What Are The Worst Contracts Ever?

The Modern Car Loan Sucks. But It's Got Company.

Ah, consumer contracts. The inflexible, often crooked backbone of our financed purchases and service subscriptions. Sure, they’re unavoidable. But do they have to be so onerous/intentionally obtuse/downright awful?

We at Fair have been clear about our disdain for auto loan contracts—dense, multi-colored stacks of legalese that can lock you into the same constantly depreciating, slowly deteriorating car for years on end. But how does the modern auto finance contract stack up to what we consider to be some of the worst financial pacts in history? Read on!

1994 Cell Phone Contract

After the first-generation “brick” cell phone ran its course as a status symbol for ‘80s yuppies, IBM dropped what’s largely considered to be the first smartphone in 1994. It retailed for $1,100—but came discounted if you agreed to sign up for a cell phone service contract.

Of course, that enticement was no accident considering how constrictive these early cell contracts were. They’d charge you for calling out of area code. They’d put caps on your minutes. And if you went over your time, you were charged exorbitant fees.

True, today’s cell contracts aren’t bonanzas of fun. But at least unlimited talk and text on our phones is no longer a pipe dream—and we can binge watch GoT from the bathroom at work.

2006 Adjustable Rate Mortgage

If you’re one of the millions of Americans who lost their home or life savings in the fallout of the 2008 Housing Crisis, you likely have Adjustable Rate Mortgages (ARMs) to blame for it. Accounting for a quarter of all home loan applications at the time, these contracts were intended to soak up interest from as many people as possible by enticing them to buy homes with little regard for whether they could actually afford one.

These contracts offered super-low upfront interest rates that would later “adjust” abruptly upward based on fluctuations in the interest rate index. And when these higher payments became unaffordable, a good chunk of American homeowners found themselves with a new address: Bankruptcy City.

Of course, that was just the beginning. Next came millions of move-ins with relatives and a massive economic downturn that fractured the economic fabric of our country for years afterward. So, yeah. ARMs: Not great.

1930s Studio Actress Contract

Judy Garland. Bette Davis. Shirley Temple. All iconic actresses of our time, all hampered by insanely oppressive studio contracts.

Although all the studios played this game—it was called the Studio System, after all—MGM was perhaps the most notorious. At one point it held 60 big-name actors under contract, unilaterally controlling almost all aspects of their personal and professional lives. Garland’s story is particularly heinous, with her contract often requiring her to work six days per week, 18 hours per day—all while ingesting a steady diet of pills to keep her singing, dancing and thin. With no power over her image or schedule, MGM told her what to do, what to say and where to go in practically all elements of her life. Things got so bad that she eventually had to check into a hospital just to learn how to eat and sleep again.

But hers wasn’t the only horror story. Temple recalled how she was sexually harassed and how underage contract stars were punished by being locked in a large box where the only place to sit was a block of ice.

Bette Davis fought the studios for fairer treatment in the ‘30s, but watched her career suffer as a result. It wasn’t until Shirley MacLaine’s lawsuit in the late ‘50s that the Studio System was effectively brought to a close.

1990s Music Contracts

Bring up a ‘90s music superstar and the chances are “bankruptcy” comes to mind. And while some might have had themselves to blame, too often the culprit was a notoriously corrupt recording contract, which left stars like TLC and Toni Braxton broke, bankrupt and creatively stifled.

Not only did some of the biggest stars of the day end up having to pay for their career expenses out-of-pocket, but their royalty payments were often massively belated—and ridiculously small. TLC, for example, earned 56 cents per album and had to split it three ways.

And don’t forget all the famous boy bands of the ‘90s, particularly N’Sync and The Backstreet Boys. Both were managed by so-called impresario Lou Pearlman, who went to jail for running a $300-million Ponzi scheme and bilked the boys big-time. Thanks to their contracts, each band only made $12,000 per year at the height of their fame between 1993 and 1997, and they were often worked to the point of exhaustion, causing some to develop substance abuse problems to cope. Both bands broke from Pearlman in 1998, and were embroiled in lawsuits and countersuits for years… until Pearlman got busted by the FBI and put in jail for his financial schemes. (Pearlman died in jail in 2016.)

Then there’s Prince, who famously performed with “Slave” scrawled across his cheek in response to his battle with Warner Bros. over the rights to his own music—and their reluctance to release what he was recording.

Revolutionary War Soldier Contract

Imagine volunteering for the British Army in the mid-1700s. Not a bad gig, you might think. The sweet red coats. The full force of the most powerful Army in the world behind you. Who’s ever going to mess with that, right?

But then the Revolutionary War breaks out—and all bets are off. Before long, you find yourself in America fighting a bunch of scrappy, nothing-to-lose Colonials pretty much non-stop for the better part of eight years. What’s worse, your daily ration was little more than canned peas or an ounce of rice, an ounce of butter, a little beef or pork and a smidge of flour or bread. Okay, you did get one-and-a-half gills of rum (whatever that is), but by that point a stiff drink is pretty much your only escape from daily drudgery and death.

Things were no better on the American side, of course, with injury, disease, capture and a potentially grisly death existing as a constant possibility. It’s estimated that 6,800 Americans died in action, with another 6,100 wounded and another 17,000 American soldiers dying from diseases like smallpox.

Food rations for the Colonial forces were similarly dismal, though soldiers did get the choice between beef, pork or salted fish to accompany their flour/bread, dried vegetables and their own gill of whiskey. They were promised a reward for serving, though—either land or money. Their salaries ranged from $6 to $20 per month, depending on their rank. But that income quickly sank as soldiers were expected to pay for their own uniforms and gear.

And the official enlistment age? Sixteen—though you could enlist with parental consent at 15 if, you know, you were super eager. The initial “volunteer” time was listed at one year, then raised to three years by 1777, and finally extended to whenever the war ended.

Which probably explains why mutiny was such a thing back then.

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