Judge Posner Admits He Didn’t Read Boilerplate for Home Equity Loan – News – ABA Journal

Judge Richard Posner of the Chicago-based 7th U.S. Circuit Court of Appeals does a lot of reading—but he apparently hates boilerplate as much as the next person.

Appearing at a recent American Constitution Society conference, Posner recalled his encounter with hundreds of pages of documentation for his home equity loan, Above the Law reports. Posner got a laugh when he said he didn’t read it; he just signed it.

The most interesting issue in this article is not it’s focal one, i.e. that a judge ignored the fine print when getting a loan as a consumer.

Most interesting, to me, is that this is a striking example of REAL consumer behavior (e.g. people generally don’t read the fine print of important documents before signing them), as compared to legal fictions (e.g. people are presumed to have read, understood and willingly signed the contract at issue). To me, the scariest aspect of this scenario is not that a judge didn’t read the fine print. Far scarier is that our legal and political systems are based on the legal fictions, rather than the realities.

The first reality: most people don’t understand most of the complex documents they sign. Another reality: many companies take advantage of people who don’t read or understand their contracts. And more companies will do this, the way the trend is headed. That is, if existing economic and legal incentives remain intact, and continue to reward companies who lay traps via fine print.

Scariest of all, note the central element that allows all such contractual transactions to unfold: trust. When people sign contracts they don’t read and/or understand, they do so with the belief that the company that drafted the lengthy fine print can be trusted. That is, our internal monologue that says, “I don’t know what all that stuff in this contract means, but I assume the other party does not intend to take advantage of me.” Judge Posner’s scenario exemplifies the huge role that trust plays in the consumer’s mind– even a very sophisticated consumer who is exceptionally well-versed in law and economics. If all THAT consumer has to rely on is trust– given the lack of law and/or enforcement with teeth for most such scenarios nowadays– yikes.


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