Bits & Bytes: What does sharing economy mean for the contract of the future?

Last month, 100 Toronto taxi drivers gathered in front of city hall to protest Uber and what they say are its unfair practices.

Uber, of course, operates a service in more than 200 cities that connects riders to drivers through a mobile application. Drivers on the Uber platform provide a taxi-like service without paying city fees for licences to operate the service. In essence, Uber users operate outside of the regulatory framework that taxi drivers and their brokers must adhere to. By doing this, Uber users are able to provide the same service as licensed taxis but at a lower cost.

Municipalities regulate taxi drivers and brokerages for a reason: to protect the public. Without routine checkups, background checks, and other safeguard measures, it would become much more dangerous for us to get into a taxi with a complete stranger. And yet not only are people willing to get into cars with strangers but they’re trusting them with their homes (through Airbnb), pets (through DogVacay), food (through Feastly) as part of the so-called sharing economy.

Why are strangers trusting others with their cars, homes or dogs?

If you think about it, we’ve actually been doing so for years by getting into cars with drivers we don’t know (taxis), eating food at someone else’s kitchen establishment (restaurants) or staying in rooms owned and operated by others (hotels). The major difference is that, traditionally, a series of laws, branding, regulations, and associations underpin all of these services to ensure the public can trust them.

These online marketplaces allow for reviews of both the businesses and their customers. What businesses like Uber exemplify is the fact that people will trust others based on factors such as online reviews as opposed to what we lawyers consider important such as laws, regulations, a traditional contract or terms of service. A person’s online reputation lets consumers know what they can expect when they interact with another stranger, whether it be through Uber or Airbnb. These online marketplaces become a place of public discourse to air and deal with grievances as there’s no Internet court to govern these web site interactions. The basic jurisdictional and structural restrictions inherent in interacting with online services and the reviews associated with them have created this new way of resolving disputes and establishing credibility and trust. If we think about it, isn’t a measure of trust what a contract is meant to provide? It’s maybe interesting for lawyers to think about what this means for the traditional contract and regulations and what new opportunities it may present to us.

Monica Goyal is a lawyer and technology entrepreneur. She’s the founder of My Legal Briefcase and Simply Small Claims. You can follow her on twitter at @monicangoyal.

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