ProCD v. Zeidenberg and Cognitive Overload in Contractual Bargaining
Social Science Research Network
Sellers often find it useful to sell products without revealing the terms of the contract to buyers until after buyers have taken the products home or begun to use them. These transactions take a number of forms. A buyer might purchase a box containing software or a database from a store. The box's skin bears the name of the software and a description of its function, and perhaps a statement that other terms are inside, or perhaps not. The buyer learns the terms only after he takes the box home
... takes the box home and opens it; if he does not like the terms, he can return the product as long as he has not yet begun to use it, and sometimes not even then. A buyer might order a computer or appliance or airplane ticket over the phone. The operator tells him none of the terms other than price and a few others; again, he learns those terms when the product or ticket arrives and may (or may not) have an opportunity at that point to repudiate the transaction. The evident business reason for these "terms later" or "rolling" contracts, as they are sometimes called, is that sellers cannot communicate all the relevant information to the buyer on the outsides of boxes or in telephone conversations. Buyers do not have the time or patience to listen to or read and understand the terms. The optimal terms cannot be disclosed without causing cognitive overload. To avoid driving off buyers, sellers provide minimal information in advance of purchase. Yet when buyers learn of unfavorable arbitration clauses or other adverse terms, they complain that they never consented to those terms, and therefore should not be bound to them.