Hope Springs

Friedrich Kessler, who lamented the mass market’s need for customer-screwing contracts of adhesion also sows hope that freedom of contract may defeat that enemy, as it has others before. By contrasting principle and precedent with the prevailing rationalizations of his time (1943, at the height of both World War II and the industrial age), Kessler provides inspiration and guidance for the work going on today. What follow are a series of successive excerpts from Kessler’s “Contracts of Adhesion—Some Thoughts About Freedom of Contract,” each followed by the help they currently provide.³

Standard contracts … in the hands of powerful industrial and commercial overlords [enable] them to impose a new feudal order of their own making upon a vast host of vassals.

That’s where we are still. The calf-cow model is the Web-based embodiment of that same feudal order.

… since not more than a hundred years ago contract ideology had been successfully used to break down the last vestiges of a patriarchal and benevolent feudal order in the field of master and servant. Thus the return back from contract to the status we experience today was greatly facilitated by the fact that the belief in freedom of contract has remained one of the firmest axioms in the whole fabric of the social philosophy of our culture.

In other words, freedom of contract prevailed against the feudal system—and we still believe in it, even as companies violate it because they find no other way to operate.

The role played by contract in the destruction of the institutional framework of capitalistic society is constantly obscured to the lawyer by the still prevailing philosophy of law which neglects to treat contract as the most important source of law.

In other words, lawyers writing boilerplate contracts of adhesion are unaware of how little their work resembles what contract was about in the first place or freedom’s gravitational attraction toward freedom of contract’s original value system. Thus, they rationalize their work:

According to conventional theory contract is only a convenient label for a number of “operative facts” which have the consequences intended by the parties if the law so ordains. In this respect the great philosophers of natural law thought quite differently: society, in proclaiming freedom of contract—according to their teaching—has delegated to individual citizens a piece of sovereignty which enables them to participate constantly in the law making process. Freedom of contract means that the state has no monopoly in the creation of law. The consent of contracting parties creates law also. The law-making process is decentralized. As a result, law is not an order imposed by the state from above upon its citizens; it is rather an order created from below.

So citizens may create law freely through contract and fix what’s broken in the marketplace through practice, rather than by waiting for government action:

In the happy days of free enterprise capitalism the belief that contracting is law making had largely emotional importance. Law making by contract was no threat to the harmony of the democratic system. On the contrary it reaffirmed it. The courts, therefore, representing the community as a whole, could remain neutral in the name of freedom of contract. The deterioration of the social order into the pluralistic society of our days … was needed to make the wisdom of the contract theory of the natural law philosophers meaningful to us.

Little could be done with that wisdom in 1943, or even in 2011.

The prevailing dogma, on the other hand, insisting that contract is only a set of operative facts, helps to preserve the illusion that the “law” will protect the public against any abuse of freedom of contract.

And, as we saw earlier, it does a lousy job of that.

This will not be the case so long as we fail to realize that freedom of contract must mean different things for different types of contracts. Its meaning must change with the social importance of the type of contract and with the degree of monopoly enjoyed by the author of the standardized contract.

Today, the degree of monopoly enjoyed (if that’s the right word) by adhesive contract authors verges on absolute. Yet the utility for these contracts has sunk to an all-time low, simply because it is now abundantly clear that these “agreements” are nothing of the sort. They are merely pro forma ceremonies in which the submissive party clicks on a box and hopes for the best. In our Internet age, this “operative fact” has become equally ridiculous and normative.

So, what to do?

Make Law, Not War

It’s handy that freedom of contract lets us reform both business and law, without waiting for government action. That’s twice what could be done with copyright, another legal legacy that too often prevents more business than it protects.⁴ Creative Commons, for example, reformed copyright practice during the time two of its founders (Lawrence Lessig and Eric Eldred) were busy fighting a losing battle (Eldred v. Ashcroft) in the Supreme Court.⁵ Creative Commons did this by releasing at no charge a variety of easy-to-understand (and apply) copyright licenses that gave creators far more control over the use of their works than had ever been contemplated, much less practiced, under the industrialized copyright regime run by publishers and music recording companies.

Thus, Creative Commons achieved in practice what its founders failed to achieve through litigation or through appeals to Congress (which continues to ratchet copyright protections toward forever). This was a remarkable accomplishment, and it is now an excellent model for the VRM community in respect to freedom of contract. That is, what Creative Commons modeled for the vendor side of the marketplace (creators), the VRM community can do for both sides.

A Level Agreement Field

In The World is Flat, Thomas L. Friedman describes the Internet’s creation of a new worldwide marketplace:

When you add this unprecedented new level of people-to-people communication to all these Web-based application-to-application work-flow programs, you end up with a whole new global platform for multiple forms of collaboration. This is the Genesis moment for the flattening of the world …⁶

That same moment was also Genesis for the cookie, for standard-form “agreements” one “accepted” with a click, and for other instruments by which we were branded like so many calves by countless Web sites.

But the Internet is still there, still flat, and still wider than any corral. Now it’s time to do to customer ranching what freedom of contract did to the old feudal system. And we’ll do it the easy way: by writing straightforward terms for both customers and vendors that both sides (including their faithful machines) can easily understand and agree on (or disagree respectfully)—and are good for both sides.

Coming from Agreements

In early 2011, the start-up Personal.com, which makes a private data vault (among other services), broke new ground with what it called its “Owner Data Agreement.” In November 2011:

Summary of Important Terms & Rights for Owners

You own your data

Under the terms of this Agreement, Owners will own all of their data that they upload to the Personal Service, as well as any data they create while using the Personal Service.

 

You control who gets access to your data

Only Owners can grant access to their data that is stored with the Personal Service. Personal will never grant any third party access to an Owner’s data, except strictly in accordance with our Privacy Policy, which is incorporated into and made a part of this Agreement and may be found here, or when specifically required by law.

 

Data Users are contractually obligated to use Owner data only as authorized by the Owner

Any Data User (as defined below) to whom an Owner elects to grant access to their data stored with the Personal Service will be required to agree to the terms and conditions in this Agreement regarding the use of such data.

 

Take your data with you

At an Owner’s request, Personal will promptly export their data and permanently delete all data that the Owner has stored with the Personal Service.

Summary of Important Terms & Rights for Data Users

Covenants data users must never violate

Data Users may not access, use, store, share or monetize an Owner’s Data without explicit consent of the Owner, and must agree to transparency in the usage of Owner Data.⁷

It was a bold and ground-breaking move by Personal.com to call users “owners,” especially at a time when there was much debate about whether data could be “owned” at all. (Also, recall the Jefferson quote in chapter 13, about how ideas, like flames, duplicate easily, and make for problematic property.) To my knowledge, Personal’s terms had no precedent and modeled a new legal position, both for vendors and for intermediaries.

An agreement like Personal.com’s at this writing is the best any vendor or intermediary can do in the absence of full agency on the individual’s side. With full agency, however, an individual can say, in the first person voice, “I own my data, I control who gets access to it, and I specify what I wish to happen under what conditions.” In the latter category, those wishes might include:

• Don’t track my activities outside of this site.
• Don’t put cookies in my browser for anything other than helping us remember each other and where we were.
• Make data collected about me available in a standard, open format.
• Please meet my fourth-party agent, Personal.com (or whomever).

These are EmanciTerms, and there will be corresponding ones on the vendor’s side. Once they are made simple and straightforward enough, they should become normative to the point where they serve as de facto standards, in practice.

Since the terms should be agreeable and can be expressed in text that code can parse, the process of arriving at agreements can be automated.

For example, when using a public wi-fi access point, a person’s EmanciTerms might say, “I will not knowingly hog this shared resource, for example, by watching high-def video on it,” or “I will not engage in illegal activities here.” If the provider of the access point has a VRM-ready service that is willing to deal with the user on his or her own EmanciTerms as well as those of the provider, it should be possible to automate the formalities and let the user bypass the usual “read and accept our agreement” ritual.

Customer Commons is working this same territory, providing sets of terms for both buyers and sellers that can be easily understood by both parties and matched electronically as well as by individuals (including lawyers, but not always requiring them). Because these terms work only for emancipated individuals (and organizations open to dealing with them), we group them together under the heading EmanciTerm.

Customer Commons will also provide a place where lawyers and ordinary folks can examine and review any company’s existing terms and privacy policies. The main difference between this and Personal.com’s agreement is between first- and second-person voices. Where Personal.com says you own your own data (speaking in the second-person voice), Customer Commons uses the first-person voice: I own my data, I control who gets access to it, and I specify what happens under what conditions.

Creative Commons pioneered the idea of asserting terms that make quick and easy sense to lawyers, machines, and ordinary folks. With EmanciTerm, your terms can be matched easily—preferably automatically, in the background—with those of vendors. That’s why EmanciTerm includes terms for both sides.

Customer Commons is also not working alone on this front. The Information Sharing Workgroup at Kantara has developed an information sharing agreement that deals in detail with the many kinds of personal data that may reside in a personal data store (its term for Personal.com’s vault), the many kinds of uses to which that data might be put, and the kinds of controls an individual or other agent may exercise in an agreement with another party.⁸