The only way you would ever have a free market is if the average person always fully understood both the product/service that is being sold AND any contract that goes along with it. Even that wouldn't be enough. You would then need for all people, as individuals, to be willing to boycott a company (even in the absence of a competitor) and bring it to its financial knees and to be willing to do this over even minor abuses. They must do this individually and not as the result of some organization's decision, and nearly all of them must do so. Then if a corporation even remotely looks like maybe it is screwing someone over, it gets faced with its own bankruptcy and made an example of. This will put other corporations on notice, proving to them that anything resembling bad-faith or malfeasance absolutely will not be tolerated and will be punished at all costs.
Under your idea of doing things, no corporations would exist, because they would not be able to get the working capital from prospective shareholders to accomplish anything meaningful; they'd be too worried about losing their investments to the next lawsuit-de-jour, whether justified or not.
I'm not saying corporations don't do bad things - there's a mountain of evidence to show they do. When they do, they should be held accountable. But there is such a things as going to far, over reacting or creating an environment so stifling that no innovation can take place.
Let's take a deep breath and see how this plays out, shall we?
