Gateway Customer Sues to Get His PC Fixed

prostoalex writes "The Sacramento Bee tells the story of an El Dorado resident who had to go to small claims court to get his Gateway PC fixed: 'Right out of the box, he says, the computer displayed scattered graphics and wouldn't work properly. He says he called a Gateway salesman five times and sent him an e-mail to get an authorization number to send the computer back, but his phone calls and message were never returned. Then, over the course of months, Sheehan said he called Gateway technical support dozens of times.' Gateway insists that by clicking 'Accept' on a customer service EULA when the computer was first booted, Mr. Sheehan has waived his rights to sue the computer manufacturer in United States courts. The Gateway EULA states that conflicts must be resolved via private arbitrage. Sheehan, though, argues that he never saw the EULA, because of the broken graphics. As such, he's not held to that agreement." Some connections between this and a discussion about a Second Life case we had yesterday.

Yes...

[evilviper]

Some connections between this and a discussion about a Second Life case we had yesterday.

And even more connection to THIS ARTICLE from yesterday:
http://hardware.slashdot.org/article.pl?sid=07/06/ 07/2317239 [slashdot.org]

It's been done for a long time...

[iknownuttin]

"We are at a point now where every large corporation that has the ability to say 'take it or leave it' is opting out of the civil justice system," said Cliff Palefsky, a San Francisco trial lawyer and expert on arbitration agreements. "Some do it in a straightforward manner. Others do it in an underhanded manner."

The securities brokerage industry, stocks, bonds, etc.. has been doing this for decades. If you want a brokerage account, I don't care where, you have to agree to an industry arbitration. And some business magazine, I believe "Forbes", many years ago found that the arbitration panels are heavily loaded in the industries favor.

I have mixed feelings about it. On one hand it sounds like everything is weighted in favor of the company and against the consumer.

On the other hand, many times consumers cause themselves their own problems and refuse to take responsibility for them. Whether it be installing boards incorrectly themselves, or gambling on the derivatives market. I, for one, don't want to have to pay other's litigations, whether through increased product costs, or insurance costs.

As Gateway tells it in court filings, the company replaced Sheehan's computer a few months after he first complained, and he kept both machines.

Oh yeah, it sounds like, if Gateway is telling the truth, that this guy is trying to "game" the system and get a free computer.

Arbitrage? Perhaps not.

[richg74]

The Gateway EULA states that conflicts must be resolved via private arbitrage.

I suspect it states that conflicts must be resolved by arbitration. "Arbitrage" is primarily an economics term; my dictionary defines it thus:

The purchase of securities on one market for immediate resale on another market in order to profit from a price discrepancy.

Both words do ultimately come from the same Latin root, though ('arbitrari', to render a judgment).

Re:Dupe tag, anyone?

[asninn]

From http://slashdot.org/faq/tags.shtml [slashdot.org] :

Use dupe only when a Slashdot story is an actual duplicate of a previous Slashdot story, offering no new information. [...] These tags will alert us to problems immediately (but they won't show up on the top tags list).

Not sure about the rest (like "haha" etc.), though.

One sided contracts aren't enforcable

[Anonymous Coward]

A contract is unenforcable unless both parties get some (roughly equal) benefit.

"The Uniform Commercial Code which is followed in most American states has specific provisions relating to standard form contracts. Furthermore, standard form contracts will be subject to special scrutiny if they are found to be contracts of adhesion.

[edit] Contracts of adhesion

The concept of the contract of adhesion originated in French civil law, but did not enter American jurisprudence until the Harvard Law Review published an influential article by Edwin W. Patterson in 1919. It was subsequently adopted by the majority of American courts, especially after the Supreme Court of California endorsed adhesion analysis in 1962. See Steven v. Fidelity & Casualty Co., 58 Cal. 2d 862, 882 n.10 (1962) (reciting history of concept) [3].

For a contract to be treated as a contract of adhesion, it must be presented on a standard form on a 'take it or leave it' basis, and give the purchaser no ability to negotiate because of their unequal bargaining position. The special scrutiny given to contracts of adhesion can be performed in a number of ways:

        * If the term was outside of the reasonable expectations of the person who did not write the contract, and if the parties were contracting on an unequal basis, then it will not be enforceable. The reasonable expectation is assessed objectively, looking at the prominence of the term, the purpose of the term and the circumstances surrounding acceptance of the contract.
        * Section 211 of the American Law Institute's Restatement (Second) of Contracts, which has persuasive though non-binding force in courts, provides:

                Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement.

        This is a subjective test focusing on the mind of the seller and has been adopted by only a few state courts.

        * The doctrine of unconscionability which is a fact-specific doctrine arising from equitable principles. Unconscionability in standard form contracts usually arises where there is an "absence of meaningful choice on the part of one party due to one-sided contract provisions, together with terms which are so oppressive that no reasonable person would make them and no fair and honest person would accept them." (Fanning v. Fritz's Pontiac-Cadillac-Buick Inc.)

[edit] Shrink wrap contracts

Courts in the United States have faced the issue of shrink wrap contracts in two ways. One line of cases follows ProCD v. Zeidenberg which held such contracts enforceable (eg. Brower v Gateway [4]) and the other follows Klocek v. Gateway, Inc which found them unenforceable (eg. Specht v. Netscape Communications Corp. [5]). These decisions are split on the question of consent, with the former holding that only objective manifestation of consent is required while the latter require at least the possibility of subjective consent."

http://en.wikipedia.org/wiki/Standard_form_contrac t [wikipedia.org]

In Britain, the law seems more specific. http://en.wikipedia.org/wiki/Unfair_Terms_in_Consu mer_Contracts_Regulations_1999 [wikipedia.org]

Re:Bullshit

[morgan_greywolf]

IANAL, but my general understanding of a 'covenant not to sue' is that a covenant not sue that has a 1:1 relationship is likely to stand up in court, as it is a release of liability, at least as to the items enumerated in the covenant (i.e., you agree not to sue someone for product liability, but then trip on their sidewalk, you can still sue them for the sidewalk). But a covenant not sue that has a 1:many relationship is not likely to stand up.

IOW, while someone agreeing to such a EULA may be limited in their ability to sue as an individual, it does not stop them from entering into a class action suit.

However, this clause in the EULA may not be a 'covenant not to sue' and may actually just be a clause to accept binding arbitration in lieu of sueing. Such clauses can be binding in the U.S., but I believe only to a certain point when it comes to product liability.

Furthermore, as the guy in the article didn't read the EULA, there is no 'meeting of the minds,' which is a requirement for any contract to be binding in the U.S. Even if he 'agreed' to it when he clicked 'I agree', since he couldn't read what he was agreeing to, the contract is null and void.

Finally, the imposition of any limitations of liability by EULA or warranty notice vary from state to state. Some states do not allow certain limitations of liability. So your rights in this regard vary depending on where you live.

Can a EULA on a physical product even be valid?

[The Monster]

#include <ianal.h>

The elements of a contract are Offer, Acceptance, and Consideration. Once you've agreed to certain terms and money has changed hands, neither party can impose additional terms on the other. I know that argument by analogy is fraught with peril, but let's try this one on for size:

I buy a new Chevy. My signature is on the purchase contract, I've handed the salesman a check and he's given me the keys. I get in the car, turn the key, and out of the dashboard comes an End User License Agreement that says that if I have any problem with the car, the venue for the action will be Oakland County, Michigan, despite the fact that the car dealer is in Johnson County, Kansas. From my layman's understanding of KS law, such ex post facto terms are completely invalid. If something like that happened, I'd contact the AG's office so they could investigate it.

The only reason why software EULAs have any traction at all is that installing software onto a computer requires copying of copyrighted files to the hard drive. In the case of an integrated computer system, the software has already been installed. I take the position that any software advertised as part of the purchase is, well, part of the purchase. The legalities of getting that software onto the computer's hard drive have been worked out between the publisher and integrator are their affair, not mine. If the software publisher alleges that their product was illegally installed on the computer I bought, they need to go after the person who did it, not me.

The retailer has advertised a computer with certain hardware and software installed, and a price that I find agreeable. I've given them my money; they've given me the computer. It's a done deal, and neither can later come along and make any new demands on the other.

Not quite

[Anonymous Coward]

If I agree to sell my beloved Jaguar to my lifelong friend for one dollar, the court will probably agree with the deal. On the other hand, if I sell something to someone for way less than it's worth, the court may indeed have something to say.

Here's the famous case of the pregnant cow.

"Seller Walker owned breeding cows, worth between $750.00 and $1,000.00 and barren cows, worth about $80.00. Buyer Sherwood inspected an apparently barren cow, Rose 2nd of Aberlone, and decided to buy her. A price was agreed on 5.5 cents per pound but before the exchange of money and cow, Walker found Rose was pregnant and refused to part with her. The court said that if both parties thought the cow was barren (a question for the jury), the contract was voidable on grounds of mutual mistake."

"A mistake of fact, shared by both parties, which goes to the basis of the bargain, entitles either party to rescind the contract. (See, Sherwood v. Walker 33 N.W. 919 (Mich. 1887).) If both parties are mistaken and neither is at fault or both are equally to blame, mistake may prevent the formation of a contract. Unilateral mistake does not render a contract voidable except where the mistake is due to the fault of the other party or the other party knows or has reason to know there is a mistake. (Rest.2d 153)."

So, a court may find that a contract is enforcable even to the extent of a castle for a peppercorn. That is by no means guaranteed though.

Re:Can a EULA on a physical product even be valid?

[Scott Wood]

The only reason why software EULAs have any traction at all is that installing software onto a computer requires copying of copyrighted files to the hard drive. In the case of an integrated computer system, the software has already been installed. I take the position that any software advertised as part of the purchase is, well, part of the purchase. The legalities of getting that software onto the computer's hard drive have been worked out between the publisher and integrator are their affair, not mine.

Actually, in the US, it's been worked out by Congress. 17 USC 117 says that you're allowed to make incidental copies of software that you own that are necessary in order to use the software. So even the EULAs on non-preinstalled software are on pretty shaky legal ground.