And What about the Service Provider? Models of Protection of P2P Service Providers

And what about the service provider?

Models for protection of P2P-service providers in the platform economy

Dr Wouter Verheyen

Associate professor Commercial law Erasmus School of Law
PhD coordinator Erasmus Graduate School of Law
Lecturer KULeuven/ Erasmus UC Brusssels

ABSTRACT

While the sharing economy model presumes contracting between peers and thus between parties with equal bargaining strength, in the platform economy contract terms are often imposed on the P2P-service provider by the platforms. Taking into account the freedom of contract, there seems to be a significant freedom to impose unbalanced terms. This is among others potentially harmful for the P2P-service provider when it comes to the liability exposure both to the platform as to the customers. Such liability exposure is not only detrimental to the P2P-service provider, but could also deprive customers of a compensation of the losses incurred. If such compensation ultimately lies with the P2P-service provider, his willingness to compensate might be much more limited than in case he can recover such compensation from the platform. Moreover in case of a great liability exposure, the access to the insurance market for the P2P-service provider might be costly and thus give an adverse incentive to P2P-service providers to take up insurance. In case of great liabilities, resulting in the P2P-service provider`s insolvency, the consumer could thus stay behind without compensation of the damage incurred. 

In other fields of law, the 19th and 20th century legislators were confronted with similar excesses of freedom of contract.  This has led to a number of legislative mechanisms to protect weaker contract parties. While labor law and consumer law provide two examples hereof, also in specific areas of commercial law such protective legislation exists. This is for example the case in transport law, where mandatory international conventions exist for every mode of transportation. In a more general way, in many countries unfair contract terms legislation also applies to SME-enterprises and thus provide for a certain level of protection for SME`s. 

In this paper we investigate to what extent the existing protection mechanisms can preclude unbalanced contracts between platforms and P2P-service providers. The focus lies here with the sector of P2P mobility (both of passengers and cargo), where we 1) assess the applicability of the aforementioned legislation 2)investigate the compliance with such legislation and, in case of non-applicability 3) evaluate the gap between the liability exposure under these standard terms and that under the aforementioned protective regimes. To the extent the current mechanisms are incapable of providing sufficient safeguards, the strengths and weaknesses of three existing types of protection are being investigated as a model for platform-contract law. These mechanisms are: 1) mandatory (sectoral) collective bargaining agreements (similar to labor law); 2) mandatory (sectoral) legislation (similar to carriage conventions); 3) an obligation for the platform to provide third party insurance for the benefit of the service provider. Here, regards is given to both the specific context of the P2P-industry as to their merits and shortcomings as evidenced by their functioning in the current legal system. In addition to this, a model for bottom up contract drafting for cooperative platforms will be presented.