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Are 'Pay Now, Terms Later' Contracts Worse for Buyers? Evidence from Software License Agreements
Florencia Marotta-Wurgler, NYU School of Law
Forthcoming, The Journal of Legal Studies, vol. 38 (June, 2009)
The full text of this version of the working paper is not currently available online.
ABSTRACT:
The rise of commerce over the Internet and telephone has led to widespread use of "pay now, terms later" or "rolling" standard form contracts, in which buyers are not able to read the standard terms until after they have purchased the product. While some scholars and judges argue that rolling contracts do not merit special attention, others, including consumer advocates, are concerned that sellers take advantage of delayed disclosure by hiding especially unfavorable terms. I find no evidence for this view. In a large sample of software license agreements, I find that software publishers that use rolling contracts for their online sales offer do not offer more one-sided terms than those who make their licenses available prior to purchase. The results suggest that to the extent there are inefficiencies associated with standard form contracts, they are not made worse by delayed disclosure.
SUGGESTED CITATION:
Florencia Marotta-Wurgler,
"Are 'Pay Now, Terms Later' Contracts Worse for Buyers? Evidence from Software License Agreements"
(July 29, 2008).
New York University School of Law.
New York University Law and Economics Working Papers.
Paper 144.
http://lsr.nellco.org/nyu/lewp/papers/144
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