The Forgotten Frontier that Can Bring Liberals Tons of Votes: Inequities in Contract Law
The Forgotten Frontier that Can Bring Liberals Tons of Votes:
Inequities in Contract Law
By
David Gottfried
Democrats Leaders: Wake Up and smell the ridiculously overpriced coffee at your local Starbucks. There is an issue that appeals to blacks and whites, old folks and hipsters, John Wayne wannabes and bitchy women who practice snarling like Greta Thunberg. The issue is the inequities in contract Law.
As we slog through the debate over how much the govt. should spend to revitalize the economy, and as we suffer the pettiness of Senators Munchkin and uncinematic Sinema, we seem to forget that economic well-being is more than a matter of how much the government will spend. How much consumers spend, when dealing with companies, and the contracts they are pressured to enter into, matter a whole lot too.
Individuals enter into contracts with mammoth corporations every day. You enter into contracts with utilities, internet service providers, credit card companies and when you walk into a hospital you are often made to sign a bunch of forms that you cannot even see because you are signing the form on a tiny screen that contains less than one percent of the terms you are agreeing to.
Many people are bedeviled by the slavish notion that they must always abide by the clauses of a contract. They almost seem to think that by signing a contract one has participated in a religious sacrament and that if one were to violate the contract one would be guilty of breaking one’s solemn word.
However, it’s high time people realized that the big boys who write contracts know that half of what they write is unprincipled and woefully wordy dogshit that should be headed for the shredder.
For example, the American Bar Association ruled, around the time I graduated from NYU Law School, that an attorney’s advice to a client, to breach a contract, did not constitute a violation of the ethical rules attorneys must adhere to.
Certain contractual clauses have been particularly disfavored. For example, when a contract has a provision that says, “Mr. Pasta shall pay Mr. Fazool 10,000 dollars if he, Mr. Pasta, breaches the contract,” that provision is often stricken as an invalid “liquidated damages” clause. The rationale: At the outset, before the contract is underway, no one can know if Mr. Fazul will suffer a loss of 10K simply because Mr. Pasta breached the contract. Since his actual losses cannot be predicted at the outset, the party who breaches the contract won’t have to tender 10K in damages. Also, the judiciary practically jeers at other sorts of contracts, such as non-competition agreements.
In addition, there is a particular sort of contract that is symptomatic of our era, late-stage capitalism, an era in which economic power has been concentrated into the hands of fewer and fewer corporations. These kinds of contracts are called ADHESION CONTRACTS because an offending provision, harmful to the consumer, had almost been surreptitiously tacked on like a date rape drug dissolved into a seemingly innocent glass of beer. Adhesion contracts have certain things in common:
A) One party to the contract was a huge corporation and the other party to the contract was an individual of poor, moderate or only slightly rich means
B) There was no equality of bargaining power
C) The contract was an endless morass of verbal diarrhea which discreetly and slyly contained, in paragraph 18, a provision which would make you wish you were dead
D) The contract was completely written by the corporate entity
E) The contact was offered on a take it or leave it basis
F) The contract was for a product or service that was indispensable in order to lead a normal life and the other mammoth corporations almost all had the same onerous conditions.
In the 1960’s courts were increasingly willing to make onerous provisions in adhesion contracts null and void. Actually, courts have a long history of slashing and burning contracts that conned the innocent, but the assault on adhesion contracts, as I understand it, reached full bloom in the magical sixties.
As a sign of the times, shortly after John F Kennedy won the West Virginia Primary, a great gust of air relieved the law books of their dust and gloom. In Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960) (https://law.justia.com/cases/new-jersey/supreme-court/1960/32-n-j-358-0.html) the Supreme Court of the State of New Jersey spewed contempt on the notion that we the people meant we the peons. In this case, a person had been damaged by a defective car. The Defendant said it did not have to pay a dime because the sacred contract at issue said that the Defendant would not be liable for personal injuries. The Court held that such a provision “shocked the conscience” and that the contract was an adhesion contract.
The court veritably excoriated modern commercial life:
“The traditional contract is the result of free bargaining of parties who are brought together by the play of the market, and who meet each other on a footing of approximate economic equality. In such a society there is no danger that freedom of contract will be a threat to the social order as a whole. But in present-day commercial life the standardized mass contract has appeared. It is used primarily by enterprises with strong bargaining power and position. The weaker party, in need of the goods or services, is frequently not in a position to shop around for better terms, either because the author of the standard contract has a monopoly (natural or artificial) or because all competitors use the same clauses. His contractual intention is but a subjection more or less voluntary to terms dictated by the stronger party, terms whose consequences are often understood in a vague way, if at all."
Henningsen v. Bloomfield Motors, Inc., 32 N.J. at 380
As the 1960’s proceeded, Courts were increasingly amenable to striking down contractual provisions which were detrimental to consumers. As I recall, my professor at NYU law school, Mr. Charles Knapp, said that at the end of the 1960’s some jurists held any price which was three times the fair market value of a good should be deemed unlawful and unenforceable by a court of law.
Since the 1960’s, it appears that we are not as keen on voiding contractual provisions on the grounds of iniquity. If my impression of legal trends is incorrect, my impression of societal attitudes is certainly not. Most people I know, and I am including in this category highly intelligent, educated people, believe that contracts are semi sacred documents which must be followed to the letter. And what is the result of corporate over-reach and a slavish citizenry ? (Most Americans think they are robust defenders of rights and freedoms, but half of them seem to think they are assertive because they throw tantrums when airline stewards ask them to wear a mask or believe that Hillary is trafficking in child prostitutes)
We are being bled of every red cent by mammoth corporations every single day.
I submit to you that millions of Americans are saving less, are paying less to keep warm in the winter, are unable to buy additive free foods (which some people really need because genetic aberrations make them more susceptible to malignancies), are taking fewer vacations and are leading meaner and more miserable lives because huge corporations, whom they cannot begin to bargain with, have arbitrarily set their prices in the dizzying stratosphere.
I am sure my detractors will claim that I do not pay sufficient heed to the lords of our democracy, men like Adam Smith who is often deemed the Grand Daddy of Laissez Faire capitalism. (Perhaps I should remind you that Adam Smith was known to talk to himself in an audible voice in public places.)
And why should the principles bequeathed by Adam Smith give a company the right to charge tens of thousands of dollars for a drug you need to save your life ?
Perhaps you will offer this rebuttal: The drug companies need to charge a fortune because their research expenditures are huge.
And if you offer that rebuttal, you have been trained well by the message masters on Fox News. In fact, a very large proportion of drugs, which are owned by companies, were invented, in whole or in part, by scientists on the payroll of Uncle Sam. The rightful owners of these drugs are us, not Merck or Johnson and Johnson et al.
Perhaps you think I sound like a socialist. I suppose that next to Tucker Carlson I am a red devil ready to throw a Molotov cocktail into his fat and fetid face. However, if one really began to understand America’s intellectual history, one would know that in the 1940’s many moderates knew that sometimes corporate paws had to be encased in manacles of steel. Consider these sage words of Justice Frankfurter (a man who was in many ways quite conservative):
“But is there any principle which is more familiar or more firmly embedded in the history of Anglo-American law than the basic doctrine that the courts will not permit themselves to be used as instruments of inequity and injustice? Does any principle in our law have more universal application than the doctrine that courts will not enforce transactions in which the relative positions of the parties are such that one has unconscionably taken advantage of the necessities of the other?”
United States v. Bethlehem Steel Corp., 315 U.S. 289, 326, 62 S. Ct. 581, 86 L. Ed. 855, 876 (1942)
I submit to you that most of the contracts that individuals enter into with large corporate concerns are unjust and have all the features of adhesion contracts. I submit to you that the American people are routinely robbed by the princes and potentates of Wall Street. I submit to you that the Left should call for the wholesale negation of persecutorial contractual clauses which enfeeble and pillory the poor. I submit to you that excessive prices in contracts should be struck down and lowered. If you think that gives the government too great a role in our economy, please remember that during World War Two the government’s Office of Price Administration froze all wages and prices in the United States. (One had to apply to the government to alter a wage or price).
Of course, some people will say that this violates the constitution which bestows on the American people freedom of contract. However, as I recall, courts have ruled that the provision in the US constitution, which bars the government’s abrogation of contractual responsibilities, only pertains to contracts executed in the past; the government is not precluded from voiding provisions in future contracts. Also, in the right circumstances, the thunderous roar of public upheaval and rebellion can throw all the fuddy duddy notions of freedom of contract into the incinerator of the people’s well-founded wrath. In the 1930’s, farmers in Iowa, a sedate state that was comfortably won by Trump in the past two elections, kidnapped a judge, who was conducting a foreclosure hearing, and tarred and feathered the corporate state’s juridical tool.
IF DEMOCRATS CARE ABOUT WORKING PEOPLE, THERE ARE OTHER ISSUES, REGARDING CONRACT LAW, THEY MUST ADDRESS:
Among other things, I am thinking of what is known as the “employee at will” doctrine.
Suppose one loses one’s job. If one has been employed pursuant to a contract, that contract will govern. If one is a member of a union, the contractual agreements between the union and your employer will govern. If one is black or female, etc., one can protest one’s termination on the grounds that the employer was discriminating against members of classes which one is not allowed to discriminate against.
But what if one is a white man, and he cannot avail himself of a union contract or some other contract which provides that he can only be fired in certain circumstances enumerated by the contract.
Then, he is an “employee at will.” I remember a New York case in which a man was told at about 9:30 in the morning that his employment was, at that very minute, terminated, and two of his fellow employees physically led him out of the building while another couple of employees gathered up his personnel effects and threw them on the street.
The New York Court Appeals, the highest court of New York State, ruled, in all of is supercilious and haughty majesty, that he was an employee at will and that he could be fired for a good reason, or a bad reason or no reason at all, and he can be fired with ample notice, or short notice or no notice whatsoever.
Man, that judicial decision made Marie Antionette proud.
Of course, these are the sorts of things that make white men become republicans. Many white men believe, with ample justification, that they have been forgotten.
It is long overdue that we enact legislation barring termination in certain circumstances or providing that if a worker is fired, his termination must adhere to certain procedural safeguards.
I am sure that this sort of proposal will be opposed on the grounds that the restraints it places on business will ineluctably restrain business growth and that this in turn will make America less great because as Calvin Coolidge, that great avatar of predatory capitalism, said, “the business of America is business.”
However, is America great merely because her companies are great in wealth and size. And is America great when her companies are enormous but her people keep getting poorer, more uneducated, and sicker in body and spirit.
I suggest that my readers take a look at the first chapter of Barbara Tuchman’s “The Proud Tower.”
This is an account of England in the late Victorian and early Edwardian eras. England, at the end of the 19th century, was deemed the richest and most militarily powerful nation on earth, a nation that the sun never set on. But its people were among the poorest in Europe because of the stark and harsh chasm between the very rich and the very poor. The rich were so rich and there were so many poor people working for nothing that some manor homes had up to 100 servants taking care of the house. Some stately homes had as many as 500 rooms. This book is by turns stunning, as reading about the world of the English rich was akin to eating a sumptuous, sparkling desert of sorbets and sherbets and strawberries and cream; enraging, as the super-rich had the gall to believe that they were innately superior to everyone else on this planet; and it gave me fillips of slightly sadistic presentiment, as I was gladdened that soon their august and arrogant proud tower would come tumbling down like the walls of Jericho and the Tower of Babel. Yes, when England was the richest nation on earth, she was, in many ways, at the apex and Zenith of her imperial majesty and glory. But most of her people were extremely, insufferably poor.