How would one go about the process of discovering the law related to a field such as consumer contracts in order to incorporate it into a “Restatement”? Presumably, a scholar would be concerned with the reasoning of courts as they apply legal principles “on the ground,” a practice that transcends recitations of doctrine classified in categories such as “holdings” or “dicta.” Instead, one would consider the court’s discussion of the potentially applicable legal rules and, given the facts before it, what the court determined was the most appropriate rule to resolve the case. This is the lesson of Holmes’s admonition in The Path of Law that one “mark of a great lawyer is that he sees the application of the broadest rules.” Holmes illustrated his view with an apocryphal story of a Vermont Justice of the Peace who rejected a complaint that the defendant had broken the plaintiff’s churn because the judge had looked through the laws and found nothing about churns. That non-churn cases could have relevance to liability for broken churns seems to have escaped the justice’s analysis.
This is the trap that critics of the draft Restatement of Consumer Contracts have set for themselves when, for example, they reject as “irrelevant” or “inapposite” the Reporters’ empirical findings that rely on analyses of consumer law not embodied in holdings, or when they suggest that the Reporters should have wholly disregarded cases that fall into discrete categories, such as “statutory” cases or those that involve “atypical” situations, as the critics characterize arbitration clauses inserted into credit cardholder agreements. To see the problem, one need look no further than the reliance of Levitin et al. on Stiles v. Home Cable Concepts, Inc., the first case they mention in their appendix of allegedly inapposite “statutory” cases. The court’s statutory discussion in that case was invoked to confirm a significant discussion based on common law to the effect that an arbitration clause was valid and conscionable, although not independently signed. The court concluded, “[f]ar from being unconscionable, the procedure to which Stiles objects is specifically sanctioned by the [statutory] law which applies to this contract.” Regardless of whether the “holding” of the case was predicated on both common law reasoning and statute, or only on the latter, one would be hard pressed to suggest that the court’s common law analysis was irrelevant or inapposite to a study of how courts have addressed the conditions under which consumers are bound by contracts.
Indeed, many of the chestnuts of Contracts courses would be “irrelevant” to our understanding of contract law if judicial discussions were rejected in favor of examining narrowly considered holdings or dicta. The textbook staple of Transatlantic Financing Corp. v. United States, for example, would tell us little about commercial impracticability under § 2-615 of the Uniform Commercial Code, as the case did not involve a sale of goods, and the D.C. Court of Appeals “held” little more that the contract therein was not rendered legally impossible. But the case is understood as an exemplar of the situation that § 2-615 addresses, given the court’s discussion of the elements of impracticability and application of those elements to the facts before it. Of course, one might contend that the holding in Transatlantic Financing should be stated more broadly to include the proposition that a contract that meets the criteria of impracticability discussed within the case is subject to excuse. That may be a fair reading of the concept of “holding”. But then a similarly broadened understanding of the “holding” in cases like Stiles is appropriate to subsume the court’s common law reasoning and place it squarely within the Reporters’ study.
My objective here, however, is not to defend a narrow or broad reading of the concept of “holding.” To the contrary, it is to suggest that the principles for which cases stand, and thus the principles that inform a body of law such as consumer contracts, must be detected through a process that cannot be limited to “holdings,” howsoever narrowly or broadly construed. If the Reporters had been charged with setting forth black letter doctrine unrelated to credit cards, or with identifying contracts cases not decided on the basis of statutes, the objectors’ points would make sense. But that is not the task of the Restatement. Instead, in supplementing the standard ALI analysis with an empirical study, the Reporters have attempted to consider the law as discerned from what courts say and do. In furtherance of that goal, the Reporters have counted as relevant those cases that discuss the law of consumer contracts as it has emerged in an era characterized by mass markets and technological innovation, and that therefore disrupts many of the bedrock principles of traditional contract law. Doing so requires attention to the manner in which courts have wrestled with novel developments in a variety of contexts, to look for consistencies and commonalities. An exercise that relied solely on counting cases based on bottom line holdings would likely miss the pertinent “churns cases” and thus do a disservice to the very project the Reporters have been asked to undertake.
Clayton P. Gillette is the Max E. Greenberg Professor of Contract Law at NYU School of Law and an Adviser to the American Law Institute’s Restatement of the Law, Consumer Contracts.
This post is part of a symposium on the Draft Restatement of the Law of Consumer Contracts. All of the posts in this symposium can be viewed here.
 Oliver W. Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 474 (1897). Cf. Frank H. Easterbrook, Cyberspace and the Law of the Horse, 1996 U. Chi. L. Forum 207.
 Levitin et al. at 456.
 994 F.Supp. 1410 (M.D. Ala. 1998).
 994 F. Supp. at 1418.
 363 F.2d 312 (D.C. Cir. 1966).