Should contracts be repositories?

Have you ever gotten a letter from a credit card company which says something like:

Your contract with us has been revised section 13a is changed, replace ‘… a time of not less than thirteen days …’ with ‘… a time of not less than eight days …’

Looks a lot like a patch to me. Which would be great if I had the original contract as a computer file and had religiously applied every update they had sent me. Anyone who is a programmer can probably guess where I am going with this. A living (updated over time) contract seems naturally map quite naturally to a repository. You want to know the full history of the contract and they are naturally updated with diffs.

I should preface this discussion with the fact that I am not a contract lawyer and do not claim to have any deep understanding of contract law. I would appreciate feedback from anyone who does understand law, or especially contract law, more deeply. The basic idea of the law is very simple:

1. Any public contract (contract which the parties want the government courts to be responsible for enforcing and arbitrating) must be uploaded to a, probably government run repository in a form that is both human and machine readable. I suggest either plain text, html, or some simplified markup language, possibly purpose written. Contracts between small numbers of parties can be uploaded in an encrypted form with the keys given to all parties and a copy held in escrow for a court’s use in case of disputes. Any contract with a large number of unaffiliated signatories (say 1000) must be fully publicity accessible.
2. Any changes to the contract must be posted to the repository and are not binding on either party until both parties re-sign the contract. Contracts can and should be written such that they terminate if one party fails to re-sign a needed revision, but under no condition will there be an implied acceptance of new conditions. If my signature is not on record for a contract version, I am not bound by it.

The intent of this law is to help strengthen on of the core principles of contract law: That that all parties must understand a contract they are signing. It does this in several ways.

1. It allows all parties to view the contract in a manner that is most convenient to them.
2. It will ensure the availability of an authoritative version of the contract. It will avoid the problem common with many contracts with corporations (credit card ones come to mind) where the consumer is sent a set of revisions to the contract stating changes to specific sections of the original document, but not including a full text of the contract.
3. It will make it easier for consumer advocacy groups to highlight terms in contracts that consumers might want to be wary of. I would hope that eventually this would lead to a proliferation of guides to understanding what you are signing up for with common contracts, and, eventually, consumer pressure forcing businesses to write simpler and more fair contracts. Because the contracts are online, it will be easy us web citizenry to highlight both the worst offenders and those that are fair and readable.

I do not think this law change represents any particular expansion of powers of the government. In fact it I think it actually fits well within even a libertarian view of government since it is mainly a clarification of the core government duty of enforcing contracts. In fact, for people who completely distrust the government, it would also be possible for private citizens or foundations to maintain mirrors of the repository. The point is so much that the government have an authoritative copy of the contract, as that an authoritative version exists and is accessible.

I don’t think this change would harm anyone except large businesses with consumer contracts. For them, Item 2 is the more significant cost because it will greatly reduce their ability to revise contracts, especially unilaterally. I think this is a worthwhile shift of power towards the consumer, indeed I think the current system where unilateral contract shifts can be forced actually goes against the true spirit of contract law. However, The two sections are severable, and if Item 2 is deemed too onerous, Item 1 could still be implemented. Simply requiring the contracts to be posted in their current form publicity (item 1) would still do a lot of good, and I believe would impose a very minimal cost on businesses. In fact, I would go so far as to say that enacting Item 1 should have a trivial cost on any business which is not attempting use contracts to take unfair advantage of consumers.

Thomas G. Dimiduk (triplepoint217@gmail.com), July 24, 2011

Proposed Contract Law by Thomas G. Dimiduk is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.