Should Written Contracts be Eliminated for Small Dollar Transactions? A Conversation with Special Guest David Hoffman, Professor and Deputy Dean, University of Pennsylvania Carey Law School

Consumer Finance Monitor

Professor Hoffman first explains his thesis that falling transaction costs has led to the proliferation of form contracts into areas where they little have social value, resulting in social harms that require a new approach. We then discuss his proposal that states deny enforcement of written contracts for small dollar transactions by adopting what he calls a “Statute Against Forms.” Under such a statute, for contracts at the lowest dollar amount (e.g. $100 or less), only oral contracts would be enforceable. In our discussion, we consider the potential benefits of this approach for industry and consumers, why this approach might be preferable to the current regime of policing contract terms using doctrines such as unfairness and unconscionability or to an approach that focuses on adhesion, and whether it would be preferable to address this issue on the federal rather than the state level. We also discuss reactions to Professor Hoffman’s proposal.

Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the conversation.