Tue, Dec 2 2008 1:38 AM aheram

The Validity of End User License Agreements Redux

I have been reading The Technology Liberation Front (libertarians critiquing developments in the fields of the internet and technology) and came across Tim Lee's repost of the popular webcomic XKCD regarding End-User License Agreements (EULA) with a question, "Legally enforceable?"

Wendy Grossman explained the legal gray area that surrounds every EULA software companies use for their softwares:

If you did read the terms, you might be surprised. Eulas typically specify that the software's publisher is not liable if anything goes wrong. They typically specify the publisher's preferred jurisdiction for legal disputes. And some are even more restrictive: some graphics packages have been known to specify that they cannot be used in the production of pornographic images. Yet these licences are, as Hanlon complained, not really contracts: you generally cannot read them before you buy (rather than use) the software, and you can't negotiate terms.

I have tackled the question before in Copyfascism Watch, where I raised another point that EULAs are not voluntary contracts as they are not agreed upon prior to the purchase of the software. And there is the bizarre claim by manufacturers that consumers are merely purchasing the physical CDs and not the software it contains. I asked, "How legitimate are the claims of manufacturers that consumers are merely buying the CDs and not the permission to install and use the software for which the consumer (rightly, I might add) believed he is paying?"

Jeffrey Tucker of the Mises Blog responded:

[R]estrictive covenants do this all the time with houses for example. You buy the house in a particular neighborhood and it is really yours, but you can't paint your shutters pink and you have to mow your grass and can't leave a sofa on the porch etc. Why can't EULAs amount to a sort of covenant?

In the Mises Blog, Tucker also asked this question, "Are EULAs contrary to property rights?" Tucker seems to be of notion that is similar to a covenant, but therein lies the issue and the difference between physical property covenants and EULAs: covenants are known and agreed upon prior to purchase, EULAs are hidden contracts that is then revealed to you after the purchase.

A commenter named PR raised the same point:

Since the EULA isn't revealed until after the buyer has handed over his money, of course it shouldn't be considered a valid agreement. All the examples of convenants I know of are presented to the buyer before the sale, but a EULA is more like a legal Trojan horse that restricts the use of property one already owns.

Many of the responses seem to miss that point and the important issue regarding this unconscionable agreements: it is secret, it is hidden, and cannot be agreed to prior to purchase. A commenter pointed out that you can always return the software, but most stores I purchase software from only have a return-policy for unopened boxes of software. Of course, one can argue that one can choose not to patronize the store that has taken one's money for a software crippled by an agreement one cannot agree to prior to purchase and afterwards, but since when do libertarians make excuses for theft?

Cross-posted to Red State Eclectic.

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# re: The Validity of End User License Agreements Redux

Monday, December 1, 2008 11:15 AM by Stephan Kinsella

The problem with such an attack on shrinkwrap etc., is that if you prevent it, vendors will find a way around it. E.g. if you say EULAs are unenforceable b/c they are not known ahead of time, then the software vendor can simply sell only thru stores or outlets that make the customer sign an agreement upon purchase. Then the EULA-opponents will just shift their attacks and come up with another argument.

That said, I do think a better argument against even click-wrap agreements (which ARE agreed to before the purchase) is that there is often no meeting of the minds on the fine print.  If the customers routinely just click the "I have read and agree to these terms" box but never do read it, and the vendor knows this, then it's a sort of fiction to assume both sides have actually agreed on these terms. For example supposed buried in fine print for a contract for sale of a $20 program, is the provision, "Buyer agrees to give 50% of his income to Vendor for life." Is this enforceable? Of course not. Why not? Because there was no agreement to this. So the "hidden" terms have to be in some sense reasonable, at the least.  

# re: The Validity of End User License Agreements Redux

Tuesday, December 2, 2008 7:51 AM by Eduard - Gabriel Munteanu

@Stephan Kinsella

In the current political setting, yes, they are unenforceable. But can one argue that, in a libertarian society, such contracts should always be unenforcable? For example, if the producer has put in a provision that is on the border between reasonable and unreasonable, wouldn't unenforceability allow the customer to abuse such contracts, depending on who judges such a case?

My take on this: contracts can't be too unreasonable. In anarcho-capitalism for example, any abused customer is likely to find someone to protect him. The other way around: the customer can't abuse the producer, since he would likely need to spend material resources in order to protect himself from the producer.

# re: The Validity of End User License Agreements Redux

Friday, December 19, 2008 11:01 PM by David Johnson

There is another difference between covenants and EULAs: you're required to sign a covenant. Even an explicit "click thru" agreement pushes the envelope on assent. They may be sufficient to display a notice (such as a warranty disclaimer) but to my mind they are insufficient for an exchange of rights.

There's a reason covenants are not merely taped to the doors of new homes.