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Home > Privacy and Business > Privacy Law Governing the Private Sector > Contracts


The law of contracts is one of the most important ways that privacy is protected in the commercial context.

For many sensitive transactions, some kind of privacy is often an implied contract term. This is the case when it is well understood in that business that information will be kept private.

Other contracts may be formed with explicit terms that protect or do not protect privacy. The parties to the contract are free to decide the privacy levels that are suitable for themselves. Businesses that post privacy policies on their websites or in documents they issue are making promises that become part of the contracts they enter into with consumers.

Thanks to the law of contracts, consumers have many choices. They may refuse to deal with businesses that do not have satisfactory privacy policies. They may attempt to bargain individually with businesses over the privacy of information. Or they may be perfectly indifferent, in which case the terms put forward by the business, or generally understood terms will govern. All these options are possibilities under contract law.

Contract law is very flexible and responsive to the privacy needs of society generally, and to the needs of individuals. It allows each individual consumer to seek out the level of privacy that he or she desires. Rather than trying to dictate the privacy terms in contracts, governments should be limited to enforcing the contract terms that consumers choose. This allows consumers to protect their information if they want, and reap the benefits of sharing their information if they want.

Links: Puts Consumers in Control by Jessica Melugin, Competitive Enterprise Institute (September 25, 2000)

Privacy Precepts Learned the Hard Way by Jessica Melugin, Competitive Enterprise Institute (August 23, 2000)

Complaint in Aquacool_2000 v. Yahoo! (sounding largely in contract) (May 2000)

Opinion and Order in Jessup-Morgan v. AOL, No. 98-70676 (E.D. Mich; July 23, 1998) (dismissing contract privacy claims in light of plaintiff's prior breach)

Comments? (Subject: Contracts)

[updated 04/18/02]

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