Posts Tagged ‘shrinkwrap/EULAs’

August 3 roundup

For real liability reform, try freedom of contract

Six months ago the Delaware Supreme Court upheld the right of an enterprise to include a loser-pays provision in its bylaws, specifying that losing shareholder-litigants would have to contribute reasonable legal fees to compensate what would otherwise be loss to other owners. Since then there’s been a concerted campaign to overturn the ruling, either in the Delaware legislature or if necessary elsewhere. But as I argue in a new Cato post, allowing scope for freedom of contract of this sort is one of the best and most promising ways to avert an ever-rising toll of litigation. Contractually specified alternatives to courtroom wrangling have played a vital role, and are under attack for that very reason, in curbing litigation areas like workplace and consumer arbitration, shrinkwrap and click-through disclaimers of liability, and risk disclaimers at ballparks and elsewhere. (& Stephen Bainbridge).

To the extent America has made progress in recent years in rolling back the extreme litigiousness of earlier years, one main reason has been the courtsā€™ increased willingness to respect the libertarian and classical liberal principle of freedom of contract. Most legal disputes arise between parties with prior dealings, and if they have been left free in those dealings to specify who bears the risks when things go wrong, the result will often be to cut off the need for expensive and open-ended litigation afterward.

More on the Delaware bylaw controversy: D & O Diary (scroll), Andrew Trask on state of the merger class action, WSJ Law Blog first and second, Daniel Fisher, and ABA Journal in June, Alison Frankel/Reuters (forum selection bylaws).

OMG! Betty Crocker clickwrap destroys your legal rights!

For those who freaked out at those headlines Thursday, Daniel Fisher at Forbes has a corrective to the New York Times’ latest story advancing the trial lawyer campaign against arbitration. More: Eric Goldman. Sequel: General Mills quickly withdraws new policy, perhaps reasoning that even when the New York Times is wrong, a consumer marketing company really can’t win trying to argue with it. Yet more: Dave Hoffman with an analysis of whether the language actually creates a contract.