Book contents
- Frontmatter
- Contents
- Preface
- List of Contributors
- PART ONE WHY IS BOILERPLATE ONE-SIDED?
- PART TWO SHOULD BOILERPLATE BE REGULATED?
- 6 Online Boilerplate: Would Mandatory Web Site Disclosure of e-Standard Terms Backfire?
- 7 Preapproved Boilerplate
- 8 “Contracting” for Credit
- 9 The Role of Nonprofits in the Production of Boilerplate
- 10 The Boilerplate Puzzle
- PART THREE INTERPRETATION OF BOILERPLATE
- PART FOUR COMMENTARY
- Notes
- Index
8 - “Contracting” for Credit
Published online by Cambridge University Press: 02 December 2009
- Frontmatter
- Contents
- Preface
- List of Contributors
- PART ONE WHY IS BOILERPLATE ONE-SIDED?
- PART TWO SHOULD BOILERPLATE BE REGULATED?
- 6 Online Boilerplate: Would Mandatory Web Site Disclosure of e-Standard Terms Backfire?
- 7 Preapproved Boilerplate
- 8 “Contracting” for Credit
- 9 The Role of Nonprofits in the Production of Boilerplate
- 10 The Boilerplate Puzzle
- PART THREE INTERPRETATION OF BOILERPLATE
- PART FOUR COMMENTARY
- Notes
- Index
Summary
Editor's Note:In this chapter, Ronald J. Mann argues that boilerplate terms in credit card agreements enable issuers to modify meaningful elements of the transaction retroactively, to the detriment of consumers. These effects, he argues, are not priced upfront and are not suppressed by market efficiency pressures. Mann explores the merits of two types of regulatory solutions. One solution involves a prohibition against some of the most problematic clauses. Another solution is a regulated standard mandatory contract, drafted either by regulators or by the leading credit card networks.
In 2005, U.S. consumers used credit cards in about 100 purchasing transactions per capita, with an average value of about $70. Many do not pay the full balance when it is due and prefer to pay interest on their debt. These debtors owe, altogether, nearly $500 billion dollars. Individual credit card transactions are small and routine but collectively have led to a rise in consumer borrowing and an increase in bankruptcy filing rates. The crux of the borrowing problem is the relationship between the cardholder and the issuer, which the law relegates almost entirely to the private contractual relationships between those groups. Yet the existing literature has only begun to assess the unique contracting problems that those transactions present.
Two features of the context make credit card contracting more problematic than other consumer credit transactions.
- Type
- Chapter
- Information
- BoilerplateThe Foundation of Market Contracts, pp. 106 - 119Publisher: Cambridge University PressPrint publication year: 2007
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