Standard Form Contracts and the Duty to Read

Richard Warner

Carnival Cruise Lines v. Shute The Shute’s entered into a contract to take a

cruise from Los Angeles to Puerto Vallarta. In international waters, Mrs. Shute slipped on a mat and fell.

She sued Carnival Cruise Lines in Washington State, where the Shutes lived.

The contract had a forum selection clause that required that suits be filed in Florida.

The Presentation of the Terms The terms were printed on the back of the

ticket, which were sent to the Shutes after they paid for the cruise.

“A careful reader will find the forum-selection clause in the 8th of the 25 numbered paragraphs.” Justice Stevens, dissenting.

The Majority Decision

“[W]e do not address the question whether respondents had sufficient notice of the forum clause before entering the contract for passage. Respondents essentially have conceded that they had notice of the forum-selection provision.”

The Duty to Read

“It will not do for a man to enter into a contract, and, when called upon to abide by its conditions, say that he did not read it when he signed it, or did not know what it contained.” Sanger v. Dunn, 3 N. W. 388,, 389 (1879).

The argument is a normative one: If you have an adequate opportunity to read and understand the agreement, but choose not to, you assume the risk that the terms may be one’s to which you object.

The Modern rule

If a party has an adequate opportunity to read and understand an agreement, then that party is treated as if he or she read the agreement even if in fact the party did not do so.

Justice Stevens’ dissent raises questions about what counts as an adequate opportunity to read and understand. .

“Understand” Broadly Understood “Amazon disclaims all warranties, express or

implied, including, but not limited to, implied warranties of merchantability and fitness for a particular purpose. Amazon does not warrant that the amazon services, information, content, materials, products (including software) or other services included on or otherwise made available to you through the Amazon services, amazon's servers or electronic communications sent from Amazon are free of viruses or other harmful components. amazon will not be liable for any damages of any kind arising from the use of any Amazon service, or from any information, content, materials, . . .”

Standard Form Contracts

The courts generally find adequate opportunity to read and understand standard form contracts

and online contracts, Provided that the presentation constitutes an offer

(Specht v. Netscape).

Privacy Policies Too?

Privacy polices are generally treated as enforeceable contracts.

Self-Promotion

Robert Sloan and Richard Warner, Unauthorized Access: The Crisis in Online Privacy and Security, www.unauthorizedaccess-thecrisis.com.