Re: Consideration in a Shrinkwrap Contract

Brad Englund wrote:

> Absurdity, as with all other things, is in the eye of the beholder. The procedure is
> inefficient, to be sure, but is mandated if UCC-2 is being applied to the transaction
> (not that UCITA does a much better job in this regard). What alternative would you
> suggest?

It depends on how you characterize the shrink-wrap license. If you characterize it as later supplied (or additional) terms, then you get the battle of the forms, in 2-207(2) which in the case of consumers tends to cut in favor of ignoring the terms.

Thus, instead of facing your perfect tender, rather, you are faced with a transaction where the terms were in essence set when you went through the line and paid for the software at the cash register. The terms would thus be what a reasonable consumer would expect, which I would submit is to be able to install the software on one system at a time and execute such.  

> Those advocating the unenforceability of shrink-wrap licenses (because it is in the
> box, and unavailable for review prior to purchase) must either believe (i) that
> consumers would be better off if all of the license fine print were plastered on the
> outside of the box; or (ii) if forced to put the license on the outside of the box,
> software companies would not do it, but would still sell the same software, for same
> price.

I do believe that consumers would be better off if the terms were clearly printed on the outside of the box. I also do not believe that the cost would go up that much, if any.

I think the reality is that the decision not to put the terms on the outside of the box has been primarily a marketing decision, and not a legal decision.

> Both positions, while not absurd, are certainly unreasonable.

Unreasonable to you, not to me.

> I would guess that when downloading software from the Internet, most consumers do not
> read the license terms before clicking the "I accept" button. Similarly, if software
> companies are required to put the license terms on the outside of the box (or CD jewel
> case), I doubt that most consumers would spend much time reading the terms before
> putting their money down. Requiring the license terms to be on the outside of the box
> provides a hollow benefit.

Regardless, I still see a big legal difference. In the one case, the terms are available before the sale, and in the other they are not. In the first case, your only real arguments are those of adhesion and unconscionability, whereas in the latter, you also have the argument that the terms found in the box are after-supplied terms, and in the case of consumers (versus the case for merchants), the battle of the forms tends to resolve in their favor (under UCC II). You also have the argument that the shrink-wrap terms are not supported by consideration - that the consideration was paid at the cash register, and that the software vendor is not really granting any real rights to the purchaser that he did not already have under section 117.

> Similarly, I doubt software companies would sell the same software, for the same
> price, if they did not have the protections provided by the license terms.

While this argument may make some theoretical economic sense, I do not think that it is accurate. Rather, I would suggest that in the most part, the cost of mass market software is more driven by supply and demand. Besides, at worst, they would factor in the additional costs incurred by the lack of protection, which I think would be minimal.

Besides, it still is not settled whether or not shrink-wrap licenses for software are enforceable under UCC II. Courts have gone both ways, and in my opinion, the better reasoned cases say no, which IMHO is the reason for the UCITA.  

> The simple fact is that for mass-market software, the license terms are largely
> irrelevant to the consumer's decision. (How many of us have bothered to read the
> license terms after we opened to box?)

But that cuts both ways.

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The preceding was not a legal opinion, and is not my employer's.
Original portions Copyright 2000 Bruce E. Hayden,all rights reserved
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Bruce E. Hayden                      bhayden[_at_]acm.org
Phoenix, Arizona                     bhayden[_at_]ieee.org
                                     bhayden[_at_]copatlaw.com