Are you one of those people who reads every word of the documents you sign? The vast majority of the population cannot be bothered to peruse the HIPAA disclosures at the doctor’s office, the fine print on the credit card application, or even all of the terms of an apartment lease. Even rarer are those who bother to read the end user license agreement (EULA) for the latest smartphone app or video game.
Attorneys make pretty good money by reading and writing contracts. They make a whale of a lot more money representing clients who commit to contractual terms without fully understanding what they have agreed to. What sort of surprises hide away in the fine print? Consider a few examples:
iTunes’ Suppression of Would-Be Weapons Manufacturers
If you have accepted the terms of Apple’s EULA, you have just limited your career options — at least insofar as they involve the use of anything from iTunes. The EULA includes a provision in which “you agree that you will not use the product (iTunes) to create missiles and biological, chemical, or nuclear weapons.”
Microchip’s Right to Visit Your Home
Microchip Technology’s MPLAB X used to have the following line in its EULA:
Microchip’s authorized representatives will have the right to reasonably inspect, announced or unannounced and in its sole and absolute discretion, Licensee’s premises and to audit Licensee’s records and inventory of Licensee’s use of the Software, whether located on Licensee’s premises or elsewhere, at any time, in order to ensure Licensee’s adherence to the terms of this Agreement.
In other words, by accepting the EULA, Microchip’s representatives had every right to show up at your home in the middle of the night, without warning. If you are the sort of person who has difficulty making friends, you might find this enforced social interaction helpful. Most, however, would not welcome the visit.
My Condo is Your Condo, and Your Profit is My Profit
Buried in the contract condominium sales in New York City is a standard clause that states that if the owner sells his condo for a profit within a year of purchase, the condo owner must give the developer half of his windfall. Under these terms, you could purchase a condo for cash, paying the developer everything he or she asked. If you sell it within a year, however, and make any money off of the transaction, the developer is still entitled to get more money out of you.
Signing Away Future Employment
Covenants not to compete are common contractual arrangements between employers and employees. In these, the employee promises that after leaving the employer’s business, he or she will not work with a competitor or do anything to compete against the former employer. A common problem with these agreements is the overreaching scope of time, geographic limitations, and nature of competition.
The non competition agreement used by Amazon for its seasonal workers included this gem:
[The employee may not, for 18 months,] engage in or support the development, manufacture, marketing, or sale of any product or service that competes or is intended to compete with any product or service sold, offered, or otherwise provided by Amazon (or intended to be sold, offered, or otherwise provided by Amazon in the future) that employee worked on or supported, or about which employee obtained or received confidential information.
Consider the ramifications of signing this agreement. A person who takes a temporary job over the holidays to earn a little extra spending money will not be allowed to work for 18 months at any place that makes or sells any product sold by Amazon or that Amazon does not currently sell, but may sell in the future. Take a look at the items sold by Amazon and try to identify anything that would not be in competition. Essentially, this agreement requires an individual to be unemployed for 18 months after leaving Amazon’s employment.
Pedantic Provisions or Reasoned Results?
Entertainers are notorious for including seemingly-petty requirements in their contracts. Sometimes, however, there may be a method to the madness. Van Halen’s standard contract, for example, required concert venues to provide the band with a bowl of M&Ms but no brown ones.
At first glance, this appears to be petty and annoying. In reality, the band learned that this was a quick way to find out whether the concert venue gave appropriate attention to the contract’s details. The band’s performance relied on the use of 850 par lamp lights. At the time, most venues did not use them. If the band arrived and there were brown M&Ms in the bowl, it showed that the venue may not have read the contract carefully enough. They would then take additional steps to make sure the lighting was adequate for their needs.
Getting The User’s Attention
Tumblr tried to get the point of its EULA across by departing from complicated legalese. took a very honest and to the point approach in their user agreements. Anticipating the arguments of underage users, it included the following age restrictions:
You may wish to be Benedict Cumberbatch, but the terms of service gently reminded everyone that there is, sadly, only one Benedict Cumberbatch:
Renting a Home and Guaranteeing a Happy Birthday
When two renters received their lease agreement in a Word document, instead of a PDF, they decided to amend the document with a special clause.
The landlord didn’t notice the change before signing it, thus becoming obligated to provide two birthday cakes per year. Interestingly enough, the contract specifies that vanilla cake is not acceptable, but with no other limitations, presumably, the landlord could have provided a cake made out of liver and castor oil.
Long Live the Queen and All of Her Descendants
Law students uniformly dislike the section of property classes that discuss the Rule Against Perpetuities. Essentially, contractual obligations related to real estate cannot go on forever; they must vest not later than 21 years after some life in being at the creation of the contractual interest. The practice in the United Kingdom is to tie these conditions to the royal family by adding the “royal lives clause” into contracts. The terms of the property interest would expire under terms similar to this:
“The option must be exercised before the end of the period ending at the expiry of 21 years from the death of the last survivor of all the lineal descendants of her late Majesty Victoria who have been born on the date of this agreement.”
If this website is to be believed, there are (as of October 20, 2020) currently 949 living descendants of Queen Victoria. The above royal lives clause would require the interests of that contract to vest within 21 years of the death of the last survivor of them.
Let Both Parties Beware
It isn’t just the recipient of a contractual offer who needs to carefully review the terms before signing. Sometimes the tables can be turned on the one who drafted the contract, as well. Dmitry Agarkov received a credit card offer in the mail. He read the term and decided they were not as favorable as he would have liked. He rewrote the the contract so as to guarantee zero percent interest, no fees, and no credit limit. He also included provisions that assessed penalties to the bank should it fail to hold up its end of the agreement or attempt to cancel the contract. He signed it, and the bank did too, not noticing the amendments.
When the bank filed a lawsuit against the for unpaid balance and related fees, Agarkov counter-sued. Agarkov prevailed in the case against him; the court ruled that he only had to pay the principle debt, not the late fees or interest claimed by the bank. His counter-suit was later settled out of court for an undisclosed amount.
Your Soul for a Video Game
A few days ago, we published this article about the Latvian financier who offers loans in exchange for the borrower’s eternal soul. In 2010, 7,500 customers of GameStation entered into a similar transaction. The terms of service for those who purchased games on their website on April 1 of that year required users to agree:
“…to grant Us a non-transferable option to claim, for now and for ever more, your immortal soul. Should We wish to exercise this option, you agree to surrender your immortal soul, and any claim you may have on it, within 5 (five) working days of receiving written notification from gamesation.co.uk or one of its duly authorized minions.”
There was an option to “nullify soul transfer.” Only 12 percent of purchasers saw the clause and opted out of forfeiting their souls. Fortunately, it was not necessary to collect. After April Fools Day was over, GameStation graciously relinquished its rights to the souls.
It always pays to read the fine print. Sometimes it pays more than other times. Antivirus software company PC Pitstop hid in the text of its terms of service the promise of a $1,000 reward for the first person who actually read the statement in their terms. It took four months and 3,000 downloads of the software before someone finally wrote in to claim the reward.
European law enforcement agency Europol chose a rather sobering way to educate the public about the safety concerns of free public Wi-Fi use. The agency offered free Wi-Fi services for those who would agree to the terms and conditions, which included a “Herod clause.” The free Wi-Fi was provided only if “the recipient agreed to assign their first-born child to us for the duration of eternity.” Six people agreed to the terms to sign up for the free network. F-Secure, the sponsoring firm for the experiment, later promised it would not try to enforce the clause.
Categories: Laws and Lawyers