Contracts: always read before signing!

To avoid unpleasant surprises afterwards and to take advantage of the benefits to which we are entitled, it is strongly advised to read contracts carefully before signing them. So why don’t we do it, or so rarely? myLIFE explains why we all have an ambiguous relationship with contracts and why it is essential to read at least the most important clauses.*

Every day, millions of internet users click on “I accept” or “I have read and accept the conditions” without having read a single line of the documents they validate. All these terms and conditions, privacy policies, and other digital contracts are far from trivial. We sometimes give up our personal data, waive certain rights and expose ourselves to clauses we know nothing about. Certainly, this phenomenon existed with paper contracts, but it has intensified in the digital age and with the famous GDPR, which requires companies to obtain consumers’ consent before using their personal data.

Would you give up your first child?

Do you always read contracts before signing? Most people answer yes if asked, even though the overwhelming majority do not. This is what researchers Jonathan Obar and Anne Oeldorf-Hirsch call the “biggest lie on the Internet“ phenomenon. In reality, we are so used to accepting contracts, terms and conditions, or the use of our data, that we often approve them without reading, while claiming otherwise. But acting this way carries risks.

Do you always read contracts before signing? Most people answer yes if asked, even though the overwhelming majority do not.

Nothing illustrates this phenomenon better than the experiment conducted by these researchers around a fake social network they called “NameDrop.” Hundreds of students signed up after clicking “I accept” to confirm they had read and accepted the terms of use. However, these terms included a clause stating that by signing up, the new member was giving their future first-born child to NameDrop. Obviously, this deliberately absurd clause was solely intended to prove that the validation of the “I have read and accept” statement is often a mere formality for internet users who do not take the time to read or understand such documents. In the specific case of the NameDrop experiment, 98% of the students accepted the terms without even realizing they were “giving away their first child.”

Another experiment shows that by not reading a contract to the end, one also risks missing out on benefits or rights included in the contract. This time, it was a travel insurance company that conducted the test in 2019. They hid a promise of a $10,000 donation inside a small print clause in their insurance policy. It took 73 clients subscribing to the policy before one of them finally read the hidden clause and claimed the promised amount. Admit it, it makes you think! So let’s drop the mask and be honest: very few of us read all the contracts we sign. And the figures are there to prove it. A 2010 study revealed that only 8% of participants read bank contracts before opening an account, 19% read car rental contracts, and 25% read dry cleaning contracts. Another study indicated that more than 80% of internet users admit to not reading or barely reading “click-through agreements,” and only 0.1% read the license associated with software before purchasing it. In a survey conducted among 6,045 European Union citizens in 2016, 9% of respondents admitted regretting their online purchase for not having read the general terms and conditions of sale.

If we are all aware of the importance of reading the contracts that bind us, why don’t we do it? Because it’s too much!

The weight of mental load

If we are all aware of the importance of reading the contracts that bind us, why don’t we do it? Because it’s too much! With the proliferation of digital services, we are literally overwhelmed by the amount of text to read. As human beings, our cognitive capacity is sometimes exceeded by the complexity and volume of the texts. Indeed, the general terms of use (GTU) are often legal “bricks.” Based on an average reading speed of 240 words per minute, it would take about 36 minutes to read those of Spotify, 31 minutes for TikTok, and more than an hour for Microsoft. It takes less time to read Macbeth than, for example, the terms of use of Apple Music.

With the GDPR and the data protection law, every site asks for your permission before offering you services, or even just to let you browse its pages. This phenomenon occurring throughout the day becomes tiresome, even exhausting. To spare ourselves this cognitive overload, we tend to give our consent blindly. But amidst all the innocuous contracts we accept throughout the day, we risk overlooking a contract deserving our full attention.

On the other hand, contracts are often written in inaccessible legal jargon. A 2013 study measured the readability of energy suppliers’ contracts and concluded that they far exceeded the comprehension level of an average adult reader. The accumulation of technical terms and complex sentences, without a clear summary, discourages most users. As surprising as it may seem, the OECD even concluded that it is rather “reasonable” for consumers to forgo this reading, as it requires an investment of time and effort. Indeed, reading all the privacy policies we encounter would take about 200 hours per person per year according to some estimates, representing an annual cost of 781 billion dollars in “lost time.”

Good reasons to read your contracts

Even if there are arguments justifying “no time to read,” there is a lot to lose by not reading at least the most important clauses of the contracts you sign and that bind you! Clauses such as:

• • Waiver of legal action. Many terms and conditions include mandatory arbitration clauses, prohibiting legal action against the company in court.
  • Hidden fees and limited warranties. Despite the rules in force, there are often inconspicuous references to penalties, limited warranties and strict return conditions.
  • Collection and use of personal data. Most platforms reserve the right to collect, analyze, and sometimes resell your personal data (location, photos, browsing history, etc.) to third parties. By giving consent without reading, the user is unaware of what they are exposed to, such as massive advertising profiling and increased exposure to data breaches or hacking.
  • Benefits you are not aware of. Not reading a contract also means missing out on certain benefits and guarantees it may offer. For example, your credit cards offer a host of advantages that you never enjoy unless you take advantage of them.

Good news! With the help of digital tools and artificial intelligence, it is entirely possible to identify and understand the important clauses of a contract more quickly.

Ten practical tips for better reading and understanding your contracts

Good news! With the help of digital tools and artificial intelligence, it is entirely possible to identify and understand the important clauses of a contract more quickly. This can reduce the cognitive effort required to know what you are committing to before signing. Here’s how to minimize risks and identify benefits before signing:

• • Identify key sections. Quickly identify parts of the contract that address critical topics (termination terms, additional fees, arbitration clauses, personal data management).
  • Use the search function. Search for keywords such as “fees,” “termination,” “warranty,” “penalty,” or “data.” This helps quickly spot critical passages related to your rights.
  • Read summaries or key points. Today, many contracts offer a summary of key points or a section dedicated to “essential information.”
  • Pay attention to unusual or highlighted clauses. Sections in uppercase or highlighted often signal important clauses. Take the time to examine them!
  • Compare with similar contracts. If you have already accepted contracts in the same field (e.g., online service, insurance), comparing the main clauses can help you identify differences to clarify.
  • Browse the provider’s FAQs or guides. Companies that value transparency often offer explanations or guides to decipher complex clauses.
  • Consult reviews and user feedback. Forums, blogs, and user reviews can reveal points of concern on certain contracts or alert you to problematic clauses.
  • Note your questions. When you come across a clause you do not understand or that seems too restrictive, note it to clarify later with customer service or a legal advisor.
  • Use digital reading aid tools. Some online tools and applications highlight risky passages and help you quickly identify essential points.
  • Check for updates. When renewing a subscription or service, ensure the contract has not been modified. Even minor changes can have significant consequences.

Online contracts are ubiquitous in the digital age. Without the slightest vigilance, one risks giving up important rights, exposing personal data, or losing any avenue of recourse. Admittedly, the length and complexity of the terms and conditions partly explain why so many people ignore them. However, spending a few minutes on a selective reading can avoid many troubles and identify all the benefits included in the contract. Make the decision to no longer be among those who, out of habit, click “I have read and accept” without knowing what they are committing to. Use the new tools at your disposal and take the time to identify and understand the essential clauses before signing.

* Content translated from French by the BIL GPT AI tool