March 2006 Vol. 104 No. 5 THE REVIEW

"Contracting" for Credit

Ronald J. Mann

On a recent day, I used my credit cards in connection with a number of minor transactions. I made eight purchases, and I paid two credit card bills. I also discarded (without opening) three solicitations for new cards, balance transfer programs, or other similar offers to extend credit via a credit card. Statistics suggest that I am not atypical. U.S. consumers last year used credit cards in about 100 purchasing transactions per capita, with an average value of about $70. At the end of the year, Americans owed nearly $500 billion dollars, in the range of $1,800 for every man, woman, and child in the population. Although the individual credit card transaction is small and routine, the transactions collectively have a significant effect on the overall stability of many American families, leading to a rise in consumer borrowing and an increase in bankruptcy filing rates. 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 done little to assess the unique contracting problems that those transactions present.

That is not to say that scholars have overlooked credit cards. On the contrary, some scholars have noticed the lengthy fine-print agreements that issuers tender to their cardholders. Thus, credit cards have become a common topic in the boilerplate literature that culminates in the symposium for which this Article is prepared. The branch of that literature focused on consumer contracts explores the extent to which voluminous terms in adhesion contracts become enforceable without the type of voluntary and informed assent on which the paradigm of contract law rests. At the same time, other scholars have become increasingly concerned about the likelihood that cognitive and behavioral limitations restrict the ability of consumers to evaluate borrowing transactions effectively.

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