'Hold the Arbitration Clause, Hold the Attorney Fees!'

For example, purchasers of books, a relatively low-value item, might select a different menu of legal boilerplate than buyers of plasma televisions, who may want to keep open the right to go to court in a state of their choosing. Sellers could give better prices to customers who were willing to live by their seller-friendly boilerplate than to those who reserved the right to take them to court. Online stores could simply refuse to sell to consumers who don't accept their seller-friendly terms. (In fact, that result is effectively the case today, at least on sites that won't let you buy unless you click “I agree” to boilerplate with an exclusive jurisdiction-and-venue clause, and other seller-friendly terms.)

Certainly, such buyer democracy would be unusual, perhaps even unprecedented. After all, who ever even thinks that boilerplate contract terms can be negotiated? Boilerplate has that name because, like “plate metal,” it is fixed and unchangeable.

Yet in reality, most contracts are the result of a give-and-take negotiation, as each side tries to have it its own way. Bricks-and-mortar businesses, for example, will often try to negotiate virtually every clause of every contract, or at least those worth the cost of the negotiation. While they typically haggle only over economic terms, such as price, once counsel gets involved, almost anything can be on the table ' at least as long as the client is willing to pay the hourly fees for counsel to raise all of the issues. As a result, the only persons who don't get to negotiate each clause, generally, are consumers and small-business customers ' and e-commerce buyers. Those groups may just plain not know how much of the law governing their lives is negotiable or, for the most part, just don't have the leverage to get changes made to a standard form. In the case of e-commerce, of course, the explanation for the absence of bargaining is even simpler: How can you negotiate when your only option is to click or not?

Online Contracts: Often
One-Way 'Negotiations'

In prior columns, I have explored the legal problems created by the omnipresence online of non-negotiable “terms and conditions.” That boilerplate stands in stark contrast to the “give and take” assumed by traditional contract law. Online terms and conditions are merely the latest example of the traditional legal problem of a “contract of adhesion,” courts' reluctance to enforce the terms of a contract that was not created by a “meeting of the minds.”

Nonetheless, courts will almost always stand behind a contract dictated by one party, on its terms, and usually by the one with superior bargaining power. The customer has the choice to “take it or take it.” While particular provisions may be struck down as overreaching, especially ones that try to take away a party's procedural rights (see, “Web Site Terms and Conditions” in the November 2008 edition of e-Commerce Law & Strategy, www.ljnonline.com/issues/ljn_ecommerce/25_7/news/151226-1.html), more often than not, seller's counsel gets it right and the online contract stands up. Recent rulings in which courts have allowed challenges to this rule haven't undermined the basic enforceability of online contracts of adhesion. (See, for example, Kerr v. Dillard's Store Services, Inc., No. 09-2604-KHV, USDC Kansas 2009, at www.steptoe.com/assets/attachments/3760.pdf, and Harris v. Blockbuster, Inc., No. 3:09-cv- 217-m, N.D. Texas 2009, at https://ecf.txnd.uscourts.gov/cgi-bin/show_pub lic_doc?2009cv0217-32.) In Kerr, the court did not question the propriety of an arbitration clause itself, but refused to enforce it because the employer did not have systems in place to prove that the employee had actually agreed to it electronically, after having previously refused to sign it offline. In Harris, the court refused to enforce an arbitration clause on procedural grounds, because it felt that the seller's reserved right to make unilateral amendments made the whole contract illusory.

Facebook's Experiment

Early this year, major social-media Web site Facebook unilaterally “proposed” a radical alternative to the traditional, non-negotiable, model of terms and conditions, both online and off. This proposal came in response to immediate and massive criticism of changes that detractors claimed would have given the Web site much greater control over user-provided information. In essence: “(A)nything you upload to Facebook can be used by Facebook in any way they deem fit, forever, no matter what you do later” (see, http://consumerist.com/5150175/facebooks-new-terms-of-service-we-can-do-anything-we-want-with-your-content-forever, and www.pcworld.com/businesscenter/blogs/bizfeed/159672/facebook_owns_your_business_data.html?tk=rel_news).

In response to such criticism, Facebook first tried to explain that notwithstanding the legal terms, Facebook would not “share your information in a way you wouldn't want” (see, http://blog.facebook.com/blog.php?post=54434097130). When that Orwell-speak version of “trust me” did not calm the critics (e.g., www.pcworld.com/article/159703/facebook.html?tk=rel_news), Facebook quickly responded with its own version of corporate democracy ' to allow users to vote on a new statement of principles (www.facebook.com/terms.php?ref=pf.#/principles.php and www.facebook.com/press/releases.php?p=85587) and, ultimately, updated legal terms to incorporate them (see, www.facebook.com/fbsitegovernance for Facebook's new “Site Governance Page”).

Of course, much like our representative form of government, Facebook's proposal was not true democracy; according to the announcements, Facebook posted new legal terms only for a membership vote rather than letting the members themselves draft and then propose policies to the membership for a vote. Facebook also required that the vote's effectiveness depend on participation by a minimum number of members. And Facebook proposed discussion on only a series of general concepts, rather than on specific contract terms.

When the voting was complete, more than 74% of those who went to the trouble to vote favored the proposed change. However, the more than 600,000 votes cast represented less than one half of 1% of Facebook's registered users (see, http://blog.facebook.com/blog.php?blog_id=company). That participation volume was substantially below Facebook's own proposed minimum-vote threshold of 30% of its registered members required to make the vote binding (see, www.usatoday.com/tech/webguide/internetlife/2009-04-23-facebook-vote_N.htm?csp=Tech, http://timesonline.typepad.com/technology/2009/04/facebooks-new-rules-the-terms-of-service-furore-ends-with-a-whimper.html and www.thestandard.com/news/2009/04/24/what-facebook-vote). Despite the underwhelming participation, Facebook announced that it will implement the proposed changes, based on the strong (but curiously not overwhelming) support of the 74% minority of users who did vote (see, www.salon.com/wires/ap/scitech/2009/04/24/D97OTGBG0_us_tec_facebook_vote/). (The “new,” improved, Facebook Statement of Rights and Responsibilities, which became effective May 1, may be found at www.facebook.com/terms.php?ref=pf and www.facebook.com/group.php?gid=67758697570#/terms.php?ref=pf.)

Despite the tepid response, Facebook's experiment nonetheless represents a radical departure from the tyranny of lawyers writing terms and conditions. After all, only the “worst” terms of such one-sided contracts will typically generate enough interest ' or ire ' to create such a firestorm of controversy. While not as eye-catching as the content-rights questions that triggered Facebook's worries, lawsuits are won or lost ' or thwarted before they can be filed ' by such boilerplate as mandatory binding arbitration, exclusive jurisdiction, and (a favorite of corporate lawyers) reimbursement of legal fees.

Of course, not everyone was willing to put Facebook on the same voting-rights pedestal with Abraham Lincoln, Lyndon Johnson and Martin Luther King, Jr. In fact, shortly after the vote, one online security expert, Bruce Schneier, criticized the exercise as a “deceptive” diversion from true reform. Schneier said: “(Facebook's) plainly written (and not legally binding) Statement of Principles contains an admirable set of goals, but its denser and more legalistic Statement of Rights and Responsibilities undermines a lot of it. One research group who studies these documents called it democracy theater: Facebook wants the appearance of involving users in governance, without the messiness of actually having to do so. ' Facebook wants to market a democracy but run a dictatorship. But they all involve trying to deceive the customer” (see, http://online.wsj.com/article/SB123997522418329223.html). Another online critic labeled the proceedings “a sham democratic process” whose “goal is not to actually turn governance over to users, but to use the appearance of democracy and user involvement to ward off future criticism” (see, www.lightbluetouchpaper.org/2009/03/29/commentary-on-facebooks-terms-of-service).

But Businesses Aren't
True Democracies

For e-commerce firms, however, there has been little appreciation ' amid the favorable commentary for Facebook's willingness to consider its members' views when establishing its legal policies ' of the legal and practical conundrums such an effort at user participation could create for typical e-commerce firms. From a process perspective, as well, will Facebook and like-minded firms find themselves hemmed into, by Facebook's precedent of its initial good intentions, submitting future changes to a potentially expensive and time-consuming user vote? Certainly, most online sellers' contracts reserve the right to amend their terms and conditions unilaterally, just as bricks-and-mortar sellers can change their rules at will. Even if e-commerce firms can still rely on the boilerplate that allows contract changes, their online customers may now expect such rights, perhaps even on routine matters.

From a purely business perspective, my colleague, e-commerce expert and veteran Tim Szuhaj (www.lawsgr.com/Bio/TimothySzuhaj.asp), provided a different critique of Facebook's experiment. For ongoing e-commerce businesses, he considers the concept of allowing user input on legal terms simply “misguided,” because of the practical problems such practices will create for online firms that adopt it ' a “recipe for disaster,” in his words. In his view, firms adopting such policies, however well intended or beneficent the motivation, could face difficult legal issues. Most important, from the perspective of a former in-house counsel responsible to business management for meeting budgets, he warns that such firms will also face increased costs of routine contract administration, because any change in legal or business terms that management may contemplate could have a different effect on each customer ' each of whose “custom” contracts would have to be reviewed to see the effect of the change. In other words, counsel cannot review a proposed change in the abstract because of the possibility that an individual contract change could have been made that would conflict with the proposed changes. He noted that already, the limited “opt-in/opt-out” privacy-protection clauses found in most contracts today have made it difficult for executives to make across-the-board business decisions. He also warned that if firms allow contract terms to vary by user, such practice could undermine the rationale of the safe harbor protections currently enjoyed by firms worried about liability for third party content posted at their site.

As a former in-house executive, he also questions how anyone's online experience would be improved by such voting, whether the seller or the customer. In his experience, customers and clients alike prefer the certainty of knowing the legal rules, even if harsh. He noted that when one of his former employers had tried a limited version of the Facebook proposal, the only contract provision that parties cared enough about to vote on were the typical pricing terms ' just as they have always been negotiated privately among parties, long before an “e” was ever needed as a prefix to describe a commercial or law transaction. Moreover, if buyers will be concerned only about economic parts of the contract, why should a seller cede any practical leverage by allowing negotiation over the boilerplate that gives it strength?

While initially one had to wonder if there would be enough interest in such legal arcana to meet the participation thresholds Facebook posed for its members, the level of commentary that immediately followed the announcement suggested that some users truly care about the rules under which they post, or that corporate layoffs have left them with little else to do. Given the participation level, perhaps Facebook was overly influenced by a vocal minority of activist users. In addition, despite the low voter participation, Facebook's attempt to transform the ill will caused by application of poorly thought-out “standard” lawyers' advice (see, “e-Commerce Contracts: Boilerplate or Common Sense?” in the September 2006 edition of e-Commerce Law & Strategy, www.ljnonline.com/issues/ljn_ecommerce/23_5/news/147261-1.html) into an online Prague Spring (see, http://en.wikipedia.org/wiki/Prague_Spring) for Web-user democracy has certainly provided invaluable free publicity for itself, and for the concept of online user democracy, and at a time of intense competition in the field of social media (and, we hope, will not be crushed by the tanks of boilerplate and legions of corporate lawyers as easily as the 1968 Czech political uprising was).

But, as noted above, perhaps allowing user input is not as revolutionary as it seemed, and perhaps the result should not have been surprising, either. For example, consider the Web's own “revolution” in recent years over privacy policies. It seems that every site now has one (even if few of us read them before entering personal information). Indeed, the widespread election to “opt in” or “opt out” of such policies has been its own form of customer democracy ' and one that few of us choose to exercise, just as in the recent Facebook vote (see, www.bbbonline.org/UnderstandingPrivacy/library/whitepapers/RetailCreditStudy.pdf and www.law.duke.edu/shell/cite.pl?52+Duke+L.+J.+745+pdf). Unfortunately, online economic democracy has triggered the same indifference that too often greets real-world democracy in the United States and other so-called First World countries where voter turnout for real elections pales compared with the American Idol headcount, where over 100 million votes were reportedly cast via phone and text for the show's recent season finale. If real elections were subjected to the same tests of popular interest as Facebook had proposed, we might never remove an incumbent.

Worth the Effort?
Probably Not

In the same vein as Tim Szuhaj's comments, consider also several other real-world problems that would arise for firms that try to please customers by giving them a voice. Certainly, one of the virtues of a standard form contract is just that ' it is identical from the smallest customer to the largest. When that standardization is lost, not only must each contract be considered individually when amending the terms and conditions, but also when doing other routine corporate acts, such as bank-loan representations, for example, or providing due diligence in a corporate transaction. Will the additional business gained from customers to whom boilerplate matters cover the cost of the legal fees necessary to conduct all of these reviews, and maintain a system of widely variable contracts? In fact, because those most sophisticated customers will probably have their counsel negotiate on their behalf anyway, will there be any fee savings at all from allowing negotiable contracts in the first place?

Similarly, the burden of keeping track of what each contract says will increase. While that is no different from maintaining an accurate, complete and current set of paper files, the growth in electronic files over time along with business expansion will require a fundamentally sound recordkeeping system ' the “master” contract may not matter after each individual contract has been altered.

Firms willing to try such flexible contracting should certainly steer clear of intellectual-property provisions. There will be only a few occasions, if any, on which a customer should even think of an interest in an e-commerce firm's IP assets (unless the context involves some type of joint development). More important, if the core assets of a virtual firm are its intangibles, then the firm should not share them with a third party any more than a traditional firm would consider allowing others access to its key customer contacts.

Perhaps one way of proceeding with a participatory contract in the face of all these uncertainties, if a firm desires to do so, may be to limit the scope of negotiable variables to a few that can be more easily tracked. Electronic records should create the same burden for all contracts, from the smallest to the largest, and facilitate the development of detailed electronic recordkeeping required for a system of flexible contracting.

From an e-commerce seller's perspective, then, it seems that letting customers “have it their way” may “upset” the seller's cost-and-operations structure quite a bit, and with an uncertain return ' if any ' for the seller's trouble. Indeed, in the end, letting customers “have it (their) way” may not make e-commerce a buyer's “kind of place” (to quote Burger King's rival), and won't give the seller's counsel or compliance office the “break they deserve today” ' or any other day in the foreseeable future after adoption of a scheme like that proposed by
Facebook (see, www.listafterlist.com/tabid/57/listid/8189/Food++Dining/McDonalds+Slogans+over+time.aspx).

Some of Mr. Jaskiewicz's articles on e-commerce contract terms and conditions that have appeared in this newsletter are listed below.

1. 'The Myth of Certainty: The End of the e-Contract Is Not the End of Legal Fees. Here Are Some Things You and Your Clients Can Do About That,' in the April edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/25_12/news/151909-1.html.
2. 'Web Site Terms and Conditions: Adhesion Contracts or 'Offers You Cannot Refuse'? Is This Approach Best for e-Commerce Firms?' in the November 2008 edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/25_7/news/151226-1.html.
3. 'What Your Terms and Conditions Tell Your Customers (And Do You Mean It?),' in the October 2008 edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/25_6/news/151144-1.html.
4. 'I Signed WHAT?! The Brutish World of e-Commerce Terms and Conditions, or, Why Goliath Sometimes Loses,' in the July 2008 edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/25_3/news/150654-1.html.
5. 'e-Commerce Contracts: Boilerplate or Common Sense? Don't Get Lost Seeking 'Certainty” in the September 2006 edition of
   e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/23_5/news/147261-1.html.

Hold the pickles, hold the lettuce,
Special orders don't upset us.
All we ask is that you let us serve it your way!
Have it your way! Have it your way!
Have it your way at Burger King!
' Burger King 1970s advertising jingle

In recent months, I have described how e-commerce firms impose non-negotiable terms and conditions on their customers, sometimes with questionable logic (see the sidebar below). But what if they let their customers “have it their way” by offering a choice on the terms and conditions?

Burger King famously revolutionized the (at that time) “one-size-fits-all” fast-food business with its 1970s invitation to “have it your way,” a flexible ordering concept targeted at the perceived rigid menu of rival McDonald's. Could online sellers try the same recipe for the contract terms they offer to customers?

For example, purchasers of books, a relatively low-value item, might select a different menu of legal boilerplate than buyers of plasma televisions, who may want to keep open the right to go to court in a state of their choosing. Sellers could give better prices to customers who were willing to live by their seller-friendly boilerplate than to those who reserved the right to take them to court. Online stores could simply refuse to sell to consumers who don't accept their seller-friendly terms. (In fact, that result is effectively the case today, at least on sites that won't let you buy unless you click “I agree” to boilerplate with an exclusive jurisdiction-and-venue clause, and other seller-friendly terms.)

Certainly, such buyer democracy would be unusual, perhaps even unprecedented. After all, who ever even thinks that boilerplate contract terms can be negotiated? Boilerplate has that name because, like “plate metal,” it is fixed and unchangeable.

Yet in reality, most contracts are the result of a give-and-take negotiation, as each side tries to have it its own way. Bricks-and-mortar businesses, for example, will often try to negotiate virtually every clause of every contract, or at least those worth the cost of the negotiation. While they typically haggle only over economic terms, such as price, once counsel gets involved, almost anything can be on the table ' at least as long as the client is willing to pay the hourly fees for counsel to raise all of the issues. As a result, the only persons who don't get to negotiate each clause, generally, are consumers and small-business customers ' and e-commerce buyers. Those groups may just plain not know how much of the law governing their lives is negotiable or, for the most part, just don't have the leverage to get changes made to a standard form. In the case of e-commerce, of course, the explanation for the absence of bargaining is even simpler: How can you negotiate when your only option is to click or not?

Online Contracts: Often
One-Way 'Negotiations'

In prior columns, I have explored the legal problems created by the omnipresence online of non-negotiable “terms and conditions.” That boilerplate stands in stark contrast to the “give and take” assumed by traditional contract law. Online terms and conditions are merely the latest example of the traditional legal problem of a “contract of adhesion,” courts' reluctance to enforce the terms of a contract that was not created by a “meeting of the minds.”

Nonetheless, courts will almost always stand behind a contract dictated by one party, on its terms, and usually by the one with superior bargaining power. The customer has the choice to “take it or take it.” While particular provisions may be struck down as overreaching, especially ones that try to take away a party's procedural rights (see, “Web Site Terms and Conditions” in the November 2008 edition of e-Commerce Law & Strategy, www.ljnonline.com/issues/ljn_ecommerce/25_7/news/151226-1.html), more often than not, seller's counsel gets it right and the online contract stands up. Recent rulings in which courts have allowed challenges to this rule haven't undermined the basic enforceability of online contracts of adhesion. (See, for example, Kerr v. Dillard's Store Services, Inc., No. 09-2604-KHV, USDC Kansas 2009, at www.steptoe.com/assets/attachments/3760.pdf, and Harris v. Blockbuster, Inc., No. 3:09-cv- 217-m, N.D. Texas 2009, at https://ecf.txnd.uscourts.gov/cgi-bin/show_pub lic_doc?2009cv0217-32.) In Kerr, the court did not question the propriety of an arbitration clause itself, but refused to enforce it because the employer did not have systems in place to prove that the employee had actually agreed to it electronically, after having previously refused to sign it offline. In Harris, the court refused to enforce an arbitration clause on procedural grounds, because it felt that the seller's reserved right to make unilateral amendments made the whole contract illusory.

Facebook's Experiment

Early this year, major social-media Web site Facebook unilaterally “proposed” a radical alternative to the traditional, non-negotiable, model of terms and conditions, both online and off. This proposal came in response to immediate and massive criticism of changes that detractors claimed would have given the Web site much greater control over user-provided information. In essence: “(A)nything you upload to Facebook can be used by Facebook in any way they deem fit, forever, no matter what you do later” (see, http://consumerist.com/5150175/facebooks-new-terms-of-service-we-can-do-anything-we-want-with-your-content-forever, and www.pcworld.com/businesscenter/blogs/bizfeed/159672/facebook_owns_your_business_data.html?tk=rel_news).

In response to such criticism, Facebook first tried to explain that notwithstanding the legal terms, Facebook would not “share your information in a way you wouldn't want” (see, http://blog.facebook.com/blog.php?post=54434097130). When that Orwell-speak version of “trust me” did not calm the critics (e.g., www.pcworld.com/article/159703/facebook.html?tk=rel_news), Facebook quickly responded with its own version of corporate democracy ' to allow users to vote on a new statement of principles (www.facebook.com/terms.php?ref=pf.#/principles.php and www.facebook.com/press/releases.php?p=85587) and, ultimately, updated legal terms to incorporate them (see, www.facebook.com/fbsitegovernance for Facebook's new “Site Governance Page”).

Of course, much like our representative form of government, Facebook's proposal was not true democracy; according to the announcements, Facebook posted new legal terms only for a membership vote rather than letting the members themselves draft and then propose policies to the membership for a vote. Facebook also required that the vote's effectiveness depend on participation by a minimum number of members. And Facebook proposed discussion on only a series of general concepts, rather than on specific contract terms.

When the voting was complete, more than 74% of those who went to the trouble to vote favored the proposed change. However, the more than 600,000 votes cast represented less than one half of 1% of Facebook's registered users (see, http://blog.facebook.com/blog.php?blog_id=company). That participation volume was substantially below Facebook's own proposed minimum-vote threshold of 30% of its registered members required to make the vote binding (see, www.usatoday.com/tech/webguide/internetlife/2009-04-23-facebook-vote_N.htm?csp=Tech, http://timesonline.typepad.com/technology/2009/04/facebooks-new-rules-the-terms-of-service-furore-ends-with-a-whimper.html and www.thestandard.com/news/2009/04/24/what-facebook-vote). Despite the underwhelming participation, Facebook announced that it will implement the proposed changes, based on the strong (but curiously not overwhelming) support of the 74% minority of users who did vote (see, www.salon.com/wires/ap/scitech/2009/04/24/D97OTGBG0_us_tec_facebook_vote/). (The “new,” improved, Facebook Statement of Rights and Responsibilities, which became effective May 1, may be found at www.facebook.com/terms.php?ref=pf and www.facebook.com/group.php?gid=67758697570#/terms.php?ref=pf.)

Despite the tepid response, Facebook's experiment nonetheless represents a radical departure from the tyranny of lawyers writing terms and conditions. After all, only the “worst” terms of such one-sided contracts will typically generate enough interest ' or ire ' to create such a firestorm of controversy. While not as eye-catching as the content-rights questions that triggered Facebook's worries, lawsuits are won or lost ' or thwarted before they can be filed ' by such boilerplate as mandatory binding arbitration, exclusive jurisdiction, and (a favorite of corporate lawyers) reimbursement of legal fees.

Of course, not everyone was willing to put Facebook on the same voting-rights pedestal with Abraham Lincoln, Lyndon Johnson and Martin Luther King, Jr. In fact, shortly after the vote, one online security expert, Bruce Schneier, criticized the exercise as a “deceptive” diversion from true reform. Schneier said: “(Facebook's) plainly written (and not legally binding) Statement of Principles contains an admirable set of goals, but its denser and more legalistic Statement of Rights and Responsibilities undermines a lot of it. One research group who studies these documents called it democracy theater: Facebook wants the appearance of involving users in governance, without the messiness of actually having to do so. ' Facebook wants to market a democracy but run a dictatorship. But they all involve trying to deceive the customer” (see, http://online.wsj.com/article/SB123997522418329223.html). Another online critic labeled the proceedings “a sham democratic process” whose “goal is not to actually turn governance over to users, but to use the appearance of democracy and user involvement to ward off future criticism” (see, www.lightbluetouchpaper.org/2009/03/29/commentary-on-facebooks-terms-of-service).

But Businesses Aren't
True Democracies

For e-commerce firms, however, there has been little appreciation ' amid the favorable commentary for Facebook's willingness to consider its members' views when establishing its legal policies ' of the legal and practical conundrums such an effort at user participation could create for typical e-commerce firms. From a process perspective, as well, will Facebook and like-minded firms find themselves hemmed into, by Facebook's precedent of its initial good intentions, submitting future changes to a potentially expensive and time-consuming user vote? Certainly, most online sellers' contracts reserve the right to amend their terms and conditions unilaterally, just as bricks-and-mortar sellers can change their rules at will. Even if e-commerce firms can still rely on the boilerplate that allows contract changes, their online customers may now expect such rights, perhaps even on routine matters.

From a purely business perspective, my colleague, e-commerce expert and veteran Tim Szuhaj (www.lawsgr.com/Bio/TimothySzuhaj.asp), provided a different critique of Facebook's experiment. For ongoing e-commerce businesses, he considers the concept of allowing user input on legal terms simply “misguided,” because of the practical problems such practices will create for online firms that adopt it ' a “recipe for disaster,” in his words. In his view, firms adopting such policies, however well intended or beneficent the motivation, could face difficult legal issues. Most important, from the perspective of a former in-house counsel responsible to business management for meeting budgets, he warns that such firms will also face increased costs of routine contract administration, because any change in legal or business terms that management may contemplate could have a different effect on each customer ' each of whose “custom” contracts would have to be reviewed to see the effect of the change. In other words, counsel cannot review a proposed change in the abstract because of the possibility that an individual contract change could have been made that would conflict with the proposed changes. He noted that already, the limited “opt-in/opt-out” privacy-protection clauses found in most contracts today have made it difficult for executives to make across-the-board business decisions. He also warned that if firms allow contract terms to vary by user, such practice could undermine the rationale of the safe harbor protections currently enjoyed by firms worried about liability for third party content posted at their site.

As a former in-house executive, he also questions how anyone's online experience would be improved by such voting, whether the seller or the customer. In his experience, customers and clients alike prefer the certainty of knowing the legal rules, even if harsh. He noted that when one of his former employers had tried a limited version of the Facebook proposal, the only contract provision that parties cared enough about to vote on were the typical pricing terms ' just as they have always been negotiated privately among parties, long before an “e” was ever needed as a prefix to describe a commercial or law transaction. Moreover, if buyers will be concerned only about economic parts of the contract, why should a seller cede any practical leverage by allowing negotiation over the boilerplate that gives it strength?

While initially one had to wonder if there would be enough interest in such legal arcana to meet the participation thresholds Facebook posed for its members, the level of commentary that immediately followed the announcement suggested that some users truly care about the rules under which they post, or that corporate layoffs have left them with little else to do. Given the participation level, perhaps Facebook was overly influenced by a vocal minority of activist users. In addition, despite the low voter participation, Facebook's attempt to transform the ill will caused by application of poorly thought-out “standard” lawyers' advice (see, “e-Commerce Contracts: Boilerplate or Common Sense?” in the September 2006 edition of e-Commerce Law & Strategy, www.ljnonline.com/issues/ljn_ecommerce/23_5/news/147261-1.html) into an online Prague Spring (see, http://en.wikipedia.org/wiki/Prague_Spring) for Web-user democracy has certainly provided invaluable free publicity for itself, and for the concept of online user democracy, and at a time of intense competition in the field of social media (and, we hope, will not be crushed by the tanks of boilerplate and legions of corporate lawyers as easily as the 1968 Czech political uprising was).

But, as noted above, perhaps allowing user input is not as revolutionary as it seemed, and perhaps the result should not have been surprising, either. For example, consider the Web's own “revolution” in recent years over privacy policies. It seems that every site now has one (even if few of us read them before entering personal information). Indeed, the widespread election to “opt in” or “opt out” of such policies has been its own form of customer democracy ' and one that few of us choose to exercise, just as in the recent Facebook vote (see, www.bbbonline.org/UnderstandingPrivacy/library/whitepapers/RetailCreditStudy.pdf and www.law.duke.edu/shell/cite.pl?52+Duke+L.+J.+745+pdf). Unfortunately, online economic democracy has triggered the same indifference that too often greets real-world democracy in the United States and other so-called First World countries where voter turnout for real elections pales compared with the American Idol headcount, where over 100 million votes were reportedly cast via phone and text for the show's recent season finale. If real elections were subjected to the same tests of popular interest as Facebook had proposed, we might never remove an incumbent.

Worth the Effort?
Probably Not

In the same vein as Tim Szuhaj's comments, consider also several other real-world problems that would arise for firms that try to please customers by giving them a voice. Certainly, one of the virtues of a standard form contract is just that ' it is identical from the smallest customer to the largest. When that standardization is lost, not only must each contract be considered individually when amending the terms and conditions, but also when doing other routine corporate acts, such as bank-loan representations, for example, or providing due diligence in a corporate transaction. Will the additional business gained from customers to whom boilerplate matters cover the cost of the legal fees necessary to conduct all of these reviews, and maintain a system of widely variable contracts? In fact, because those most sophisticated customers will probably have their counsel negotiate on their behalf anyway, will there be any fee savings at all from allowing negotiable contracts in the first place?

Similarly, the burden of keeping track of what each contract says will increase. While that is no different from maintaining an accurate, complete and current set of paper files, the growth in electronic files over time along with business expansion will require a fundamentally sound recordkeeping system ' the “master” contract may not matter after each individual contract has been altered.

Firms willing to try such flexible contracting should certainly steer clear of intellectual-property provisions. There will be only a few occasions, if any, on which a customer should even think of an interest in an e-commerce firm's IP assets (unless the context involves some type of joint development). More important, if the core assets of a virtual firm are its intangibles, then the firm should not share them with a third party any more than a traditional firm would consider allowing others access to its key customer contacts.

Perhaps one way of proceeding with a participatory contract in the face of all these uncertainties, if a firm desires to do so, may be to limit the scope of negotiable variables to a few that can be more easily tracked. Electronic records should create the same burden for all contracts, from the smallest to the largest, and facilitate the development of detailed electronic recordkeeping required for a system of flexible contracting.

From an e-commerce seller's perspective, then, it seems that letting customers “have it their way” may “upset” the seller's cost-and-operations structure quite a bit, and with an uncertain return ' if any ' for the seller's trouble. Indeed, in the end, letting customers “have it (their) way” may not make e-commerce a buyer's “kind of place” (to quote Burger King's rival), and won't give the seller's counsel or compliance office the “break they deserve today” ' or any other day in the foreseeable future after adoption of a scheme like that proposed by
Facebook (see, www.listafterlist.com/tabid/57/listid/8189/Food++Dining/McDonalds+Slogans+over+time.aspx).

Some of Mr. Jaskiewicz's articles on e-commerce contract terms and conditions that have appeared in this newsletter are listed below.

1. 'The Myth of Certainty: The End of the e-Contract Is Not the End of Legal Fees. Here Are Some Things You and Your Clients Can Do About That,' in the April edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/25_12/news/151909-1.html.
2. 'Web Site Terms and Conditions: Adhesion Contracts or 'Offers You Cannot Refuse'? Is This Approach Best for e-Commerce Firms?' in the November 2008 edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/25_7/news/151226-1.html.
3. 'What Your Terms and Conditions Tell Your Customers (And Do You Mean It?),' in the October 2008 edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/25_6/news/151144-1.html.
4. 'I Signed WHAT?! The Brutish World of e-Commerce Terms and Conditions, or, Why Goliath Sometimes Loses,' in the July 2008 edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/25_3/news/150654-1.html.
5. 'e-Commerce Contracts: Boilerplate or Common Sense? Don't Get Lost Seeking 'Certainty” in the September 2006 edition of
   e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/23_5/news/147261-1.html.