But a Shrinkwrapped Roy Orbison Is Still Legit

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Alex Harris makes a libertarian case against shrinkwrap contracts

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  1. I just hate shrinkwrap period. It’s a bitch to get into sometimes. This just makes it even worse….

  2. I’m not sure what Gateway was trying to get people to agree to that they didn’t know about until they got the computer (I really can’t imagine what it would be), but the issue he raises is a good one.

    Still, when you buy software, open it, and get to the terms and conditions – if you don’t agree to them you can’t very well get your money back (has anyone actually done this?)

    I enjoyed the bum-washes-your-windshield-and-asks-you-for-payment analogy, and that is how I feel sometimes (umm.. taxes?)

  3. Sounds good in theory. In practice, I don’t know anyone who reads the terms before clicking “I Agree”. And no one ever reads the terms that come with their credit card. You could make a case that that’s another example of “shrinkwrap” since you accept by using the card. But even so they send that stuff to you and you throw it out.

    If we change the law so that you have to sign every contract you agree to, all that would change is we’d have to sign a hundred other pieces of paper, that we wouldn’t read, every year. Seems to me, getting people in the habit of agreeing to documents they don’t know what’s in them is something we should leave to the politicians.

  4. Wiki has an interesting rundown on issues with shrink-wrap contracts and other contracts of adhesion here.

  5. Warren –
    I read the contract that comes with a credit card 🙂 It’s really not that long. I don’t read the revised privacy policy that I get every 3-6 months from the company holding my student loans, however.

  6. The state creates all contracts by its willingness to enforce them. There is no “natural law of contracts” because there is no natural law. (If there were a natural law, everyone would agree on what it is, and that hasn’t happened.) The state can decide which contracts, and which provisions of contracts, it will enforce. As a practical matter, we have very little control over the contracts we make with Microsoft, MasterCard, etc. We rely on competition in the marketplace to prevent companies from engaging in malicious practices. Of course, companies can be quite “aggressive” in defining the terms of a contract with their customers, and often enough they cross the line of acceptability. But there’s no way to define the line between “unfair to company” and “unfair to consumer” in advance. It’s totally pragmatic. Totally.

  7. If there were a natural law, everyone would agree on what it is, and that hasn’t happened.

    Everybody who matters has agreed on it, so get off my lawn NOW.

  8. “There is no ‘natural law of contracts’ because there is no natural law. (If there were a natural law, everyone would agree on what it is, and that hasn’t happened.)”

    If there was such a thing as libertarianism, professed libertarians would agree on what it was, and that hasn’t happened.

  9. You don’t have to be a libertarian to agree with this line of reasoning. I think the courts deviated from traditional contract law in shrinkwrap and clickwrap agreements on the basis of convenience and on a misunderstanding of the technology involved in the latter instance. How seriously can people be taking these agreements when there’s no real offer or acceptance?

    With credit card agreements, banks include provisions that allow them to change terms willy nilly. However, you generally have the right to avoid those new terms by closing the account.

  10. There is no “natural law of contracts” because there is no natural law.

    Really, Alan? You can’t think of one critically important difference between men and animals?

  11. “With credit card agreements, banks include provisions that allow them to change terms willy nilly. However, you generally have the right to avoid those new terms by closing the account.”

    For me, there is a fair amount of daylight between signing a contract that allows the other party to change it – while giving me the option to sever it if I don’t like the changes – and a contract that I didn’t ever accept, and didn’t even know about when I purchased the product.

  12. natural law is one of those truly useful social fictions, provided you don’t think about it too long.

  13. With credit card agreements, banks include provisions that allow them to change terms willy nilly. However, you generally have the right to avoid those new terms by closing the account.

    Go ahead, cancel your credit card, see what happens to your credit score when you do. But that’s not any of your bank’s concern is it?

    I read the contract that comes with a credit card 🙂 It’s really not that long. I don’t read the revised privacy policy that I get every 3-6 months from the company holding my student loans, however.

    They’re long enough. But length isn’t the problem. They are utterly unintelligible. I’ve spoke to financial lawyers that can’t parse CCCs. My understanding is that most of the complexity is mandated by law.

  14. Go ahead, cancel your credit card, see what happens to your credit score when you do.

    Huh? As long as you paid it off, there is zero repercussion for canceling it. I have a phenomenal credit rating and have canceled a bunch of cards.

  15. Huh? As long as you paid it off, there is zero repercussion for canceling it. I have a phenomenal credit rating and have canceled a bunch of cards.

    That is one of the first things I am doing as soon as I leave the country.

  16. If there were a natural law, everyone would agree on what it is, and that hasn’t happened.

    I’m not going to prove the existence of natural law here, but I would like to point out that this is not really a very good argument against its existence.

    This is like arguing that until everyone knew what the law of gravity was, it didn’t exist.

    Or that Antarctica wasn’t there until it was discovered.

    With regard to the topic at hand, I think that the relevant thing to consider in these types of consumer contracts is whether the consumer is able to decline the terms without penalty after the terms have been communicated. So I would consider Gateway’s actions fair if, upon receipt of the computer, customers who did not like the T&C could return the computer for a full refund at Gateway’s expense. OTOH, I consider the kind of shrinkwrap contracts software companies use unfair, because you are forced to engage in an action which constitutes assent to the contract before you’re allowed to see the full contract.

  17. I always read the revised contract my card companies send me. There are absolutely no repercussions for refusing the new terms. I have one line of credit I’m still paying off that I refused the amended contract. As long as I don’t use the line of credit and pay off my balance in accordance with the original contract, they can’t (and won’t) do a damn thing. Nor can they ding your credit score for it.

    As pointed out above, this is completely different from a contract I didn’t see until after I purchased the item.

  18. Ulrich Haarb?rste is a literary genius!

  19. Don’t you people watch Suzi Ort.. Org… That blond TV financial Dear Abby woman.

    Canceling your credit card can damage your FICO
    Here’s the top Google hit.

  20. Susie Oortcloud?

    I doubt that merely closing an account will hurt your credit score. Lots of inquiries can be a problem, as can numerous account closings in a short amount of time, I suppose.

  21. if you don’t agree to them you can’t very well get your money back (has anyone actually done this?)

    I have managed to do it for software I bought in a store on three separate occasions although only once was because I disagreed with the license. All took effort and at least a half-hour, escalating it up to the manager, and pure stubbornness. And, one of them was after Maryland passed MUCITA which explicitly stated that anyone who disagreed with the license was entitled to a refund. The problem is that MUCITA did not specify whether the retailer or software company is responsible.

    [Credit Card Agreements] are long enough. But length isn’t the problem.

    My major problem with them is that they turned contract law upside down. Contract law used to require that any modification to a contract required explicit action to acknowledge agreement (using the card). Now, it requires explicit action to reject the terms. You have to send a letter within 15 days. If you are on a two week vacation when they decided to jack up your interest rate to 25%, too bad.

    Another problem I have with them is that when they do send new terms and conditions, they send the entire thing without informing you of what has changed. So, you are required to reread the entire thing in mind-numbing legalese.

  22. I doubt that merely closing an account will hurt your credit score.

    It can. One of the items factored into your credit score is the amount of actual revolving debt to your total credit line. This is the reason that almost every personal finance site advises people who are paying off debt to cut up the card once it is paid off instead of closing the account.

  23. ed | October 29, 2008, 9:14am | #

    Really, Alan? You can’t think of
    one critically important difference
    between man and animals?

    Man is not afraid of vacuum cleaners.

  24. By reading this, you have agreed to pay J sub D the sum of $100,000.

    Bullshit, right?

    You broke the seal to read this, you are now contractually obligated …

    Bullshit as well.

  25. All of my postings are the property of Pro Libertate, LLC. Each time you view or load any page that includes a Pro Libertate Comment?, you agree to pay Pro Libertate, LLC the sum of US $1,000 within thirty (30) days. You agree to pay interest at the maximum rate allowed by law and to pay for any collection costs, including but not limited to attorneys’ fees.

  26. Incidentally, as professionals like R C Dean will note, the above language isn’t even close to what I’d really inflict upon you if I were serious. Besides the usual indemnities and boilerplate, I’d also use Iceland as the venue and the controlling law.

  27. Really, Alan? You can’t think of one critically important difference between men and animals?

    Pants?

  28. And since under traditional contract law “the offeror is the master of his offer,”

    “… all night long it was honor and offer”

  29. But perhaps shrinkwrap contracts will become less of a problem as more sales – and even content acquisition – occurs online.

    The last paragraph doesn’t make much sense to me. Increasing amounts of online sales and even content I would think to *increase* ‘shrink wrap’ contracts. Isn’t that what the trend has been so far? I also don’t understand the difference between switching from Itunes to Amazon because of their sales policy and switching between Gateway and Dell in the example he used. (or going to a physical store to buy the computer)

  30. Kolohe,

    The point is that when you buy things online, the retailer can make you agree to terms before you buy. Gateway tried to make you agree after you bought.

  31. The bill of sale is the only contract I need. If I buy a product, the contract is concluded, regardless of what any piece of paper inside the product says. In addition, “install-wrap” contracts are bogus as well. You’ve legally acquired the software, you shouldn’t have to assent to anything to subsequently install or use it.

    While they may pass ideological muster, anonymous click-thru contracts stink to me. There’s no way I can read through and understand the legal terms before the session cookie times out. And even if there weren’t cookies to worry about, who the hell has time to read all these EULAS while shopping online?

    I don’t have to sign a contract when I buy a toaster, the bill of sale is sufficient. Where the contract does matter, as when I buy a car, then I sit down with the seller and exchange signatures. But somehow we’re all expected to assent to contracts when we acquire software. Bullshit. Standard copyright is protection enough for most software. It won’t let me copy, redistribute or mangle the software. Why does the seller need anything more? Slap a warranty disclaimer on the box and be done with it.

  32. As I understand it, the idea is that a signed contract is acknowledgment that you understand and agree to the contract terms. I don’t believe you can sustain that assertion with a shrinkwrap or clickthru agreement. Especially one that says you are bound by changes after the fact that you are unaware of.

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