Wednesday, April 19, 2017

The Economics of Legalese Fine Print

Over at, Charles Goyette makes an interesting point in the wake of the passenger that was thrown off a United Airlines plane:
Nobody books a flight and pays for it and is then told by the airline that it will honor the ticket only when it deems it convenient. But that is the practical effect of the “contract of carriage” fine print.

Most of the commentary reasonably objects to the bloody treatment of the passenger, but otherwise it too often defends the airline’s right — not its judgment in doing so, but its right – to unilaterally rescind the purchase and bump its passenger.  Some explain in needless detail all the reasons that airlines overbook flights.  Those reasons are compelling for airlines, but they are a needless and irrelevant sidebar...

But the issue that goes mostly unaddressed in the many defenses of United’s contractual rights is one of casuistry: the clever use of lawyerly reasoning or the exceedingly fine print of legal language and contractual minutiae to subvert the plain meaning of the purchase of a seat on an airline, a new home, or anything else.

Nobody here is arguing against a close reading of terms and contracts in complex business deals and agreements. But must we go through the principal activities of our daily lives — shopping, traveling, and all the rest – needing to have a lawyer on speed dial or Black’s Law Dictionary in our hip pockets?  Have you read the fine print that goes with your brokerage account?  Have your assets – which you plainly think are yours – actually been pledged, repledged, hypothecated, or re-hypothecated by the brokerage house? When you clicked “Yes” in the box to download a piece of software, were you really agreeing to be Bill Gate’s towel boy?

Here’s an entry on casuistry from the Oxford English Dictionary: “Casuistry destroys by distinctions and exceptions, all morality, and effaces the essential difference between right and wrong.”

In the spirit of the Easter season I prefer the words of a higher authority who said of such casuistry that it ladens men “with burdens grievous to be borne.”

No matter what they slip into t,e fine print.
But I have always thought of all this legalese as a corporation saying:

Look, we will do this exchange with you but if there is any outlier issue we have major league, high-priced lawyers who will back us up and you are not going to win.
I believe this is how most people think of the situation and there is nothing wrong with this. If you don't like that you are being required to agree to fine print, you are free to not do the exchange.

I readily sign such agreements that have such fine print and unless a lot of money is involved I never read them, especially since I am a student of economics and know that value scale adjustments override fine print.

By this, I mean that fine print can mean one thing or many things but the key is to "adjust" the value scale of the person attempting to enforce the fine print.

Often outlier issues don't even fall nicely under the fine print.

In most cases at the start, anyone attempting to enforce fine print against you really has little concern for how you view the situation and a correct reasonable interpretation of the situation. Their concern for you on their value scale is near the bottom if it exists on their value scale at all.

What you need to do is make concern about you a high priority on their value scale.

Sometimes this is as easy as charming a person, Other times it takes more effort.

When someone is a bit of an authoritarian I find addressing them seriously with respect works by saying:
Look, I am in a jam. I know you have the power and authority to fix this.
By saying this I have placed on the mini-authoritarian's value scale the opportunity to show me his power. It really is an open sesame.

Depending on the specifics of the situation an indication that they are making a mistake that could cost them their job might work, but it can't be a weak threat. No Donald Trump type bluster here. You have to show them how their calculations of the situation are way off.

Also asking for a superior can work. A superior is more inclined to make an irritant go away, especially if it is clear you are going to stay an irritant if the matter isn't resolved. Occasionally, I have to climb high up the corporate letter to get my problem high on the corporate value scale. I do this, of course, only when something is very important to me. On minor stuff, I just take the "fine print" hit if I can't move value scales quickly.

Many years ago, I had a problem with Hilton Hotels and couldn't get anyone to budge. I was finally successful in getting Barron Hilton on the phone. At the time he was trying to get a gaming license in Atlantic City, using Wenzel logic I explained how I was going to be a major problem in his getting his license if my little problem wasn't taken care of. Resolving my problem scooted right to the top of the Hilton Hotel value scale.

Something similar happened to me with ATT, I had to get to the general counsel of ATT before the firm understood that the resolution of my problem needed to be at the top of ATT's value scale.

My proudest achievement was the time I had a problem with a major Silicon Valley company. I was getting nowhere with customer service and, as you all probably know, it is impossible to get contact information for any high-ranking official at this type firm.

So I did the next best thing, I started calling members of the board of directors of the firm until I got a very competent, high-ranking assistant to a board member that recognized that my problem should be the top priority at the Silicon Valley firm.

The problem was fixed pronto but more important, a top executive at the Silicon Valley firm called me and she gave me her personal cell phone number for any future problems.

I had reason to call her about three months later for a minor problem. It turned out she was on the on the road when I called.

Her response was:

"I am on the highway. I am going to have to pull off to the side to take this information down. I will call you right back."

Now, there's an executive who understands exactly where the resolution of my problems should go on her value scale!

I have plenty of other "adjusting value scale" stories I can tell but the point is this:

Fine print is the legal way of corporations telling you they are in charge. Employees go along with this even when the fine print doesn't cover your specific outlier. The only way you can change that is if you know how to adjust corporate employee value scales.

The more you study and think about how to adjust corporate employee value scales the better you get at it. Fine print is for the masses.

Robert Wenzel is Editor & Publisher of and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics, on LinkedIn and Facebook. The Robert Wenzel podcast is on  iphone and stitcher.


  1. This reminds me of that old song about paying the ferryman.

    It also makes me more skeptical of the often stated libertarian saying that it isn't in a business's best interest to hurt their customers. Until recently, United Airlines apparently thought it was in its best interest to assault its customers over a seating screw-up. It appears that they've changed that now, but every time we hear about some company apologizing for some customer service screw-up, it's really the same thing, just of a different scale. Maybe the libertarian saying should be that it isn't in a business's best interest to hurt their customers, unless they are positive they can get away with it.

    1. Re: geoih,

      --- It also makes me more skeptical of the often stated libertarian saying that it isn't in a business's best interest to hurt their customers. ---

      The fact that some company employees or even the CEOs act stupidly does not diminish the self-evident truth that a company's interests are not served by hurting its customers.

      If you're going to suspend reason and logic, there are plenty of sites and forums you can visit to make a show out of your "skepticism", but don't expect to get away with that here.

    2. Damn free market! State agents never assault anyone, least of all at airports!

    3. Anthropomorphizing a business or any other group of people (like "society") leads to many logical fallacies. Just like government, businesses often inadvertently employ assholes, and people who are not assholes are still fallible. Unlike government, the incentives for profit will tend to restrain those in business. Also, unlike governments, businesses that for some reason don't constrain their "assholes", have limited capacity to inflict damage on the rest of us.

    4. Is it a fact or not, that agents of this company physically assaulted one of its customers? Was this in the interest of the company? If not for all the videos of the event, do you think this company would have changed anything in its procedures for similar situations in the future?

      You can parse and debate the semantics of the specific words all you want, but the event happened and the outcome is obvious, but none of that mattered before the fact. In the end, the market operated and those affected adjusted, but that didn't happen until the damage was done.

    5. There are enormous state-imposed barriers to entry in the airline industry, so it's no surprise that quasi-monopolist airlines don't value their reputation as much as they otherwise would.

  2. Wenzel wouldn't agree with you:

  3. RW --

    Your examples remind me of the time I was having issues with trash pickup. I was getting nowhere with customer service. While looking at the company's website, I noted that email addresses were always in the form of I also noted the first names of the brothers who run their namesake company. So I sent an email to the regional customer service manager (name and email address was on the website) and copied the brothers using the format above. Now, the regional manager gets an email with the owners copied. I might have guessed the owners' emails incorrectly, but could the regional manager have known for certain. I got resolution in 30 minutes due to a value scale change.

  4. Well said, RW. I responded to Goyette's column, asking him how he would construct a society that would forbid the fine print he hates without ramping up government intrusions into private contracts, which he also professes to hate. Unfortunately, he had provided a stale email address, and my attempt to communicate bounced.

  5. Good post. A few thoughts from a lawyer:

    *The more competitive the market, the less legalese you will see insofar as it has a meaningful impact on the ordinary transaction. This is because of competition forcing out sellers who put too much risk on the buyer in ordinary circumstances.

    *Some level of legalese will likely remain, because one way that sellers can provide mass produced goods at low prices is to limit their liability on any one sale. This is why, for example, software licenses all say that the licensor is never liable beyond what you paid for the software.

    If it wasn't there, a business that loses millions due to a software glitch could then sue the licensor. If this happened to multiple businesses, then the licensor has now incurred far too much cost and either they go out of business, or the accessible mass market price of the software must be materially increased to bear the risk.

    *In large commercial deals, or meaningful consumer agreements (construction, etc), the legalese serves an important purpose of predictability for the one-off situations.