Joshua Fairfield (Indiana University School of Law-Bloomington) has posted Anti-Social Contracts: The Contractual Governance of Online Communities on SSRN. Here is the abstract:
Online communities, and the value they create by collaborative effort, are the heart of the new social online revolution, called Web 2.0. But all is not well. The contracts that govern online communities fail to secure the legal relationships necessary for those communities to thrive. This is because contracts are not good at efficiently creating the cheap, reciprocal, default rules that communities need. This article therefore argues that contracts are critical to ordering private preference and tweaking default legal regimes; but that contracts cannot replace or eliminate property law, tort law, criminal law, and constitutional law without serious efficiency losses. Thus, the article deals with the problems of using contracts – alone – to govern online communities, and articulates the need to develop other areas of the common law online (most notably, property law) in order for communities to thrive.
The question of contract-governed online communities is increasingly important, because community-governing contracts (called End User License Agreements, Codes of Conduct, Terms of Service, or Terms of Use) have become the tool of choice for companies seeking to govern multi-million member online communities, from MySpace to YouTube to World of Warcraft. Millions of people worldwide live significant parts of their lives in communities governed by these contracts. The law of contract is the only law consistently employed to govern these communities. But contract law cannot, by itself, secure the default legal relationships necessary to support thriving communities because contracts cannot bind non-signatories without recourse to law beyond the contract itself.
An important question should be raised at the outset: If online communities do not like the contracts that govern them, why not leave and get better ones? The answer lies above: contract law cannot secure default, background, property, tort, or other necessary legal relationships without recourse to those areas of law. Exchanging one contract for another will not fix the problem. No contract can do the whole job of property law, tort law, criminal law, or constitutional law by itself. And private property, the personal and dignitary protections afforded by torts and the criminal law, and the social rights secured by constitutional law (freedom of speech most of all) are necessary to the functioning of communities.
Thus, this article is not anti-contract, but pro-market. Markets require freedom of contract. But markets also require private property, freedom from force and fraud, reliable enforcement against criminal acts, and some basic constitutional protections, including the ability to speak and convey necessary information to the market. Thus, courts must look to other areas of the law – beyond contract – in order for online communities to thrive. Articulating the need for this development of the common law is the project of this piece.