By Bob McElwain
Many products we buy are packaged with some sort of
disclaimer or terms and conditions. For example, software
delivered is commonly sealed in an envelope upon which conditions
are printed. The claim is that in opening the envelope you agree
to them. Some companies will not allow download of software.
They insist on delivering. And one common reason for this
approach is to be able to say in court that the customer agreed
to having read the conditions upon opening the package.
In a sue-happy world such as ours, businesses must do what
they can to protect themselves. A major condition in the above
sort of contract is that the company can not be held liable for
more than the cost of the product. That is, they require you
to hold them blameless for consequential damages, and so forth.
I am not a lawyer. And do not claim any special knowledge
in the field. But I have sold a lot of software. My attorney
pointed out that such statements are mandatory, not because
a court will be bound by one, but because my legal position
is greatly weakened without one.
If I sell a piece of software that goes off track and
destroys a customer's database, I will be liable, regardless
of any claim about consequential damages the customer may have
been forced to accept.
What This Means To You
It is likely safe to rip open a package containing new
software without reading the disclaimer. For sure the company
has no interest in coming at you. But there is far greater risk
on the Web.
A Popular Credit Card Trap
Most webmasters know they need to be able to take credit
cards. But given the bewildering array of options, choosing
a merchant service is an awesome task.
While not a scam, many services offer an account with no
setup charge fee, but a hefty monthly fee, provided you agree
to a four year term. This means if you want to change merchant
services after a year, you will be billed for the remaining
three years although unused. People get bit by this catch
often. You can save a lot of grief by reading the terms and
A Merchant Account Scam
An outfit may require they be allowed to keep your money
for 180 days in the event irregularities are found in your
account. They also point out that failure to provide supporting
documentation upon request is grounds for termination of the
account. And these two statements are buried deeply within the
contract. Further they are worded with such care as to seem
a situation you will never face.
While there are other approaches to this scam, one is for the
company to wait until you have several thousand dollars due, then
not pay come the settlement date. You will try to get your
money, but find you're dealing with someone who doesn't seem
to have answers. They'll ask for documentation regards recent
sales. You will fax it to them. When you call back, they will
say they haven't received it, and inform you your account has
been canceled for non-compliance with the contract. Which is so,
provided they did not receive what you sent. (How can you prove
You may or may not see the money owed. It depends upon where
this outfit is in the cycle. Early on, you probably will get
your money, but they will have the interest on it for 180 days.
Later in the cycle, they may just disappear with your bucks and
those of others, and start up again under a different name.
I don't know of a better example to demonstrate the need for
reading terms and conditions with care. The above operation can
cost you a ton, and possibly prevent you from getting another
merchant account. Which may mean you're out of business.
Hiding The Fine Print On A Website
Most business sites present their terms and conditions.
Often, however, the link to them is buried at the bottom of the
page or in some obscure corner of it. Few visitors will see or
click it. The terms and conditions only protect a business to
the extent they can. If you are merely visiting the site, such
links can be safely ignored. However, if you plan to participate
with the site in some way, such as when signing up for an
affiliate program, read that contract. It's a must.
Who Is Protected?
All such terms and conditions are written to protect the
business, just as your attorney would write a set for you. With
exceptions such as above, there is usually nothing unethical or
devious in them. Just a committed effort to protect the company.
However, a fair contract will at least spell out the services
to be provided. While it may offer little to protect your
rights, it does *NOT* lay off on you. Any terms such as offered
by GeoCities, which in effect steals content you create, should
be avoided at all cost.
A Blatant Example
Some time back I was invited to submit my articles to a large
outfit. The promise of wide circulation was true. And I would
benefit from the exposure. But I was asked to sign a contract.
There was nothing in the document to protect me, only the
company. I had to say no because of the following paragraphs,
which I have edited so as not to reveal any names.
"XYZ provides its services to you, subject to the following
Terms and Conditions, which may be updated by us from time to
time WITHOUT NOTICE TO YOU."
Who can be expected to return and keep up-to-date on the
latest changes? While I have no desire to test it, I wonder if
the above demand is even legal.
"You agree to indemnify and hold XYZ, and its subsidiaries,
affiliates, officers, agents, co-branders or other partners,
harmless from any claim or demand, including reasonable
attorneys' fees, made by any third party due to or arising out of
articles you submit, post to, or transmit through our service."
I might have been able to ignore the first paragraph above,
but this last one was a stopper. When I rejected the offer, the
friend who had made it was quite surprised. "What risk are you
talking about?" he asked. "You never say anything bad about
anybody." My reply was that there is indeed very little risk.
So why doesn't XYZ assume it? Or at least share it?
We are all liable for what we write and publish. And if you
print one of my articles, I share the risk with you. Chances are
slim to none there will ever be a problem, for I'm careful about
what I write, and you are careful about what you publish. Libel
is really the only risk, easily avoided.
But in dealing with XYZ, I'm indirectly part of a
corporation. As a retired school teacher supplementing a modest
pension by working the Web, I don't have sufficient assets to
attract the attention of a lawyer working for a percentage.
XYZ, on the other hand, is a much better target of
opportunity. A successful dot com, growing rapidly. Given
a case, a lawyer could become very interested. And yet I was
expected to accept *all* risks.
XYZ is not even required to inform me of a pending suit.
Or to defend it in court. They can simply wait for the
judgment, then come and take my home.
To me, courts seem more interested in the law than in
justice. If there have been cases in which people have been
nailed with such a clause, chances are I could be next. Maybe
worse. I could become the center of a massive precedent setting
case. Thanks. I'll pass.
Many Did Not
I followed the ezine published by XYZ for some time. And
began to see familiar names on articles published. My hunch is
they never did click to read the contract. They simply clicked
to accept them. And added to their risk of doing business on the
Why Add To Risk?
We are all at risk of a law suit. And anything we do can add
to this risk. But in the general scheme of things, this risk is
small. Why add to it unnecessarily? I will continue to read
Terms and Conditions with care. Try it! You might just save
a bundle. Even your business. Or even your home.