ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Monday, May 30, 2016

Terms and Conditions: You Agree to What You've Agreed To

Watching terms and conditions litigations continue to play out is an interesting exercise. One of the things we learn is that the terms and conditions mean what they say, which should be obvious, but of course ignores the fact that basically nobody reads what they say. Consumers seem to be consistently caught off-guard by some of the terms. A recent Ninth Circuit decision, Geier v. M-Qube Inc., No. 13-36080, reinforces this (you can watch the oral argument here).

Geier sued m-Qube based on a mobile game it marketed called Bid and Win. m-Qube was not the provider of the game; rather m-Qube merely marketed the game. The other defendants in the case were all similarly removed from the actual content of the game, serving as "intermediaries" and "gateways." The game's actual content provider, Pow! Mobile, was not sued by Geier. 

The dispute in the case was over whether m-Qube and the other defendants were third-party beneficiaries of the terms and conditions of the game. Allegedly, when signing up for the game, subscribers, under the terms and conditions, waived all claims against Pow! Mobile's "suppliers." Despite this clause, Geier was attempting to sue m-Qube, et al., over text message abuses in violation of Washington law. (Geier, incidentally, was not alone in suing over this. A class action in the District of Nebraska was complaining about the same behavior.)

The Ninth Circuit's decision in this case is a matter of straightforward contract law: If you are an intended third-party beneficiary of the contract, you can enforce the contract. There is no real surprise there, except maybe to the consumer here, because it may sink Geier's entire case, which now hinges on whether m-Qube and the other defendants are Pow! Mobile's "suppliers." If they are, then they are intended third-party beneficiaries of the terms and conditions' waiver clause and can seek to enforce it. We may not be reading those terms and conditions, but we may be waiving lots of our rights nonetheless.  

https://lawprofessors.typepad.com/contractsprof_blog/2016/05/terms-and-conditions-you-agree-to-what-youve-agreed-to.html

E-commerce, Recent Cases, True Contracts, Web/Tech | Permalink

Comments

I doubt the customer was surprised, because the customer probably had never thought of the issue, and the customer probably doesn't care who exactly the defendants are as long as he is made whole. It's the lawyer's job to sue the right people.

As to waiving rights, Pow! apparent does not want to do business on any terms other than its own. It is not required to agree to any term proposed by a customer. If the consumer is allowed to stick its own terms into the agreement after the fact, then the seller is the one stuck with terms it didn't agree with, and (unlike the customer, who can choose not to buy) has no way of avoiding the unfair terms.

Posted by: Frank Snyder | May 31, 2016 8:29:39 AM