How to use the Restatement of Consumer Contracts: A Guide for Judges

Today’s podcast show features a discussion with Professor Gregory Klass of Georgetown University Law School about an article he co-authored with Professor Ian Ayres, entitled “How to Use the Restatement of Consumer Contracts: A Guide for Judges.” The article will be published this year in the Harvard Business Law Review (vol 15), and is available here.

The abstract of the article states:

“In the absence of major legislation or regulatory action, U.S. consumers will continue to look to courts and the common law for protection when businesses engage in unfair and deceptive contracting practices. In May 2022, the American Law Institute approved the Restatement of the Law, Consumer Contracts. This new Restatement provides a valuable resource for courts tasked with deciding the legal effects of standard terms that businesses draft and consumers do not read. This essay identifies six pieces of the new Restatement we believe courts should pay special attention to and discusses the importance of each. It also charts several ways courts might go beyond the new Restatement to protect consumers against abusive contracting practices. Unless and until legislators and regulators step in, U.S. courts should continue to reshape the common law to address risks that new technologies of contracting create.”

We discuss the following questions related to this Restatement:

1. The history and scope of the Restatement of Consumer Contracts project
2. Why was there perceived to be a need for a separate restatement for consumer contract law when there has been a Restatement of Contracts for many decades?
3. Was it wise to publish a Restatement of Consumer Contracts as opposed to a Statement of Principles since the document to a large extent focuses on what the law should be, rather than on what the law is?
4. The identification of several parts of the Restatement to which Professor Klass believes the courts should pay special attention:

a.      The “reasonable expectations” rule in Section 4;

b.     The unconscionability defense in Section 6;

c.      The deception defense in Section 7; and,

d.      The Parol Evidence rule

Alan Kaplinsky, Senior Counsel and former chair for 25 years of the Consumer Financial Services Group, hosts the discussion.