Panel 1: Share Economy and the Edges of Contract Law
The first panel of The George Washington Law Review Symposium was titled “Share Economy and the Edges of Contract Law.” The panel addressed how the new sharing economy has tested (and continues to test) the bounds of contract law. The panel approached this issue from both American and European perspectives. The Honorable Barbara Milano Keenan, Judge on the U.S. Court of Appeals for the Fourth Circuit, moderated the panel.
The first speaker was Miriam A. Cherry, Director of the William C. Wefel Center for Employment Law and Professor of Law at St. Louis University Law School. Professor Cherry spoke about labor relations and contract law, focusing on how the new share economy has tested employer-employee relations. To illustrate that the issues raised by her presentation were more than just theoretical, Professor Cherry asked the audience how many of us had used Uber or AirBnb; almost everyone in the room raised their hand. She emphasized that approximately 14 million people participate in the share economy.
Professor Cherry started with a basic point: we look to the contract when determining the rights and responsibilities of employers and employees. Many people are no doubt familiar with those long standard-form contracts with small print to which we must agree before using various web- and app-based services. These “End User License Agreements” (“EULAs”) pose many legal issues in the labor relations context, according to Professor Cherry. First, workers in the share economy are generally classified as independent contractors instead of employees, a classification that affects the kind and amount of benefits a worker can receive (including overtime pay). Second, many of these EULAs contain an arbitration clause, limiting a worker’s ability to enforce his/her rights in a court and employees’ ability bring collective action against an employer. Third, many of these EULAs limit the damages a worker can collect. Professor Cherry noted that courts have struggled to address these problems.
Due to a limited amount of time, Professor Cherry was only able to address a couple of these issues. She noted many EULAs are forms of clickwrap agreements, which require users to click an “I agree” button as a means of assenting to the terms of the agreement. Many users do not thoroughly read or even understand the terms of the agreement but still accept those terms. The question becomes, to what extent, if any, does this lack of understanding affect how a court should resolve a contract dispute between the user and the employer. Professor Cherry concluded with a thought-provoking question: to what extent can unjust enrichment or restitution theories provide a basis for recovery in labor-relations cases in the share economy.
The second speaker was Dr. Rolf H. Weber, Faculty of Law at the University of Zurich. Dr. Weber spoke about the European Union’s (“EU”) recent approach to contracts in the share economy. Right off the bat, he highlighted a fundamental issue in the EU’s response to problems: EU member states have control over contract law and thus the EU, as a unified body, may not be institutionally competent to deal with these kinds of issues. Dr. Weber addressed EU directives aimed at protecting consumers and implementing those protections in EU member states. Here, Dr. Weber highlighted another problem, that of harmonization. The consumer protection directives seek to create a uniform law across the EU and within its member states, thereby creating full harmonization. But this is a deviation from the norm, which typically gives member states some leeway in implementing EU directives. This deviation, he noted, means it is difficult for consumers in different EU member states to receive the same degree of protection.
Dr. Weber had some reservations about the EU’s competency to regulate the share economy, noting that there is currently no comprehensive regulatory framework but suggesting that the EU’s practice of regulating in the fields of copyright and data protection may help it establish a framework to do so in the future. Dr. Weber concluded with a final warning about the share economy: It blurs the lines between consumers and non-consumers. Redefining that line may create a more fragmented group and may mean that fewer people receive coverage from the consumer-protection directives.
The final speaker was Matthias E. Storme, Professor of Law at Katholieke Universiteit Leuven. Professor Storme discussed contractual privity in the share economy. He addressed two topics: the effect of other contracts on internal liability between contracting parties and the situations in which a third person may be treated as a party to contractual obligations.
In speaking about the effect of other contracts, Professor Storme highlighted the issue of liability in cases in which performance of the contract is entrusted to another. This issue, he emphasized, was especially important in the online share economy where users may sign up for a service but have third parties ultimately perform that service. Professor Storme next addressed the case of third persons as parties to a contract and the instances when a contracting party’s rights or duties may be assigned to third persons. Professor Storme noted three general scenarios where a contracting party has a direct action against a third person: when rights run with ownership, when a statutory security right is at issue, and when a statutory suretyship is created. Professor Storme concluded by noting that the share economy continues to test the bounds of our traditional understanding of contractual privity, and it will take some time for the law to adapt to the changing economy.
This summary was authored by Law Review associate Josh Hershman.
