Business to consumer contracts in the electronic marketplace: striking a proper balance between private and public regulatory objectives

Abstract

Internet contracts are increasingly part of the daily lives of most consumers. Consumers enter contracts online for all kinds of common transactions such as the purchase of goods, services, and digital content, and subscription for social media and telecommunication services. The vast majority of online contracts are standard in form, written on the supplier’s terms. Moreover, internet contracting is carried out on a huge scale, with the internet opening up new markets and allowing businesses to offer goods and services across borders. Businesses now have the potential to reach millions of users often on terms that are standardised across industries. The electronic contracting environment gives rise to particular procedural problems for consumers. These problems include issues relating to consent to contract formation, notice and transparency of terms. Consumers are habituated to online contract formation methods and may not realise the significance of the legal terms or may indeed not be aware of the existence of binding terms at all. In addition, particular concerns relating to the substantive fairness of terms and the protection of the collective public interest arise. Mass-market standard form contracts do not just impact upon the parties to individual transactions. Where businesses include standard terms that might be considered substantively unfair, effectively, they are using the mechanism of private contract to try to remove or alter rights that have been put in place through public regulation. Judicial and legislative control of standard terms is largely focused on private contract law redress systems and therefore may not be fully effective in protecting the wider public interest. This thesis critically assesses the effectiveness of existing judicial and legislative control of standard terms in mass-market business to consumer online contracts. It highlights the tension that exists between private and public regulatory objectives in the control of standard terms. Through critical analysis and evaluation of case law and legislation, it demonstrates the shortcomings that exist in the protection of the collective interests of online consumers. It queries the extent to which consumers are adversely impacted by the use of standard contracts in the online market and the type of problems that may exist in practice. Evidence of this adverse impact is added to the thesis through an empirical case study of the market for consumer software products. The study identifies a gap between the actual operation of regulatory control and its underlying purposes. The thesis concludes by making reform suggestions aimed at improving the regime of control in order to achieve an appropriate balance between the use of contract as a private law instrument and the public regulatory objective associated with the protection of the collective consumer interest.