumers rarely read and are unlikely to understand the terms upon which

they are supposedly agreeing. TED may offer a solution to the meeting of minds dilemma: by

making the terms of agreement more visible and offering explanations of clause meaning, it

60 Ibid 61 G Howells & R Schultze, Modernising and Harmonising Consumer Contract Law. (Munich: Sellier European Law Publications: 2009) at 89; P Atiyah, The Rise and Fall of Freedom of Contract. (Oxford: Oxford University Press: 1979) at 681 in R Brownsword & G Howells at 292 62 G Howells & R Schultze at 90; G Howells & S Weatherill at 15 63 J Winn & B Bix, ‘Diverging Perspectives on Electronic Contracting in the US and EU’ (2006) 54 Cleveland State Law Review 175 at 184

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counteracts the forces in modern e-contracting environments which debilitate consumer autonomy.

By putting the parties on more equal informational footing, consumers are given the tools to truly

achieve caveat emptor: and, where consumers choose to ignore this opportunity, perhaps they

should rightly be bound by the terms of their agreement.

B) Consumer protection as autonomy 2.0?

On the surface, paternalistic consumer protection legislation would appear to contradict classical

contract law, interfering with sanctity of contract and reallocating the responsibility of caveat

emptor. But might this change actually represent a redefinition of autonomy64, sensitive to modern

morality or modern technological environments?

At a minimum [autonomy now requires] a knowing understanding of what one is doing in a

context in which it is actually possible for one to do otherwise, and an affirmative action in

doing something, rather than a merely passive acquiescence in accepting something. These

indicia translate into requirements that terms be understood, that alternatives be available,

and probably that bargaining be possible.”65

Although over 10 years old, these comments remain as true today as when first written. Normative

shift might offer one explanation for the expansion of “autonomy”66; the legal response to the

philosophical question, what does making a decision entail? Such an explanation could be

supported by following the developments in the doctrine of notice in the 20th century; emerging

from a narrow rule applicable in only a few cases to a broad rule, generally applicable67. As

Savirimuthu acknowledges “traditional ideas like agreement, autonomy, and consent cannot remain

unaffected by the increasing interaction between technology, law, and society”68. Alternatively,

technological changes may have prompted the need for legal development via their effect on the

contracting environment. Modern e-commerce has put consumers at a twofold disadvantage:

knowledge and leverage (bargaining position)69, although perhaps informational deficit leads to lack

of leverage rather than acting separately70. Terms go unread71, are perhaps out of the reader’s

64 One definition could be “free, informed, and undistorted choice”: G Howells & R Schultze at 90 65 M J Radin at 1125-1126 66 J Savirimuthu, ‘Online Contract Formation: Taking technological infrastructure seriously’, (2005) 2 University of Ottawa Law & Technology Journal 105 at 120 67 Harris v Great Western Railway (1876) 1 QBD 515; Parker v South Eastern Railway (1877) 2 CPD 41; Spurling v

Bradshaw [1956] 1 WLR 461; Thornton v Shoe Lane Parking; Interfoto Picture Library v Stiletto Visual Programmes

Ltd; O’Brien v MGN 68 G Howells & R Schultze at 116 69 J Maxeiner at 136 citing Ocean Grupo Editorial SA v Rocio Murciano Quintero, 2000 ECR I-4931 at I-4973J 70 The “lemons equilibrium” reduces bargaining power in markets with uninformed consumers as they must presume all products to be equal and thus their decision is solely dictated by price: M J Radin at 1149 citing G Akerlof, ‘The Market

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competency72 or committable time73, and are presented in take-it-or-leave-it, contract-as-product

form74: hardly a platform for autonomy. Consumer law, then, may be the counterbalance in the

consumer –seller relationship, equalizing the knowledge disadvantage, creating a more transparent

ground from which autonomy can flourish. In both cases, it is submitted that contemporary

consumer legislation is not at odds with classical autonomy, but an attempt to locate it in today’s

moral and technical environment.

C) TED and 21st century autonomy

If contemporary autonomy is founded on moral evolution, we now believe that information is key to

autonomy. TED highlights the existence of important terms from the contract, so consumers ought

to be aware of at least the key aspects of the bargain. TED also helps less academically able

consumers understand the language and effect of the terms, increasing all consumers’ ability to play

an active role in their contracting life. TED facilitates a transparent and easy flow of contractual

information between seller and consumer in pursuit of a better informed choice.

As regards overcoming the challenges posed by technical change, technology can also assist here.

Arguably, developers even have a moral responsibility to contribute to solving a problem

aggravated by their implementations of technical solutions75. By presenting key terms in an obvious

way, TED helps raise consumer awareness of terms’ existence, hopefully prompting them to be

read. It also streamlines the process by highlighting only the most important from a consumer

perspective. TED also augments reader competency by offering translation and explanation of

words, phrases, and terms. Unfortunately, TED will not force sellers to offer space for term

negotiation. However, in a truly transparent market, consumers are perhaps best placed to demand

change, taking advantage of their role in the market forces76.

Lastly, TED may offer a more autonomy-supportive remedy than consumer protection. Is it not

more autonomous to enable the consumer to protect themselves rather than pick up the pieces

behind them? If sellers dictating the terms of the contract violates consumer autonomy, surely

having courts do so violates the autonomy of both parties, perhaps submitting the consumer to a

For “Lemons”: Quality uncertainty and the market mechanism’, (1970) 84 Quarterly Journal of Economics 488 at 490-491 71 Correspondence with Pär Lannerö, founder of Common Terms project, 21/05/2013 72 F Marotta-Wurgler at 253 73 Ibid 74 M J Radin at 1155; J Savirimuthu at 128 75 J Savirimuthu at 127; L Lessig, Code: Version 2.0. (New York: Basic Books: 2006) 76 See footnote 70

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double violation77. TED acts ex ante, aiding autonomous decision making by consumers by giving

them the right informational tools to do the job instead of imposing a fair bargain after the fact.

Furthermore, treating the symptoms (as in ex post facto solutions) simply perpetuates the cycle. Is it

not better for autonomy to teach consumers how to fish than feed them for a day? TED not only

involves less interference with consumer autonomy than court redress, but it also may be more

efficient in the long run if it can solve the problem. TED may also lead to a fairer contracting

environment: should consumers who have the awareness and capacity, but not the motivation, to

read the terms be protected? Should their laziness be rewarded with their escaping from contractual

obligations?

3.2 Economic principles

Under English contract law, economics and contract law are inseparably intertwined. Contract law

evolved as an instrument of market planning78 and as a platform for ensuring secure dealings so that

commerce could prosper79. Therefore, considering TED and its influence in its market context is an

important feature of a complete analysis, and given the increasing power of major commercial

actors, demonstrating wider economic benefits might be crucial to TED’s gaining market traction.

A) Cost-effectiveness

Sellers are usually driven by the reduction of losses and the pursuit of gain. Some avenues of

potential loss have already been explored in depth: legal liability can prompt significant financial

loss in terms of the resources (manpower, infrastructure, and legal advice) needed to field responses

to claims as well as the potential cost of unenforceable contract clauses, settlement fees, or

damages. Additionally, beyond the immediately dissatisfied customers, bad publicity (as a result of

the legal actions require to either enforce or escape rights or obligations towards the consumers)

might jeopardize the seller’s brand, and deter future customers. By pursuing the objective of

maximum transparency in the contracting process, TED helps sellers meet their obligations under

contract and consumer law. Where TED cannot fully avoid seller liability, it can at least

demonstrate their good faith and consumer’s disinterest which may influence the court in a seller’s

77 M J Radin at 1158; R Craswell, ‘Redmedies When Contracts Lack Consent: autonomy and institutional competence’, (1996) 30 Osgoode Hall Law Journal 209 at 232 78 P Atiyah, The Rise and Fall of Freedom of Contract. (Oxford, Oxford University Press, 1979) at 681; R Brownsword & G Howells at 292 79 R Brownsword & G Howells at 292-294; G Howells & S Weatherill at 10;

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favour. This could help develop positive brand recognition: a seller who positively supports

transparent contracting ought to be more trustworthy, a trait valued by online consumers80.

To regulators, cost effectiveness could have a micro and a macro meaning: firstly, cost-

effectiveness of government through streamlining bureaucratic public services81 via increased

citizen responsibility; and secondly, reduction of wasteful consumption in an already strained

economic environment. Significant amounts of money are invested in organisations which to

varying extents act as ex post facto remedial services for aggrieved consumers. This cost could be

minimized if consumers played a more active role in their contractual life, rejecting terms or

contracts they felt were disingenuous or overly onerous; and as has been advocated, TED may

provide consumers with additional tools to inform themselves. Furthermore, by helping consumers

to inform themselves, TED also helps reduce wasteful spending on (contract-as-) products which

ultimately dissatisfy the consumer and cause a rift between them and the seller. Uninformed

consumption solely benefits the exploitative seller, and only in the short term. Good faith sellers,

willing to admit their (contract-as-) product’s shortcomings, may be disadvantaged if bad faith

sellers can disguise poorer quality products amongst the background noise of e-commerce.

Ultimately, money spent here is wasteful consumption, as it leaves the consumer dissatisfied and

does not stimulate positive market competition. Then, more money is wasted on remedying the

situation via complaint and legal recourse; more fruitless spending to return only to the status quo.

TED can help consumers separate the sellers likely to offer good quality products and service from

mendacious sellers likely to deploy exploitative terms or policies, thus helping consumers make

smart choices. Hopefully in doing so, TED saves consumers the money which might have been

wasted on substandard products and saves both parties time, energy, and money spent pursuing

remedial action – economic resources which could be used more effectively elsewhere.

B) Consumer Credit Providers

Under certain circumstances, consumer credit providers (CCPs) such as Visa or Mastercard will be

liable to refund aggrieved consumers on behalf of sellers who utilize their services82. In distance

transactions where sellers may be hard to find, or located outside the consumer’s jurisdiction, CCPs

may increasingly stand to foot the bill. TED can help avoid the situation by highlighting important

80 J Savirimuthu at 133 – quoting EC Commission, ‘E-Commerce in Europe: Results of the pilot surveys carried out in 2001’, Eurostat 2002, http://europa.eu.int/comm/enterprise/ict/studies/lr-e-comm-in-eur-2011.pdf at 36 81 E.g. courts and large consumer standards and consumer advice bodies such as the Office of Fair Trading, whose net operating cost was £61m for 2011-2012: Office of Fair Trading, ‘Cash flow’, http://www.oft.gov.uk/about-the-oft/annual-plan-and-report/annual-report/#.UYdm3bVmiSo 82 Consumer Credit Act 1974, s. 75, http://www.legislation.gov.uk/ukpga/1974/39/section/75

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contract features the consumer should read, and offering explanations of meaning. This in turn

should reduce situations where (contract-as-) products do not meet consumer expectations, and thus

form the basis of a chargeback. Since CCPs make up the fabric of communication between the

financial and online retail worlds, their leverage may provide a useful pinch-point through which

seller cooperation (with TED’s implementers) can be promoted or even forced83, so long as the

benefit can be conveyed to CCPs. Thus, in protecting themselves, CCPs could contribute to creating

a more stable contracting environment – for the benefit of consumers, bona fide businesses, and

regulators alike.

C) Predictability of relations, market stability, and transparency

Perhaps linked to macro cost-effectiveness, one important aim of contract law is predictability of

commercial relationships, and ultimately market stability84. Latent, undiscovered terms jeopardize

market stability; should they come to light, hidden terms may jeopardize performance of the

contract, upon which others might be relying85. The relationship is no longer predictable as a result

of the contract; but rather the contract becomes the site of unpredictability in the relationship.

Furthermore, depending on the pervasiveness of standardization in contract terminology, a single

judgement against a single term could have sizeable ripple effects86. Whilst TED cannot necessarily

guard entirely against judicial intervention, it can significantly alter the current contracting

environment to reduce instances where judicial intervention would be justified; concomitantly

increasing the prima facie reliability of e-contracts, and thus the stability and predictability of legal

relationships. Above all, an informed consumer is usually a happy consumer; and if they have no

reason to complain, the relationship remains stable. TED could thus be a useful tool in promoting

market stability.

3.3 Access to justice

Simply having rules is unfortunately not enough to ensure consumers are treated fairly, hence the

need for judicial enforcers. Both the UTD and the UPCD require “adequate and effective” means of

redress to be available87, and the concept of “access to justice” will be familiar to many legal

83 Consider how CCPs imposed of certain information security standards upon sellers: R Epstein & T Brown, ‘SYMPOSIUM: SURVEILLANCE: Cybersecurity in the Payment Card Industry’, (2008) 75 University of Chicago Law Review 203 84 G Howells & S Weatherill at 10; P Atiyah at 681, R Brownsword & G Howells at 292-294 85 Ibid 86 As Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593 (E.D.Penn. 2007) prompted further challenges such as Feldman v Google Inc., 513 F. Supp. 2d 229, 231 (E.D. Pa. 2007) 87 Article 7(1), UTD; Article 11(1), UPCD

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systems. But consumers may be strongly deterred from seeking redress due to: (a) a lack of legal

knowledge; or (b) perceived circumstantial barriers which work in the sellers favour.

A) Using TED to bridge the knowledge gap

A legal knowledge gap develops when a consumer does not know: (i) the legal rules, and thus if

their rights have been breached; or (ii) how to enforce their breached rights88. How many consumers

(or even lawyers) are fully aware of the rules of commerce within their own state? Furthermore, e-

commerce aggravates this problem as transactions are potentially transnational, introducing

complex issues such as jurisdiction and choice of law, not to mention knowledge of a separate legal

system. What does it imply for the adequacy of redress if one is never aware that redress might be

appropriate? Even if a consumer knows their rights, do they know how to enforce them? Is the

responsibility to inform the public met by a government website posting plain text legislation on or

offering simplified explanations regarding the effect of the law or responses to frequently asked

questions? Furthermore, it would seem appropriate to consider not only users’ linguistic literacy but

also their technical literacy: Is it OK to rely on the Internet as a means of providing access to justice

given highly variable rates of computer literacy within a population? And does this prejudice certain

classes, age groups, or races?

TED can help mitigate the effects of the knowledge gap by reducing the need for knowledge of the

laws and legal system. Consumers who make informed transactional decisions (in a market for

substitutes) should hopefully be satisfied with their agreement, as it is based on transparency in

bargaining. Where they are satisfied, there is hopefully no need for legal recourse. TED does not so

much bridge the knowledge gap as sidestep it, but to a disadvantaged consumer perhaps even this

much is progress.

B) Barriers to suit

Even where the knowledge gap is bridged, consumers may be dissuaded from seeking recourse by

(a) a perceived imbalance between the consumer and the seller in terms of finances and legal

experience, or (b) a discouraging assessment of the costs and benefits. In both cases, consumer

perception of reality is key, as it is this that influences their decision to pursue legal claims.

88 See e.g. E Rubin, ‘The Internet, Consumer Protection and Practical Knowledge’, in J Winn (ed), Consumer

Protection in the Age of the 'Information Economy. (Aldershot: Ashgate, 2006)

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A consumer who has grounds for a claim against a seller might think it futile to pursue a seller who

(the consumer perceives) can throw vast amounts of wealth and manpower at the case, and who has

easy access to high-quality legal advice. Particularly in the case of large, powerful, online

multinational such as Amazon or Play.com, consumers may believe their own resources to be

outmanned and outgunned from the get go, causing an effective barrier to their obtaining justice.

Another barrier which may deter consumers might be that the potential benefits of redress are

outweighed by the costs of doing so (widely defined). Given the relatively low transaction sums

involved, particularly when compared to the cost of a single hour of legal counsel, the financial

rewards are likely to be low. Furthermore, a consumer must invest significant time and energy in

this endeavour, in addition to their money. Once they get over the initial vexation, consumers are

likely to be quick to value their energy and time over the menial transaction sums. Consumers of

online services may also worry that should they seek legal redress, their service shall be suspended:

which may be an intolerable consequence for most Facebook users.

TED helps sidestep these issues by removing the need for legal recourse. Handing the consumer

increased transactional knowledge (and hence power) at the bargaining stage enables consumers to

make smart choices, which should hopefully avoid conflicts arising. At this stage, the seller’s size

or reputation ought not to influence whether their terms are acceptable to a consumer, offering

easier access to contractual justice, widely defined. Furthermore, comparatively little investment is

needed (compared to that required to pursue legal action)89, therefore TED ought to be preferred to

ex post facto remedial solutions.

3.4 Conclusions regarding arguments of principle

In sum, this chapter has argued that regulators ought to take note of technological solutions to

attaining the objectives of contract law, party autonomy, and economic predictability. Furthermore,

such technology may provide a more effective means of achieving these principles than solely

relying on legal enforcement of consumers’ rights or sellers’ obligations, offering a means of

resolving the conflict before it has even begun; one which is more easily accessible to consumers

and offers less deterrence against its use. Lastly, such technology could have economic benefits for

sellers, CCPs, and governments, reducing wasteful consumption which benefits neither party in the

long run and drains the resources of governments, CCPs, and private parties alike. In these ways,

transparency-enhancing technology (in the form of TED) can be seen to be broadly beneficial, and

89 Although it has been argued that even reading every set of terms a consumer is presented with may be a challenge of its own.

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offer a potentially complementary function to the legal rules and systems already in place. It offers

a 21st century solution to a problem which really should be consigned to the 20th century.

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Act II: Some challenges of implementing a technological

solution to a legal problem

Whilst the preceding chapter addressed the need for transparency-enhancing technology and the

benefits of the suggested implementation (TED), the proceeding chapter discusses some potential

challenges in its implementation under these three broad categories: (1) Retrieval of contract data;

(2) Identification of “key” clauses; (3) Translation.

1. Retrieval of contract data

TED may need to retrieve contract terms in varying circumstances90: (1) Terms displayed in full on

the acceptance page; (2) Terms linked (via explicit reference, or unreferenced at foot); (3) Terms

not displayed or obviously linked.

1.1. Recognising terms displayed on page

Document markup might be one way a computer could identify if contract terms are displayed on a

page91. This may include a header name which includes one of certain indicative words (Terms,

Conditions, Policy, etc.) or a large body of similarly, but uniquely, formatted text, perhaps in its

own dialogue box. Furthermore, formatting continuity could be supported if a search revealed

repeated use of common legal terms like “liability”, “indemnity”, or “contract”. The presence of

these factors should be sought to ensure accuracy in identification. A way to improve accuracy in

TED’s infancy could be to employ a moderator to oversee the success of this recognition function,

whilst also offering sellers some way to verbalize objections if they feel TED is wrongly flagging

content on their site.

A further challenge will be ensuring that all relevant terms are captured, as even if the terms of sale

are displayed prominently, other terms, e.g. privacy and cookie policies, may additionally bind

consumers, but not be part of those terms immediately displayed. Perhaps the most efficient way to

maximize recall in this case is to proceed to search for linked terms as if none were displayed in full

on the page (see below), then ignore any resulting retrieved terms which are duplicated. Although

this increases the potential for false positives, perhaps completeness to the extent of repetition ought

to be preferred over possibly overlooking any key clauses. 90 Correspondence with Jenny Eriksson Lundström, 07/05/2013 91 Correspondence with Pär Lannerö, founder of Common Terms project, 21/05/2013

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1.2. Retrieving linked terms

It is perhaps more common in modern e-commerce to provide a link to the terms rather than present

them in full on the page92. This includes both a situation where they are clearly brought to the

consumer’s attention (often via a statement plus checkbox indicating assent93) and the situation

where it is not (e.g. on Facebook where the links are just placed at the foot of the page). Therefore

TED must be able to recognise and follow such links in order to retrieve the terms for assessment.

To address this, TED could undertake a search of outbound links with internal references on the

acceptance page (for retailers; on the signup page for service providers) for those with certain

indicative words such as “Terms”, “Conditions”, “Privacy”, and variations on a theme. Once a link

was identified as relevant, a script would then have to be developed that would allow TED to follow

it and retrieve specific data from the destination. Methods similar to those in the previous

subsection could then be deployed to determine what text is relevant (i.e. comprises contract terms)

at the destination. Header, footer, sidebar and link text could be identified via document markup and

discarded, whilst similarly, uniquely formatted body text could be retrieved as potential contract

terms. A moderator could be employed for oversight until it was clear TED could function

predominantly error-free.

1.3. Websites without obviously linked terms

TED may struggle here without significant further development. But perhaps the solution lies in

acceptance of shortcomings: the fact that terms cannot be easily identified using standard offline

thinking (supplemented with some automated capabilities) may be the mark of an untrustworthy

seller. For sincere sellers the resultant threat of brand/reputation harm might encourage website

redesign with a more transparent platform, assisting TED in the process, and regarding sellers who

do not change, it highlights behaviour of which consumers should be wary94.

1.4. The wider context of term retrieval functionality

TED is intended to operate as an add-on for standard web browsers. Hence, data storage and

required processing power are likely to be important considerations. Few consumers will want to

wait 30 minutes to download a huge add-on or clog up valuable hard disk space that could be spent

92 C Witner, ‘The Rap on Clickwrap: how procedural unconscionability is threatening the e-commerce marketplace’, (2008) 18(1) Widener Law Journal 260 93 J Savirimuthu at127-133 94 On consumer trust see e.g. P Beatty, I Reay, D Scott & L Miller, ‘Consumer Trust in E-Commerce Web Sites’, (2011) 43(3) ACM Computing Surveys1 (036600300)

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on movies. Nor will they continue to use the application if it leaves insufficient processor power for

streaming the newest episode of Drop Dead Diva. Thus designers should try to focus on solutions

which sap minimal storage space and processing power from the user.

One solution is to take a centralized approach; centralizing both data storage and term analysis, with

the browser add-on acting mainly as a conduit. TED could externally mine data for contract terms

in advance, storing and processing these on TED’s servers, and then supply the information to the

consumer’s browser upon request from the add-on. The add-on would run in the background at all

times, but only be active under certain circumstances (when the agreement page triggers TED’s

“launch”). This avoids clogging the user’s computer with contract data and algorithms for

identification and analysis, and also passes processing burden on to TED’s servers. A downside of

this approach might be that without effective version control, TED could be providing outdated

advice depending on when terms were last retrieved. One solution perhaps could be to compare

“last edited” dates on TED and seller’s files to highlight such instances and prompt re-retrieval.

Alternatively, the TED add-on could scan for contract terms every time a consumer visits a seller’s

site and pass the retrieved contract data back to TED’s servers. Although it ensures that the most up

to date version of the terms are those being analysed, it might generate unnecessarily high volumes

of Internet traffic and processing. Given the potential number of websites which a user might access

daily (and which might contain some form of contract terms), this could quickly consume limited

mobile data allowances or limited bandwidth, slowing user’s Web surfing to a crawl. Furthermore,

it would require a higher level of continuous processing, again to the detriment of less

technologically-advanced users or mobile users. Finally, on a macro level, if TED were to become a

staple of consumer life implementing this policy, it would likely generate much unnecessary Web

traffic. Amazon.co.uk receives around 3 606 558 daily visits95, and its terms were last updated

05/09/201296. At the point of writing (05/06/2013) TED’s version would have been updated 984

590 334 times, with no changes made. This is to the detriment of all parties involved. Hence, term

retrieval TED-server-side would be preferable, particularly if some form of version control was

implemented.

95 Amazon.co.uk website report, HypeStat, http://amazon.co.uk.hypestat.com/ 96 Conditions of Use and Sale, Amazon (UK), http://www.amazon.co.uk/gp/help/customer/display.html/ref=footer_cou?ie=UTF8&nodeId=1040616

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2. Identifying “key” terms

One of TED’s major features is the ability to pick out the “key” clauses and present these in a

warning dialogue to the consumer. “Key” terms (legally) are particularly (a) onerous, (b) surprising,

or (c) likely to have a significant influence on the consumer’s decision to contract. The selection

could perhaps be achieved in three ways: firstly, via a ranked list prepared in advance by humans;

secondly, by programming computers with rules to execute a decision process using the logic

applied by humans in creating the ranked list97; or thirdly, providing the computer with inputs and

outputs and allowing machine learning to identify the rationale behind ranking choices98.

2.1. Ranked list prepared in advance by humans

One way of automating decision making would be to provide a pre-written template specifying if

facts A do B99. This has the benefit of predictability, but at the expense of adaptability when

presented with new facts. Depending on the level of standardization in consumer contracts this,

however, might not be so problematic. If the terms encountered can be accurately predicted in

advance then a comprehensive ranking of these terms can be undertaken in advance. Such a rule set

has the benefit of source transparency: it is known who created the rules and their decisions can be

reviewed; an important factor in the validity of legal rules100

But this relies upon the ability to predict every permutation of terms which consumers may

encounter. This in turn may rely upon how standardized consumer contracts really are. Marotta-

Wurgler and Taylor found that over a 10-year period 39% of major EULAs made material changes

to at least one term101. On the other hand, 60% did not make any material changes. Furthermore, of

that 39%, 40% made changes to only one or two terms102. This might indicate a relative stability,

but a 61% coverage rate might not be enough for TED to gain market traction. Furthermore, these

statistics may be limited to EULAs, with privacy policies or wider consumer terms perhaps showing

more marked lack of standardization103. Lannerö found 450 different terms in his examination of 22

varied types of common consumer terms, which included privacy policies, terms of sale, and terms

of use104. Perhaps this highlights an opportunity for further study. Do similar business perhaps have

97 E Helling, ‘Automated Legal Systems’ in C Sjöberg (ed.), Legal Management of Information Systems: incorporating

law in e-solutions. 2005: Lund: Studentlitteratur at 168-9, 177-181, 195-197 98 E Helling at 169-170, 185-187, 215-220 99 E Helling 100 See e.g. H L A Hart, The Concept of Law. (Oxford: Clarendon Press: 1994) 101 F Marotta-Wurgler and R Taylor at 252 102 Ibid 103 Correspondence with Florencia Marotta-Wurgler of 17/05/2013; 104 Correspondence with Pär Lannerö, founder of Common Terms project, 21/05/2013

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similar terms – i.e. retailers or service providers, online or offline? What about even within

subcategories of these – does it influence matters if the product or service is wholly digital? Or even

within product markets, e.g. clothing, food, etc.? Understanding this will be key to the successful

creation of a structured rule set.

2.2. Computer-executed ranking: Designing rules for determining rank order

This is one solution to the “new facts” issue above: dictating rules for analysing the importance of

terms so the computer can make its own decision about rank order. Identifying terms which address

similar issues is one option, assuming that liability terms are maybe more important than how

quickly indemnity shall be paid, and ranking them as such. However, this would fail to capture the

panorama of effects that small changes on single terms can have on their consequent effects. For

example, “in the event of death I will pay you £100” is very different in effect to “in the event of

death you will pay me £100” or “I will not pay you £100”. They may address similar issues in a

similar linguistic pattern with similar facts, but their effects are quite different. Simply because they

are kindred does not mean they have equal effect, and thus may not be equally important to a

consumer. Furthermore, the meaning of importance might be contextual, a product of tacit

knowledge and intuition rather than logical rationality105. Perhaps “hard AI” provides more

questions than answers here, as we may not fully comprehend the underlying rules which motivate

legal analyses106. But whilst past failures should shut the door on one solution107, perhaps technical

evolution in the 21st century can open another.

2.3. Harnessing the strength of the machine: Probability, machine learning, and

big data

The 21st century has witnessed the rise of ubiquitous data generation, collection, and storage108. It is

increasingly difficult to move through life without leaving a digital trail109. Concomitantly,

increasing processor power facilitates automated trawling through the noise in search of patterns110.

105 Karlgren & M Sahlgren, ‘26. From Words To Understanding’, (2001), http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.103.6309 106 E Helling at 175-176; P Leith, ‘The Rise and Fall of the Expert System’, (2010) 1(1) European Journal of Law and Technology , http://ejlt.org//issue/archive 107 See generally P Leith 108 D Katz, ‘Quantitative Legal Prediction – or – How I Learned to Stop Worrying and Start Preparing for the Data Driven Future of the Legal Services Industry’, (2012), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2187752 at 5 109 The Data Deluge, The Economist (February 25, 2010), http://www.economist.com/node/15579717?story_id=15579717 110 D Katz at 5-9

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Focus has shifted from symbolic logics to statistical prediction and “black box” behavioural

modelling111. “Soft AI” imitates intelligent behaviour via statistical prediction and connectionism.

This has allowed Google to tailor search results based on user browsing habits112; it enabled

Amazon to provide users with “suggestions” for what other products they could buy based on a

combination of their browsing history and that of other users with similar click patterns; and it has

helped a computer predict the outcome of US Supreme Court cases with more accuracy than a panel

of leading experts113.

Regardless of the academic debate114, its practical usefulness cannot be denied. If TED can be given

enough training data, perhaps it too can take advantage. By handing control of the algorithm to the

computer and providing acceptable ranking decisions, TED can be trained to replicate the choices

of lawyers. In fact, if the data is gathered from widely and deeply enough, it might even provide a

more balanced analysis by averaging the analyses of many different lawyers, rather than providing

the consumer with a single perspective in assessment. In this way, TED could be trained to

extrapolate a rank order when presented with new information, and its accuracy will continue to

grow so long as it is fed training data. The extrapolations will, however, only be as good as the

quality and depth of the training data115, thus securing this will be important to TED’s success.

In doing so, three suggestions are offered. Firstly, TED could pay lawyers for their advice.

Completing paid surveys can generate the required outputs needed for TED’s training. Initial

funding might be sought from regulators given the social goals of the project. TED’s designers can

then pre-vet data subjects to better ensure the quality of gathered data. Since prediction accuracy is

directly related to training data volume116, gathering sufficient data by this means could be

prohibitively expensive.

A second option might be to seek advice in a similar manner, but through pro bono channels. Pro

bono is an important part of US117 and UK118 lawyers’ social responsibilities. Perhaps individual

111 D Katz at 9; P Leith at 2; E Helling 112 E Pariser at 32-33; S Brin & L Page, ‘The Anatomy of Large-Scale Hypertextual Web Search Engine’, (1998) 30 Computer Networks and ISDN Systems 107; R Waters, ‘Google Searches to Become Personalised’, Financial Times, http://www.ft.com/intl/cms/s/2/1d8adff8-3bb6-11e1-82d3-00144feabdc0.html#axzz2TFH6dnOd 113 T Ruger, P Kim, A Martin, & K Quinn, ‘The Supreme Court Forecasting Project: Legal and political science approaches to predicting supreme court decision-making’, (2004) 104 Columbia Law Review 1150; D Katz at 24 114 See E Helling at 171-173; J Searle, ‘Minds Brains and Programs’, (1980) 3(3) Behavioural and Brain Sciences 417 115 E Helling at 217-218 116 Ibid 117 The American Bar Association recommends a minimum of 50 hours per year: American Bar Association, Policies –

Voluntary Pro Bono Public Service, http://www.americanbar.org/groups/probono_public_service/policy/aba_model_rule_6_1.html 118 J Robins, Pro bono – what does the future hold, The Guardian, 12/11/2010, http://www.guardian.co.uk/law/2010/nov/12/pro-bono-week-jon-robins; K Dowell, Attorney General sets up global pro

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lawyers or even major firms could be petitioned to contribute some of their services for the

betterment of consumer society, free of charge. Preferably sources would be from varied (legal)

firms and at varying times (to allow for new clauses to become part of the questionnaire). Strong

support from regulators would also go a long way towards reminding lawyers of their social

responsibility.

A third alternative might be to gather training data via a video game. Jane McGonical cogently

argued that computer games can be an agent of social good if so-designed, as users “tackle tough

challenges with more creativity, more determination, more optimism, and we’re more likely to

reach out to others for help”119. Making data generation fun might thus offer an alternative to

financial or social motivations. Stephanie Kimbro has persuasively argued that games could be

adapted to serve legal goals such as educating users about their legal environment120. Why then

couldn’t an addictive game be developed which engages lawyers on legal issues? Maybe even by

starting it as invitation-only and limiting users to those with bar association credentials or confirmed

law firm email addresses could both help ensure data gathered is legally accurate and generate

interest simultaneously: lawyers love secret societies after all. Of the three options, this may be the

most interesting.

In conclusion, of the three options for identifying “key” terms, the first and the third may offer the

most potential: the first as a basic, initial set of rules to be supplemented by altering node

relationships via the third option, machine learning.

2.4. Knowing when to display “key” terms

Given that TED involves some level of nudging121, it is important for its presence to be used

sparingly. A permanent window may desensitize consumers, or irritate them into closing or

permanently deleting the program. Arguably TED is most valuable and relevant at the point of final

acceptance: it is at this stage in the process that the terms of agreement are commonly “negotiated”,

whilst deployment earlier in the browsing process risks consumer desensitization122.

bono database, The Lawyer, 17/11/2008, http://www.thelawyer.com/attorney-general-sets-up-global-pro-bono-database/135731.article 119 J McGonigal, ‘The Game That Can Give You 10 Extra Years of Life’, TED Talks http://www.ted.com/talks/jane_mcgonigal_the_game_that_can_give_you_10_extra_years_of_life.html; J McGonigal, Reality Is Broken: Why games make us better and how they can change the world. (New York: Penguin Press: 2011) 120 S Kimbro, ‘Game On!’, Virtual Law Practice, http://virtuallawpractice.org/2013/05/game-on/ 121 R Thaler & C Sunstein, Nudge: improving decisions about health, wealth, and happiness. (New Haven: Yale University Press: 2008); S Cohen, ‘Nudging and Informed Consent’, (2013) 13(6) American Journal of Bioethics 3 122 Although arguably by this point in the process consumers have already made up their mind to purchase, thus TED’s presence may be moot. Correctly identifying the optimal ‘point of interruption’ is beyond the scope of this thesis.

32

But how does TED know this point has been reached? One option is to try to identify the “I agree”

button, perhaps using a combination of document markup and key words123, like in identifying

links. This could be successful, but the consequence of false negatives could be that TED does not

open when needed, undermining the project completely. Alternatively, with seller cooperation, code

could be inserted, which prompts TED to begin providing assistance, similar to the way in which

pop-ups are prompted124. This, however, requires seller compliance which cannot be relied upon.

Website redesign could cause sellers direct costs and downtime – and initially they might not be

convinced of TED’s worth. Hence, it may be important to secure cooperation of those who can

apply pressure to sellers to cooperate, such as regulators, consumer groups, CCPs, and ultimately

consumers.

Data for this can be gathered by various methods, but perhaps the computer game option offers an

interesting, unique way to rejuvenate debate.

3. Translation

Some aspects of legal language in contracts lend it to easy translation, such as the rigidity of syntax

and the modular form of term building. Furthermore, to the extent that the window of context can

be narrowed (in this case to consumer contracts) the smaller the pool of possible meanings125.

However, a major challenge of automating legal translation is that words and phrases take their

meaning by reference to the meanings of the words around them126. This section considers how

these might affect TED’s implementation.

3.1. The pros: Legal language as a cooperative subject for translation

Generally, legal translation benefits from the rigidity of legal syntax, and the predictability of legal

language127. Compared to creative writing, the legal texts of consumer contracts are fairly structured

and their contextual window fairly narrow, making them perhaps more suitable for automated

123 Correspondence with Pär Lannerö, founder of Common Terms project, 21/05/2013 124 J Strickland, ‘How Pup-up Blockers Work’, How Stuff Works.com, http://computer.howstuffworks.com/internet/basics/pop-up-blocker1.htm; ‘How Do Pop-ups Work’, H2G2 http://h2g2.com/dna/h2g2/pda/A823411?s_id=2 125 Correspondence with Pär Lannerö, founder of Common Terms project, 21/05/2013 126 J Karlgren & M Sahlgren at 297 127 P Tiersma, Legal Language. (Chicago: University of Chicago Press: 1999) at 139-143; C Williams, ‘Legal English and Plain Language: an introduction’, (2004) 1 ESP Across Cultures 111 at 112-113.

33

analysis128. Operative documents, such as contracts, in particular are known to have “very formal

and formulaic legal language...[and] a very rigid structure”129 built in “modular and accretive”

forms130. This frequent repetition of words, phrases, terms, syntax, and structure can perhaps be of

assistance to legal translators131.

Firstly, certain patterns might help a computer understand the structure of a document132. Section

headings, for example, usually indicate the subject matter of the text that follows; and these may be

identifiable via their formatting – stand-alone short burst of text, perhaps in bold or all capitals,

perhaps occurring after a number plus point. Identifying the outline of the document could help in

breaking down the meaning of its contents133. With further study of the taxonomy of standard

contracts, broken down into goods/services, online/offline delivery, and perhaps specific market,

hopefully a better understanding of where contract terms are standardized could be developed. This

could then be paired with the mapping to produce a method of identifying at least standard term

types (even if not their specific effects), allowing a more targeted method of analysis to be deployed

relevant to term type. Obvious signposting in legal text thus simplifies the process.

Secondly, identifying repeatedly used phrases can help automate identification of meaning. Rather

than needing to engage in complex contextual analysis each time, the computer can simply

recognise a phrase and refer back to a set dictionary to understand its meaning. Furthermore, if this

type of phrase is understood, its syntactic features can be tagged, allowing the computer to

recognise similar occurrences where only one part has changed, and perhaps better understand the

effect of that change on the meaning of the phrase by understanding what grammatical role the

altered word played in the sentence134.

3.2. Contextual meaning: the challenge of automating translation

In spite of the above, true understanding of meaning can be difficult for computers135. Often,

understanding the effect of a certain word or phrase comes not only from its immediate meaning in

128 E de Maat, Teaching the Computer to Read Legal Text, VoxPopulii, http://blog.law.cornell.edu/voxpop/tag/legal-natural-language-processing/ 129 P Tiersma at 139 130 F Margotta-Wurgler and R Taylor at 246 131 C Williams at 113 132 E de Maat; A Wyner, Weaving the Legal Semantic Web with Natural Language Processing, VoxPopulii, http://blog.law.cornell.edu/voxpop/2010/05/17/weaving-the-legal-semantic-web-with-natural-language-processing/ 133 Ibid; J Karlgren & M Sahlgren, ‘26. From Words To Understanding’, (2001), http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.103.6309 at 297; 134 E de Maat; A Wyner 135 P Leith at 22-24

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abstract, but its contextual meaning136. Contextual meaning can be inferred from contextual

indicators as micro as inflections within a single sentence, or as macro as a word’s effect on the

term’s meaning, altering the document’s effect on that particular contractor, acting within their

socio-economic environment (and so on). Each of these in turn must be understood to fully

comprehend and translate the complete contextual meaning. Synonyms also pose an obvious

problem, particularly in legal texts, since misunderstanding could have significant consequences.

How can TED be certain that “lead” is as in follow rather than the metal?

Some sentences will also contain tacit information: “When did you stop taking drugs” implies you

did take drugs at one point, obvious to a reader not from the individual words, but as a consequence

of their combined meaning137. It involves both a comprehension factor (how do the words add

together to form a concept) and a logical factor (what are the surrounding implications of such a

concept: to stop doing something one must have been doing it before). How do we program a

computer with this knowledge? Is it realistically possible to build a rule-set which incorporates all

of these inference mechanics?

Macro context also poses the very same problems: how can the computer be programmed to

understand the relative importance of all of the factors in our diverse existence which could

influence the “meaning” of a term to its reader? How can a computer predict the types of losses a

third party might sustain? Would it require an updated list of all of the seller’s relationships, what

functions they serve, and what financial risks they involve? Given that these sorts of things change

daily, can we really expect to be able to keep on top of it? Furthermore, to fully understand the

effect of a term, the computer must be programmed with enough legal knowledge to be aware of the

term’s full effect including when the term might not be binding or open up a loophole allowing one

party to escape their obligations under the contract. Given the complexity of law and the rate of

change, this may be a bridge too far138. Instead of trying to write logical rules for contextualization

of words, which must encompass large amounts of tacit knowledge about language, perhaps TED

could mimic such behaviour without actually understanding it via machine learning, as discussed

later.

136 J Karlgren & M Sahlgren; J Wroblewski, ‘Legal Language and Legal Interpretation’, (1985) 4 Law and Philosophy 239 at 240; M Harvey, ‘What’s So Special About Legal Translation?’, (2002) 47(2) Translator’s Journal 177 at 181 137 A Wyner 138 P Leith

35

3.3. Further challenges in defining meaning: Fuzzy terms v solid rules

Another challenge might be determining meaning where fuzzy terms such as “reasonableness” or

“the average (e.g.) consumer” are involved, particularly where there has been uncertainty and

redefinition within the judiciary. Again, in designing rules for computers to act, we encounter the

challenge of tacit knowledge. Partly because we cannot predict every permutation of facts, and

partly because the understanding of fuzzy concepts is a product of our sociological context139,

lawyers often offer definition by analogy and inference than by specific boundaries. What is “not

acting in a commercial capacity”? What if I make money from my hobby, but it is not my primary

income? What if I privately rent out my apartment? At what point does private become

commercial? In the circumstances, we cannot expect to provide consumers with cases and expect

them to draw the conclusions: they simply will not invest the effort. Perhaps the simplest answer is

to inform the consumer that since every case turns on the facts, an application of common sense

judgement should suffice. Furthermore, where such fuzzy terms are present, a link could be

provided to where consumers could seek more, case-based information should they desire.

3.4. Machine learning and statistical prediction as a solution?

Translation too might benefit from the efforts of statistical prediction and machine learning. For

example, determining synonymous meaning could perhaps be reduced to a statistical probability

based on factors such as the presence of certain words in the sentence/paragraph, term subject

matter (as identified via header analysis + contract taxonomy), and general contract subject matter

the balance of which could be brought to a statistical conclusion. Furthermore, this statistical

balance could perhaps be constructed, or at least the node value (and hence accuracy) modified by

machine learning. Using training data which provides instances of contextual determination, the

computer could develop an algorithm for understanding which meaning the synonym should have

without humans needing to enunciate the rules. Perhaps “doing as I do” (machines mimicking

behaviour) might again be more appropriate than “doing as I say” (machines following man-made

rules) – as again creation of all-encompassing rules may be challenging and risk overlooking

important factors. At very least, utilizing machine learning to develop understanding is a must as it

can enable TED to become more relevant and more accurate over time rather than less so,

presuming the training data is of high quality. One way of aiding this might be to have a flag

function on the TED application so that users or sellers can flag a definition where they feel it is

139 J Karlgren & M Sahlgren at 294

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wrong, and then this could be subjected to review both by a moderator and also through addition of

its term into the training data questions.

Again, various methods of obtaining training data are available including paid and unpaid surveying

of appropriate data subjects. A legal computer game, similarly, might offer an interesting alternative

method for gathering this data. Machine learning, then could be seen as the expansion pack beyond

the basic dictionary functions that are currently available – and which could be supplemented by

natural language processing tailored to include the specific nature of the legal documents at hand

and their standardized features.

Ultimately, TED will probably need to employ a little of each method of translating. It is wise to

start small and build up, as the cost of providing flawed legal translation could be more than just

liability; it could undermine TED's reliability, and with it could depart TED's client base. Hence,

building on existing legal dictionaries should provide a helpful place to start. Gaining a better

understanding of under what circumstances consumer contract language overlaps and where its

meaning differs may allow these dictionaries to be more subject-matter specific, and their

translations offered more appropriate. However, this alone will not suffice. To be of most value,

however, TED needs to be able to put technical legal meanings in context: to explain in civilian

terms how that specific term or phrase affects that consumer. Simplicity and relevance will be

TEDs two biggest weapons; without either of which the risk is that TED will fail to catch hold and

fall into obscurity. This relevance is most likely to be successfully achieved by using multiple

methods of data gathering to allow the computer to mimic advice (as Amazon does with its

"recommendations"). Providing data subjects with specific examples of a term, then offering a

series of effects common to that type of term, supplemented perhaps by a “not applicable” option,

could allow the computer to gather data about the most relevant meaning. This could help take TED

at least part of the way towards relevance.

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Act III: Final reflections on TED

“Optimism is the faith that leads to achievement. Nothing can be done without hope and

confidence.”

Helen Keller

This thesis has sought to engage some problems of online contracting via technological means. It

presents a vision for the future as much as a picture of the present, and perhaps errs on the side of

perfectionism over practicality. If optimism is the faith that leads to achievement; the dose of

optimism required to achieve is perhaps about 10:1. So, if we are to achieve anything noteworthy,

our level of optimism must be fitted to match.

Online consent is perhaps “the biggest lie on the Internet”140, and worryingly e-commerce has built

its house of cards on top of this joker. Courts have so far been willing to tolerate the façade of click-

wrap (et al.) as a manifestation of consent, yet in practice this doesn’t seem to match up to Radin’s

seminal definition of consent in the 21st century141. Incognizant consumers blindly wandering into

contracts is not a meeting of minds, nor is it informed consent, and it is definitely not a stable

economic foundation. Perhaps so long as consumers are satisfied, or can be deterred en masse from

seeking legal redress, the system can survive. But it should not.

If the veneration of speed and cost-effectiveness is what drives consumers to wander blindly, then

TED can be their map – helping guide them away from insidious sellers and wasteful consumption,

avoiding the stress and disappointment of unfit contract-as-products.

For sellers, TED can be a brand of trust – their way of demonstrating support for transparent,

ethical, sustainable trading. TED can also help them avoid the pitfalls of liability, where typically

acceptable behaviour does not actually meet the legal requirements. For consumer credit providers,

TED might be an effective avenue for reducing their liability to consumers demanding chargeback

as a result of seller breach of contract. For regulators, TED is perhaps the middle ground between

tolerating the current myth and total disillusionment followed by legal upheaval.

TED is a bridge between sellers (and their need to protect themselves) and consumers (and their

need for speed and ease-of-use). At best, this can help consumers become willing, informed

participants in their own commercial behaviour. At worst, perhaps it may demonstrate that

consumer ignorance is to a large extent born of consumer laziness or disinterest in reading every

140 Correspondence with Pär Lannerö, founder of Common Terms project, 21/05/2013; http://commonterms.net/Problem.aspx 141 M J Radin at 1125-1126

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term. This in turn may indicate a need for a new way of thinking about electronic consumer

contracting (maybe we need centralized standardization of contracts where only certain

predetermined elements can be changed, and thus the general extent of rights/obligations is known

in advance). Or, perhaps it indicates that consumers ought to lie in the bed they have made for

themselves.

There will be more challenges to TED’s implementation than those identified within the confines of

this paper; some more traversable than others, at varying cost. Successful implementation of TED

hinges on so many factors that it is difficult to identify one specific area in which to focus initial

efforts. That said, perhaps TED should be implemented in stages. First, find a way to categorize and

identify key term types so consumers at least become aware of the terms’ existence, even if not

fully aware of their content. Then, rudimentary translations could be offered depending on whether

contract terms are standardized enough; and later this can be supplemented by machine learning to

evolve TED into a more organic, complete translator.

TED is not the ultimate solution to exploitation of consumers in electronic commerce: individual

responsibility is. But, smart decisions are based on all the facts. And since Muhammad won’t come

to the informational mountain, it must come to him – by nudging (dragging if necessary) consumers

into an environment where the information is presented obviously in small, easily-digestible bytes.

TED can help provide consumers with informational vegetables; but in the end it’s up to consumers

to digest them.

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H Micklitz, ‘The General Clause on Unfair Practices’, in G Howells, H Micklitz, & T Wilhelmsson,

European Fair Trading Law. (Aldershot: Ashgate: 2006)

J Karlgren & M Sahlgren, ‘26. From Words To Understanding’, (2001),

http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.103.6309

J Maxeiner, ‘Standard Terms Contracting in the Global Electronic Age: European alternatives’,

(2003) 28 Yale Journal of International Law 109

J Nehf, ‘BOOK REVIEW: European Fair Trading Law: The unfair commercial practices directive’

(2007) 35 International Journal of Legal Information 30

J Puplava, ‘Use and Enforceability of Electronic Contracting’, (2007) 16 Michigan State Journal of

International Law 153

41

J Savirimuthu, ‘Online Contract Formation: Taking technological infrastructure seriously’, (2005) 2

University of Ottawa Law & Technology Journal 105

J Searle, ‘Minds Brains and Programs’, (1980) 3(3) Behavioural and Brain Sciences 417

J Spencer, ‘Signature, Consent, and the rule in L’Estrange v. Graucob’, [1973] 32(1) Cambridge

Law Journal 104

J Trzaskowski, ‘User-Generated Marketing – Legal Implications When Word-of-Mouth Goes

Viral’, (2011) 19(4) International Journal of Law and Information Technology 348

J Winn & B Bix, ‘Diverging Perspectives on Electronic Contracting in the US and EU’ (2006) 54

Cleveland State Law Review 175

J Wroblewski, ‘Legal Language and Legal Interpretation’, (1985) 4 Law and Philosophy 239

M Harvey, ‘What’s So Special About Legal Translation?’, (2002) 47(2) Translator’s Journal 177

M J Radin, ‘Humans, computers, and binding commitment’, (2000) 75 Indiana Law Journal 1125

P Beatty, I Reay, D Scott & L Miller, ‘Consumer Trust in E-Commerce Web Sites’, (2011) 43(3)

ACM Computing Surveys1 (036600300)

P Leith, ‘The Rise and Fall of the Expert System’, (2010) 1(1) European Journal of Law and

Technology , http://ejlt.org//issue/archive

R Brownsword & G Howells, ‘When Surfers Start To Shop: Internet commerce and contract law’,

(1999) 19 Legal Studies 287

R Craswell, ‘Redmedies When Contracts Lack Consent: autonomy and institutional competence’,

(1996) 30 Osgoode Hall Law Journal 209

R Epstein & T Brown, ‘SYMPOSIUM: SURVEILLANCE: Cybersecurity in the Payment Card

Industry’, (2008) 75 University of Chicago Law Review 203

S Brin & L Page, ‘The Anatomy of Large-Scale Hypertextual Web Search Engine’, (1998) 30

Computer Networks and ISDN Systems 107

S Cohen, ‘Nudging and Informed Consent’, (2013) 13(6) American Journal of Bioethics 3

42

S Orlando, ‘The Use of Unfair Contractual Terms as an Unfair Commercial Practice’, (2011) 7(1)

European Review of Contract Law 25

T Ruger, P Kim, A Martin, & K Quinn, ‘The Supreme Court Forecasting Project: Legal and

political science approaches to predicting supreme court decision-making’, (2004) 104 Columbia

Law Review 1150

T Wilhelmsson, ‘Misleading Practices’, in G Howells, Micklitz, & T Wilhelmsson, European Fair

Trading Law. (Aldershot: Ashgate: 2006)

Cases (EU, UK, USA)

European Union

Case C-453/10, Perenicova and Perenic v SOS Financ spol sr.o

Ocean Grupo Editorial SA v Rocio Murciano Quintero, 2000 ECR I-4931

United Kingdom

Beta Computers (Europe) Ltd v Adobe Systems (Europe) Ltd 1996 SLT 604

Director General of Fair Trading v First National Bank [2001] UKHL 52

Harris v Great Western Railway (1876) 1 QBD 515

Interfoto Picture Library v Stiletto Visual Programmes Ltd [1989] QB 433

L’Estrange v Graucob Ltd [1934] 2 KB 394

Parker v South Eastern Railway (1877) 2 CPD 41

Spurling v Bradshaw [1956] 1 WLR 461

Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163

43

United States of America

Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593 (E.D.Penn. 2007)

Feldman v Google Inc., 513 F. Supp. 2d 229, 231 (E.D. Pa. 2007)

EU Legislation

Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts

Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning

unfair business-to-consumer practices in the internal market

Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on

consumer rights

UK Legislation

Consumer Credit Act 1974 http://www.legislation.gov.uk/ukpga/1974/39/section/75

Consumer Protection from Unfair Trading Regulations 2008, No. 1277

Unfair Contract Terms Act 1977

Unfair Terms in Consumer Contracts Regulations 1999, No. 2083

Policy Documents

EC Commission, ‘E-Commerce in Europe: Results of the pilot surveys carried out in 2001’,

Eurostat 2002, http://europa.eu.int/comm/enterprise/ict/studies/lr-e-comm-in-eur-2011.pdf

Law Commission/Scottish Law Commission, ‘Unfair Terms in Consumer Contracts: Advice to the

department of business, innovation and skills’, March 2013 available

http://lawcommission.justice.gov.uk/docs/unfair_terms_in_consumer_contracts_advice_summary-

web.pdf

44

Office of Fair Trading, OFT 311, ‘Unfair Contract Terms Guidance: Guidance for the unfair terms

in consumer contracts “regulations 1999’, Sept 2008, available at

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft311.pdf

Office of Fair Trading, OFT 1008, ‘Consumer Protection From Unfair Trading: Guidance on the

UK regulations (May 2008) implementing the unfair commercial practices directive’, (2008)

Online resources

A Wyner, Weaving the Legal Semantic Web with Natural Language Processing, VoxPopulii,

http://blog.law.cornell.edu/voxpop/2010/05/17/weaving-the-legal-semantic-web-with-natural-

language-processing/

Amazon.co.uk website report, HypeStat, http://amazon.co.uk.hypestat.com/

E de Maat, Teaching the Computer to Read Legal Text, VoxPopulii,

http://blog.law.cornell.edu/voxpop/tag/legal-natural-language-processing/

J Robins, Pro bono – what does the future hold, The Guardian, 12/11/2010,

http://www.guardian.co.uk/law/2010/nov/12/pro-bono-week-jon-robins

J McGonigal, ‘The Game That Can Give You 10 Extra Years of Life’, TED Talks

http://www.ted.com/talks/jane_mcgonigal_the_game_that_can_give_you_10_extra_years_of_life.ht

ml

J Strickland, ‘How Pup-up Blockers Work’, How Stuff Works.com,

http://computer.howstuffworks.com/internet/basics/pop-up-blocker1.htm; ‘How Do Pop-ups Work’,

H2G2 http://h2g2.com/dna/h2g2/pda/A823411?s_id=2

K Dowell, Attorney General sets up global pro bono database, The Lawyer, 17/11/2008,

http://www.thelawyer.com/attorney-general-sets-up-global-pro-bono-database/135731.article

M Masnick, ‘To Read All of the Privacy Policies You Encounter, You ‘d Need to Take a Month Off

From Work Each Year’, TechDirt, http://www.techdirt.com/articles/20120420/10560418585/to-

read-all-privacy-policies-you-encounter-youd-need-to-take-month-off-work-each-year.shtml

45

Office of Fair Trading, ‘Cash flow’, http://www.oft.gov.uk/about-the-oft/annual-plan-and-

report/annual-report/#.UYdm3bVmiSo

R Waters, ‘Google Searches to Become Personalised’, Financial Times,

http://www.ft.com/intl/cms/s/2/1d8adff8-3bb6-11e1-82d300144feabdc0.html#axzz2TFH6dnOd

S Kimbro, ‘Game On!’, Virtual Law Practice, http://virtuallawpractice.org/2013/05/game-on/

American Bar Association, Policies – Voluntary Pro Bono Public Service,

http://www.americanbar.org/groups/probono_public_service/policy/aba_model_rule_6_1.html

The Data Deluge, The Economist (February 25, 2010),

http://www.economist.com/node/15579717?story_id=15579717

Contract terms

Conditions of Use and Sale, Amazon (UK),

http://www.amazon.co.uk/gp/help/customer/display.html/ref=footer_cou?ie=UTF8&nodeId=10406

16

Facebook’s Statement of Rights and Responsibilities, 2012, http://www.facebook.com/legal/terms

Personal Correspondences

Correspondence with Florencia Marotta-Wurgler of 17/05/2013 – regarding her forthcoming article

on the subject

Correspondence with Jenny Eriksson Lundström, 07/05/2013

Correspondence with Pär Lannerö, founder of Common Terms project, 21/05/2013

46

Annexed documents

I Walker, TED – A Technical Solution to Online Contracting, Prezi.com,

http://prezi.com/pqmyautydshx/ted-a-technical-solution-to-online-

contracting/?auth_key=4ec15e5cc73a6db606ffa53f51c95ac70db731cc&kw=view-

pqmyautydshx&rc=ref-18675308