211. Standardized Agreements

 

(1) Except as stated in Subsection (3), where a party to an agreement signs or otherwise manifests assent to a writing and has reason to believe that like writings are regularly used to embody terms of agreements of the same type, he adopts the writing as an integrated agreement with respect to the terms included in the writing.

(2) Such a writing is interpreted wherever reasonable as treating alike all those similarly situated, without regard to their knowledge or understanding of the standard terms of the writing.

(3) Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement.


Comment:

a. Utility of standardization. Standardization of agreements serves many of the same functions as standardization of goods and services; both are essential to a system of mass production and distribution. Scarce and costly time and skill can be devoted to a class of transactions rather than to details of individual transactions. Legal rules which would apply in the absence of agreement can be shaped to fit the particular type of transaction, and extra copies of the form can be used for purposes such as record-keeping, coordination and supervision. Forms can be tailored to office routines, the training of personnel, and the requirements of mechanical equipment. Sales personnel and customers are freed from attention to numberless variations and can focus on meaningful choice among a limited number of significant features: transaction-type, style, quantity, price, or the like. Operations are simplified and costs reduced, to the advantage of all concerned.

b. Assent to unknown terms. A party who makes regular use of a standardized form of agreement does not ordinarily expect his customers to understand or even to read the standard terms. One of the purposes of standardization is to eliminate bargaining over details of individual transactions, and that purpose would not be served if a substantial number of customers retained counsel and reviewed the standard terms. Employees regularly using a form often have only a limited understanding of its terms and limited authority to vary them. Customers do not in fact ordinarily understand or even read the standard terms. They trust to the good faith of the party using the form and to the tacit representation that like terms are being accepted regularly by others similarly situated. But they understand that they are assenting to the terms not read or not understood, subject to such limitations as the law may impose.

c. Review of unfair terms. Standardized agreements are commonly prepared by one party. The customer assents to a few terms, typically inserted in blanks on the printed form, and gives blanket assent to the type of transaction embodied in the standard form. He is commonly not represented in the drafting, and the draftsman may be tempted to overdraw in the interest of his employer. The obvious danger of overreaching has resulted in government regulation of insurance policies, bills of lading, retail installment sales, small loans, and other particular types of contracts. Regulation sometimes includes administrative review of standard terms, or even prescription of terms. Apart from such regulation, standard terms imposed by one party are enforced. But standard terms may be superseded by separately negotiated or added terms ( 203), they are construed against the draftsman ( 206), and they are subject to the overriding obligation of good faith ( 205) and to the power of the court to refuse to enforce an unconscionable contract or term ( 208). Moreover, various contracts and terms are against public policy and unenforceable. See Chapter 8.

d. Non-contractual documents. The same document may serve both contractual and other purposes, and a party may assent to it for other purposes without understanding that it embodies contract terms. He may nevertheless be bound if he has reason to know that it is used to embody contract terms. Insurance policies, steamship tickets, bills of lading, and warehouse receipts are commonly so obviously contractual in form as to give the customer reason to know their character. But baggage checks or automobile parking lot tickets may appear to be mere identification tokens, and a party without knowledge or reason to know that the token purports to be a contract is then not bound by terms printed on the token. Documents such as invoices, instructions for use, and the like, delivered after a contract is made, may raise similar problems.