Do you take time to read those notices printed in tiny type that come with your credit card, utility and other bills? Or the contracts you sign when you buy a car, open a bank account or sign up for telephone service?
Hardly anyone does. Even Judge Richard Posner, one of the greatest legal minds of our time who sits in the Circuit Court of Appeals in Chicago, said that when he got a new home equity loan he was presented with pages and pages of fine print in the contract. "I didn't read, I just signed," Judge Posner said.
We all sign these one-sided contracts. Lawyers call them contracts of adhesion because they require you to adhere to the terms, but give the company that wrote them great freedom.
So long as everything goes right there is no problem with such contracts, which make doing business efficient. Because of them you can, for example, sign up for a rental car company's frequent driver program and drive off without standing in line to fill out a contract each time.
But big companies have been expanding and revising these contracts to make them much more one-sided in favor of the companies than a generation ago. At the same time the courts have expanded the power of companies, while diminishing consumer protections.
Buried in the fine print are words that force you to waive Constitutional rights, expose you to damages and can cost you not just a lot of money, but a lot of grief, too.
Historically such contracts had to adhere to the ancient principle of being fair. Otherwise judges would, when a dispute arose, toss them out as unconscionable.
The U.S. Supreme Court has vastly expanded the terms of the 1925 Federal Arbitration Act, which was passed to allow companies to choose to settle disputes that crossed state borders through arbitration. The court has applied this law to consumers. One legal scholar says that if the 1925 law were brought before Congress today as interpreted by the Supreme Court in the last few decades it would not get a single vote.
In arbitration you have to pay half or more of the costs, you will not have the same rights as you would in a court trial to compel the company to turn over many documents and produce witnesses and the arbitrators may not be schooled in the law, but instead come from the industry against which your complaint is lodged.
Here are some of the many phrases used in these adhesion contracts with an explanation of what the fine print means in plain English.
Adapted from The Fine Print by David Cay Johnston (Penguin Portfolio, $27.95)