Thursday, May 7, 2009 - FEEBAYS new user agreement - Part 2K. The Principles of Contract

1. Chapter Ten - Reinventing Contract

2. A standardized contract is nothing more than a commodity. A commodity is a product commonly available, easily produced and substituted, with little and declining pricing power. Some standardized contracts are products as such. For example, end user license agreements and insurance contracts lack physical attributes; they are the product. Credit agreements closely approximate the contract as pure commodity. Where hard goods or services are exchanged in the market, the standard contract accompanying them constitutes part of the product. Since standardized terms directly influence the price of products, they are indistinguishable from hard components of the product, though intangible. In the ordinary market, the commodity of contract is bought and sold like any product. The reinvented law of contract must stand on this premise.
3. The consequences that follow are: (1) the deletion of formation requirements based on offer, acceptance and consideration, (2) the elimination of consent as the basis for making contracts effective, (3) the collapse of unnecessary legal categories, (4) using an image of a buyer lying somewhere between the polarities of risk aversion and risk taking, (5) saving useful remnants of existing law, and (6) the creation of content control provisions for select terms deemed necessary for specific regulation. These are normative premises insusceptible of truth verification. But, they do not float in thin air. They rest upon inferences drawn from the history, empirical data, and legal development related to standardized transactions. The criticism that law, reinvented or otherwise, will not stop the production of "unfair" standardized terms does not constitute a fault in the theory. Law can never prevent misconduct, but merely impose sanctions for breaking it.

   Formation requirements

4. The entire formation model of contract law must be thrown out for standardized transactions. Formal requirements of offer and acceptance do not correspond to the reality of how the commodity of contract is transferred in the market. These formalities, often rigid and elaborate constructs, are irrelevant to the existence of standardized contracts. The law no more gives contract, as properly understood, its existence any more than its gives a container of automobiles its existence. If there is an exchange of product against payment, the buyer gets the contract, whether the commodity is the contract or whether the commodity contains the contract as a component part. The buyer's understanding of the "terms" of the contract also is irrelevant to the existence of the contract. Buyers do not understand the "inner workings" or "chemical composition" of most commodities they buy. Yet, the legal question of whether or not a sale of a computer or bottle of wine has taken place, and is enforceable, does not turn on whether the buyer understood the role of circuits in the personal computer or the process of fermentation in the production of wine. It follows therefore that standard form contracts come into existence and are effective upon the exchange of money (cash or credit) for products.
5. In place of formal requirements, one simple rule stands: a standard form contract becomes effective when the sale occurs and the seller either transfers the contract to the buyer or makes the contract accessible to the buyer. The definition is not narrow because it refers to "sale." Following the premise of collapsing categories, sale covers any disposition of a product, as explained later. Irrelevant is the timing of the delivery of the contract and its content, whether that content is a limitation of warranty or license terms. Commodities are shipped in parts, and the institution of contract historically has covered different species of contracts. If buyers do not read standardized terms, and if they did, nevertheless would not understand them, then it makes no sense to predicate the effectiveness of contracts on the ground that the terms were available to the consumer prior to purchase.[302] Making contracts effective upon the transfer of the product thus fits market behavior and creates symmetry between that market and the law. If the seller does not include contract terms with the product, then the background law supplies them. If the seller integrates contract terms into the product, the contract is effective. Whether the contract is enforceable raises a separate question, governed by content control provisions.

   Consent as the basis for enforcing standardized terms

6. No idea is more insipid than the one of consent in the context of standardized terms. From the 1902 decision in Fivey to the 2002 decision in I.lan, there is not one iota of consent on the buyer's part to the terms in the contract. Mr. Fivey signed the document, and the company -- I.lan -- clicked the mouse pointer over the "I agree" button. But the bottom line is that they did not consent to any terms. Absent in each case was thoughtful and deliberate decision after weighing costs and benefits. In other words, the very core of consent was missing. The parties' consent to and knowledge of standardized terms is irrelevant to the existence and effectiveness of standard form contracts. No further comment is needed.

   Unnecessary legal categories

7. The law of contract resembles "Art Nouveau." However, while ornate design is appropriate to architecture, it is inappropriate to a field that loosely may be called a social science. Reinventing contract for standardized terms requires a departure from unnecessary complexity. If Newton explained the law of motion governing large bodies in three laws, and Einstein equated matter with energy in a single formula, it is not beyond the reach of legal caretakers to develop law for standardized contracts based upon minimum necessary principles. The law has created so many classifications that it would be impossible to address each one. A few examples suffice.
8. Contract law now distinguishes between consumers and professionals with respect to standardized terms. The distinction is unjustified and unnecessary. The law should treat consumer and commercial standardized agreements under the same set of rules when the underlying dynamic of the transaction is identical: the contract is the function of exchange and not the product of bargain. The empirical data and the case law have shown that the firm behaves like the consumer when it engages in standardized transactions with other firms. A commercial party or legal entity buying products on the open market does not exercise any more bargaining power with respect to secondary contract terms than does a consumer. In other words, the consumer and commercial transactions are functionally equivalent for determining effective contract terms. So long as parties do business with sellers in open markets based on standardized terms, then logic requires their identical treatment.
9. The variety of legal terms to denote nuances, arguably important in other legal departments, have no place in standardized transactions as to the effectiveness of contracts. A logical starting point is defining terms used in the market that describe the dynamics of the exchange: "buyer," "seller," "product," "open market" and "standard form contract." Let us start with the term "product," used widely in the market but not found in the dogmatic legal texts. For example, Article 2 of the UCC applies to goods, but not to services, information, or extensions of credit. The CISG is equally myopic applying only to goods, with the exception of assembly provided the service component is not the preponderate part of the exchange. In standardized transactions, these distinctions are inapposite. The object of exchange is not germane to the question of the validity of any standardized term.[303] The term "product" covering goods, services, licenses and credit is the solution. The rationale for replacing the myriad terms for identifying the object of exchange with the single term "product" recognizes that the issue of a contract's enforceability transcends differences in what is exchanged on the market and justifies the treatment of an exchange based on standardized terms.
10. Equally central to simplification is defining broadly the terms "buyer," "open market" and "sale." For reasons already noted, the term "buyer" should apply to consumers, merchants and legal entities. Likewise, the term "seller" covers any person, regularly engaged in the business of selling products that sets or adopts the record of uniform legal terms governing the relationship between itself and the buyer, that is, the standard form contract. Normally, the manufacturer is the party that makes the uniform record of legal terms and that enters into the contract relationship with the buyer, but the definition includes other parties in the chain of distribution if these parties adopt the standardized terms.[304]
11. Equally unnecessary are distinctions now made mainly for tax, priority and copyright reasons among the terms sale, lease, security interest and license. To reduce divisions further, the term "sale" should cover sale, lease, license or other dispositions of a product in an open market, since the inventiveness of the firm and its counsel cannot be underestimated. The broad definition of "sale" establishes that the underlying dynamic of the exchange, not the "form" of the transaction, triggers application of the rules governing standardized terms.[305] Lastly, a new term must be introduced to the vocabulary of the dogma: open market. The term "open market" means the public sale of a product to a large population of persons having the money to buy it. An open market may consist of a "class of persons" because some sellers do not offer their products to every potential buyer. For example, car lease companies cannot enter into contracts with anyone; by law, the buyer must have a license and have attained a certain age. Similarly, wholesalers offer to sell only to business entities. Limitations of this sort do not change the open market nature of the sale. Additionally, the market itself need not be a physical place like a retail store. It can be a mail order system, an Internet market or the like.
12. This foray into the "Art Nouveau" of contract law is merely a beginning. The analysis is not intended to be comprehensive but illustrative of the problem of multiplying categories in response to special interests, demanding an exception to a general rule, or to the work of legal scriveners, solving problems discrete to their field by the invention or refinement of legal classification. The edifice of nuance is not needed to identify a standardized term and to determine its effectiveness.

    Image of buyer and firm

13. Implied in every law are policy assumptions. The reinvented law of standardized contracts is no exception. The implied assumptions are largely dependent upon the image of the buyer and that of the firm since those assumptions determine the level of protection the law ought to afford to the buyer and the degree of autonomy the law ought to provide the firm. At the outset, the image of the firm underlying standard form contract law is at odds with economics. In monopolistic competition, neither seller's nor buyer's conduct affects price. The demand curve is horizontal.[306] In pure monopoly, the dominant firm, at least in some industries, may be unable to fix the price because the incumbent must guard against new entrants. The price therefore is indirectly determined by competition. In addition, firms' ability to maximize returns is limited by marginal revenue, marginal cost and the law of diminishing returns. The combined effect of these factors, coupled with the financial risks involved in establishing a firm and the high failure rate, produces an image of microeconomics that distinctly differs from the underlying assumption of standard form contract law: universal firm predatory behavior.[307] Moreover, any firm that wants to conduct more than one-off sales must develop the trust of customers by building a good reputation. The firm's behavior is shaped partially by the fact that customers who are ripped off will not make repeat purchases. By contrast, buyers generally are depicted as witless victims.
14. The level of legal protection for buyers fluctuates between two extremes: the insured transaction and "caveat emptor." The insurance proposal has two defects. First, it presumes a debatable image of buyers as persons with "eyes wide shut." Under this view, the buyer is ignorant of the cost of contract terms by virtue of disinterest, limited knowledge or poverty. The insurance proposal would require sellers to charge higher prices and eliminate risk/price terms from their contracts or to absorb the cost of the risk and reduce their profits. The question never asked is what about exclusions? May firms use standardized terms in sales contracts to set the equivalent of exclusions in insurance policy agreements? This alternative ought to have, but has not, provoked study due to its effects upon behavior and the market. The exact effect of mandating insurance is unknown on the market at large. The effect depends, to an extent, on the elasticity of demand for the product. Therefore, it is likely to have an uneven economic impact upon firms and buyers.
15. The insurance proposal also fails to distinguish among the range of terms on the standardized contract spectrum. Some terms clearly are in the visible range such as price, quantity and identity of the product. Although buyers neither negotiate nor bargain for these terms, buyers know about them. Indeed, choices of this sort constitute the principal activity of purchasers in the market place. There is no reason to disturb voluntary choice by subjecting it to judicial or administrative oversight.
16. In addition, from the perspective of setting legal incentives to reduce cost, the insurance scheme is counter-productive. It eliminates the moral hazard. The classic example is that of the person dining in a fine restaurant who suddenly remembers that his luxury automobile is unlocked on the street. Should the diner disturb his fine meal to get up from the table to lock his automobile? If fully insured against theft, the probable answer is, even taking the deductible into consideration: the dinner is uninterrupted. The consequences of certain decisions should visit the decision-maker alone and not the customer base. Prices for products already reflect the insurance costs of theft, fraud and returns.[308] To add additional insurance costs against price/risk terms deprives the risk-taking buyer the option to buy a product at a lower price and assume the risk that an unlikely event leading to a substantial loss will occur. In addition, buyers often create losses by conduct or bad choice, for example, failure to pay or misuse of the product, or entering into a contract exceeding ability to pay. Passing the cost of these losses to the customer base is questionable normatively and economically.
17. However, the most objectionable aspect of the insurance proposal is its portrait of the buyer: incompetent and dependent upon institutional authority. Evidence shows buyers are not as incompetent as legislation and case law often assume.[309] Buyers' tastes change and wipe out firms. This power should not be underestimated. The insurance proposal reduces incentives for buyers to exercise their decision-making powers to drive bad products, and hence terms, from the market, since products consist of terms as well as functions. The image of buyers underlying this view is descriptively inaccurate. To insulate buyers from all risk is to create a somnambulant population. There are equally valid policy reasons - the moral hazard-- for making buyers in the market alert, careful and inquisitive. Customer choice remains a powerful force in the market as demonstrated by bargaining power exercised by customers in re-negotiating purchase price options at the end of automobile leases and the demise of new products failing to stimulate demand.[310]
18. Importantly, firms have legitimate business reasons for holding down costs through allocating certain risks to buyers.[311] General economic developments demonstrate the trend of producing better products at cheaper prices. The information economy is illustrative. Electronic commerce has achieved dramatic cost reductions in distributing business products. Examples include music, films, magazines, news, books and sport.[312] Information is expensive to assemble but cheap to distribute. "The fixed cost of creating a useable product is large, the marginal cost of distributing it is tiny. This cost structure implies vast economies of scale in production."[313] Similar cost reductions for better products in other economic sectors are the result of competition and technological development. Proposals for regulating or prohibiting standardized terms acknowledge that, if adopted, sellers would increase the prices of products to spread the risk across the customer base.[314]
19. Equally objectionable, in the form of a blanket policy, is the "buyer beware" approach. It is inconsistent with the premise that standardized terms are purchased as commodities. With few exceptions, such as high price items, buyers do not examine the contract component of the product. Even if terms are examined, most buyers cannot understand all terms, as the BMW early termination clause has demonstrated. The approach also is unworkable due to the number of commodities buyers consume and the mass marketing and distribution of products. Because buyers are "price conscious," legal professionals drafting standardized contracts for firms shift risk to buyers. The result is objectionable: the practice violates the minimum baseline of fair exchange. Hence, the goal is to find an image of the buyer lying somewhere between Nietzsche's mythical risk taker and Marx's proletariat victim, or in drier terms, between risk aversion and risk taking.

    Existing law

20. The theoretical basis for controlling standardized terms follows from treating them mainly as commodities. The distinction may be drawn between primary and secondary terms. Primary terms are agreed-to terms such as the price, description, quantity and method of shipment.[315] These terms are governed under traditional contract law. Secondary terms are not agreed-to terms such as disclaimers of warranty, limitations of liability and arbitration clauses governed by special rules. Options, such as those found in insurance contracts, are primary terms even though not negotiated provided they affect the price of the product. In addition, the reinvented law of contract must co-exist and not conflict with other existing law, mainly legislation, for example, the securities market laws.
21. It logically follows that there must be a duty to inspect the product, including the contract terms, after its transfer to the buyer. The duty to inspect would be limited to apparent defects. Since the market study has demonstrated that most standardized terms are transparent, this obligation would not impose onerous conditions upon buyers. Following general practices, the discovery of a defect would entitle the buyer to rescind the transaction without penalty. Who would bear the cost of transporting the product in a distance sale is a technicality that can be dealt with in "content control" provisions. Even if the buyer did not exercise the right of return, any particular term might be invalid under a content control provision.

    Content control

22. The first step toward breaking through conventional thought about contracts is to conduct an inter-disciplinary and empirical study of standard form contracts. The empirical study would ground the debate about standardized terms squarely on firm data and identify their social and economic consequences. No one knows, or appears to care about, the cost of "unfair" terms in proportion to GDP. Similarly, no one knows, or appears to care about, the cost of prohibiting firms from using any term deviating from background law. You would think this would be the first mystery to unravel. Yet, it is not even discussed in the literature.
23. The sample of contracts and the case law show a pattern of recurring standardized terms posing "perceived" problems in the market. These recurring standardized terms are best governed by discrete "content controlling" rules specific to the problems they pose. In addition, a default rule is required for those cases falling outside the specific rules. That default principle may be centered on the concept that any secondary standardized term destroying the economic value of the transaction is invalid. This approach avoids micro-management of terms but sets limits to the producer's "freedom of contract." Hence, the second step is to examine the attributes of each problematic term to determine which contractual property of the commodity should be enforced within the overall goal of what combination of economic, political and welfare goals the "content control" provisions is intended to achieve. There is no reason to keep the standard repertoire of tools for determining the validity of standardized terms. Rather, the opportunity exists to break through the existing words: "unfair," "unconscionable," "reasonable expectations," and state what they mean, even if that requires going outside legal doctrine to get meaningful definitions.
24. Direct content control provisions are not equivalent to the list of terms found in the EU Directive on Unfair Terms in Consumer Contracts. Some terms may be prohibited simply on public policy grounds, such as terms disclaiming that a new product is fit for its ordinary use. However, other terms raise complicated issues of appropriate allocation of risks. These terms require narrow but comprehensive sets of rules to govern their use. Terms raising complex legal and economic questions deserve the depth of draftsmanship afforded contract issues dealt with in codes such as the Uniform Commercial Code. The EU method of regulation depends generally on crude one-line descriptions of suspect terms. It is oversimplified and static.
25. In the context of standard form contracts, the problems generally involve questions of insurance. The mass production of products and terms inevitably result in defects. The question for lawmakers is how to allocate the risk of loss among innocent parties to the transactions. The EU facile response is to place the cost of insurance on the producer. However, as economics tells us, whenever the producer can pass the cost of insurance onto the customer base, it will do so. Hence, each buyer in one market is the other's insurer, at a higher price per unit. Insurance generally has two major components: premiums and exclusions. The premium is the higher price; the exclusions are the limitations placed on the extent of liability. But theoretically, what is now called an "externality," is a clause of exclusion under the insurance model. There is no meaningful difference between a risk clause in a standard form contract and a clause of exclusion under the insurance model. So what is the problem with standard form contracts containing limitations of liability, or the functional equivalent of exclusions, that are contained in every insurance policy?
26. Limitations of warranty serve as an example. Based on the sample, most sellers do not disclaim all warranties. Rather, they warrant that the product is free from defects in material and workmanship for a limited period of time, generally one year or longer for hard goods and 90 days for software. Sellers also set remedies for breaches of the warranty, such as repair, replacement or refund, often at the discretion of the seller. The question is not whether the warranty is unfair, unconscionable or defeats the reasonable expectation of the buyer, but whether the warranty follows pragmatically from the nature of the business, the cost of the product, and its expected life. It also depends on allocation of risk as under an insurance contract. Specifying the limits of warranties is not objectively abusive, preserves the "moral hazard" and resembles terms in insurance policy agreements.
27. For example, assume that there is a 10% chance of product failure and that the product costs $1000. Buyers have on average an asset worth $900, that is, the value minus the risk of failure. Assume further that for an additional 5% of the purchase price, the firm agrees to insure the product against all failure, regardless of cause, and to replace the product. Buyers on average now have an asset worth $850. But, since there is only a 10% chance of failure, the question presented is why impose an additional cost of 5% across the customer base when some customers would prefer to pay less and take the chance that nothing will go wrong. These customers will be right 90% of the time. Under this scenario, risk-averse buyers feel safe; buyers on average are poorer.
28. A related question goes to the length of the warranty. The useful life of many products -- given buyer taste, distribution of products in versions and technological change -- is short. The useful life may span a few years and then plummet to zero. Who wants a 20-year-old refrigerator or Xerox copy machine? The question is presented: how is the state going to determine which warranty period falls short of what is enforceable. By analogy to insurance, are firms to offer periodic renewal notices in exchange for additional payments of premiums? These types of questions must be explored and answered to set any content control provision governing limitation of warranties.
29. Certainly firms that sell new products should not be allowed to disclaim all warranties, express or implied. Yet, that is precisely what American law, subject to modifications such as the Magnason-Moss Act, permits firms to do. This rule allows sellers to induce sales by claiming they have something of value and then to deny that claim. Consistent with the theory of contract as commodity, sellers would be prohibited from disclaiming all warranties on new products, and from disclaiming tort obligations for personal injury and death. If the United States had that rule, the judge in the Gonzalez case could have dealt with the claim in one sentence, as opposed to a belabored explanation of unconscionability spread over 10 pages. However, difficult questions arise with respect to sellers of used products termed "as is" and sellers referring purchasers to upstream warranties. For example, based on the nature of the business, the product and its cost, it may be consistent with those factors to permit disclaimers of warranties on used umbrellas but not on used commercial jets.
30. Limitation of damages is another example. The majority of contracts contained in the sample, and that addressed the issue, excluded consequential damages but did not exclude damages entirely. If, for example, film development companies were liable for the cost of exotic vacations due to errors in film development, the price of film development would increase, probably substantially. Likewise, for reasons of cost and nature of process, dry cleaners are justified in limiting their liability. Dry cleaners cannot possibly "spot test" every garment for its suitability in the dry cleaning process without increasing cost and causing delay in delivery of laundered products. The norm of 10 times the cost of the service is consistent with the business, the cost of the service and the inability to avoid damage. Consequently, the question of damages is inextricably tied to insurance and who pays for it.[316]
31. While buyers generally quietly accept the loss of uninsured negatives and clean clothes, buyers generally are noisier when it comes to who is going to pay for the loss of higher priced items. Take cars parked and stolen from commercial parking lots. The law of bailment generally applies to these cases. The owner of the car is the bailor, and the owner of the parking lot is the bailee. The parking lot has a duty to exercise care during its custody of the car. If the parking lot does not exercise care and is negligent, the parking lot is liable to the car owner for any damage due to the failure to redeliver the car. The parking lot must prove it exercised care in its custody of the car. This is the background law that would apply in the absence of contract when a person parks his car in a parking lot and the car is stolen or damaged. Because the parties may alter the "background" law through contract, standardized terms altering the background law have posed complicated questions for courts.
32. Assume a Mercedes Benz worth $75,000 is stolen when garaged in a secure and properly managed parking lot because armed men held the attendant hostage during the theft. Under the background law, the owner of the Mercedes Benz does not have a claim against the parking lot company because the latter was not negligent.[317] If he has comprehensive insurance, he will get the proceeds of the insurance policy in the amount of $75,000. But his payment comes at a price: higher premiums, and probably not only for him but others similarly situated, though completely uninvolved in the event. In other words, all insured drivers pay for the cost of the thief. If the owner is uninsured, he sustains a loss. No one else is damaged.
33. Now assume the parking lot was negligent because the attendant fell asleep during his watch. The result is the same between the insured owner of the car and the parking lot. The insurance company pays the insured in full. But the former is subrogated to the rights of the latter against the parking lot. If the parking lot is negligent, the firm or its insurer reimburses the car owner's insurance company. In addition, the uninsured owner collects as holder of a claim for loss. When the parking lot is negligent, two costs go up: private automobile insurance and the cost of parking. In a major city the demand for parking space is inelastic. When the parking lot is prudent, one cost goes up: private automobile insurance.
34. Is there any justification for permitting a firm to alter these results by standardized terms? Assume the parking lot company attempts to limit its damages for negligence by this language: the "firms' liability for loss or damage of vehicle by fire, theft or explosion is limited to $25,000 unless an additional fee is paid when the vehicle is first parked and a receipt for that higher liability is issued." The limitation is irrelevant for the comprehensively insured owner. It also is irrelevant for any uninsured or underinsured car owner when the value of the car is less than $25,000, which will cover most cars in the market. However, the uninsured or underinsured luxury car owner will feel the pain of the limitation. The question is: should the law enforce or invalidate limitations of liability of this sort for purely economic losses? [318] The limitation may be the function of the market for insurance available to the firm, or not. Should legislators or judges shift risks taken by car owners not having insurance or having inadequate insurance to the market of policyholders and customers of parking lots in the context only of property losses? The underpinnings of the background rule-origin in an era prior to the manufacture of automobiles and the development of diverse insurance products-might justify its abolition. The answer to these questions cannot be derived from study of the law alone. But these are the types of questions drafters of content control provisions must answer before putting pen to paper.
35. Assume a further variation of the hypothetical where the Mercedes Benz owner has 25 mink coats worth $75,000 in the trunk of his $75,000 car when it is stolen. Who should bear this loss? Hadley v. Baxendale instructs that the parking lot firm should not be liable unless put on notice of the special circumstances. But is this rule viable? What if the Mercedes Benz owner says to the parking lot attendant, "By the way, I have $75,000 of mink fur in the trunk." What is the attendant supposed to do in this situation? We know he cannot mark up the fee since he lacks authority. Certainly, there is no special way to handle this car as opposed to others, such as putting it in a vault. The idea of notice is fanciful. Rather, the question of who should bear the loss must turn on an analysis of allocating the cost to the usual suspects: the firm, customers of parking lots, policy holders or the person who created the condition of increased risk. Adhering to the assumption of an "eyes wide open" buyer, the right place to put this loss is on the buyer and no one else. The result would discourage enhanced risk behavior and prevent collateral damage to innocent bystanders: the firm and the respective customer bases.
36. Current law on the subject is absurd.[319] In Barrett Garages, three automobiles were stolen from an airport parking lot. The insurance company made payments to owners of the automobiles stolen from the parking lot and then sued the owner of the parking lot to recover its payments. The claim check given to each driver contained a limitation of liability clause in the amount of $250. The court of appeals held that the delivery of a claim check to the car owners did not create a contract as a matter of law. Rather, a question of fact was presented in each case as to whether the car owner gave his consent to the terms contained in the claim check. The crucial question was "whether the particular circumstances are such that a prudent man, acting reasonably, would or would not have read the exculpatory provisions in question." This result followed from the court's starting principles that, "It is essential to the existence of a contract that there be mutual consent," and that "a person is bound by the printed contractual provisions of an instrument which he accepts delivery of if, as an ordinarily prudent man, he could and should have read such provisions."
37. However, under current law, different circumstances produce different results. For example, in Allbright Phoenix Parking, Inc. v. Shabala, the driver parked his car, locked it and paid the attendant the fee.[320] The parking ticket, which the driver did not read, stated that the lot closed at 9:30 p.m. and limited the parking lot company's liability to $100 for loss by fire, burglary, or theft provided the company was negligent. It also stated "articles left in car at owner's risk." At approximately 11:15 p.m., the driver returned to the lot after it was closed. He discovered that someone had broken into the car and had stolen his valuables in the back seat. In denying relief to the driver, the court of appeals found that, because the driver took his car keys, there was "no bailment relationship" between the driver and the parking lot. Hence, the parking lot was not responsible for the loss of items in the driver's car. The court qualified its decision by stating, "We do not decide in this opinion whether a change of one or more factual circumstances would have altered our conclusions."[321] However one views the results in these cases, the method ignores the stakes and evades the roots of disorder.[322]