As long as the price is negotiable and the customer may shop elsewhere, consumer protection comes from competition rather than judicial intervention.

But if every single company has the same clause, and there is no way to back out, then there really isn’t a consumer choice.

Where do I go to buy marshmallows soaked in blue food coloring? If I want them, and nobody sells them the solution must be judicial intervention, right?

What good is choice if I can’t choose what I want?

The point is, a contract term you don’t like is no different from a product you don’t like.

The market has selected for MBA contracts.

On #2, care to make a counter-offer? 🙂 I mostly framed my offer that way because you said, “No company will offer me a contract with a free blue pony, no matter how much I offer to raise my interest rates,” which is clearly not true. Such absolute statements beg to be confronted with ridiculous evidence to the contrary. What fun would it have been to offer to do it for the cost of the blue pony?

All this being said, I’m still not comfortable with the situation I mentioned in your 3-wheeler post. I.e., the way a typical car sale goes down: you negotiate the car with a salesman and handshake on a deal, and then go back to the business office to “work out the details” wherein the buyer gives up more in return for nothing explicit. I don’t really have a good solution, since the savvy buyer must assume that these are factored into the price while, I assume, the unsavvy simply suffer the additional clauses or sign without reading. It’d be nice to make clear somehow that when you go to buy a car, you’re really buying a contract with the car company.

Tracy: Insurance is specifically designed to hedge such risks. Assuming that by offering a price for the MBA clause, a company loses no sales (a reasonable assumption, I think, it might even gain some sales), then all of the additional revenue can be used to hedge the risk either through insurance products or, more likely, through disciplined investment (don’t giant companies have lawsuit funds already?). Presumably the price they set for buying off the MBA clause will reflect the odds of jackpot lawsuits, the popularity of buying it off, and the average settlement cost over the past several years (inflation adjusted), and whatever other actuarial metrics seem important.

Maybe I’m wrong, and there’s no interest in a market for the right to sue. In which case, my proposal will die on the vine, but if there is a market, if the companies don’t do it themselves, somebody will come along and agree to take on some of that risk for the money.

The problem I see with your logic is that it still exposes businesses to frivolous lawsuits. The credit card companies (and similar businesses) put the BA on every contract to reduce their risk. If 25% of their customers opted out then suddenly the benefit to the company is reduced. A lawsuit that is unsuccessfully pursued can still cost the company millions. Should the people who opted out of the MBA have to bear to brunt of those cost or will they be spread out to the entire customer base? My guess is the later.

There is a class of people in this country who are always looking for a chance for the big pay day. Those are the people who will opt out of the MBA.

But if every single company has the same clause, and there is no way to back out, then there really isn’t a consumer choice.

If so, the answer isn’t “judicial intervention”, but “legislative intervention”.

The last time I bought a car, I actually read through the purchase agreement and asked if there was a BA clause. The dealer just shrugged, but I’m sure there was one buried in there somewhere. I’m not a lawyer, so I just went ahead and bought the car.

What if there was a clause and I crossed it out? Is the dealer able to alter a contract created by Ford Motor Company? Is the only alternative to MBA “don’t every buy a new car”? If one company has it, usually they all do.

1) I wouldn’t object strongly to requiring arbitration clauses to be printed in bold or to require an affirmative waiver.

2) Your blue-pony sidestep isn’t playing fair. I’d be happy to provide you a credit card without MBA for a billion dollars a year, too, so if that’s all you need to solve your problems, you’re on board.