Hello Miners and other interested Parties:)
So I spent about 30 hours here and on some legal forums trying to understand what the actual rights of miners who pre-order hardware.
I was very frustrated trying to get to the bottom of what really is and is not a right of person purchasing through pre-orders. I really believe it's important to know your rights and assess your risks properly. So I decided to share this for others to learn and discuss. I am not a lawyer and this should not be construed to be legal advice. The purpose of this thread is to spawn discussion and to educate consumers so they may properly deal with vendors and understand liabilities when doing so. This is not meant express a complete tome of information or replace the need for counsel (In fact I highly suggest if you are in a legal situation you immediate retain counsel).
This thread is NOT here to demean, defame, or otherwise discuss specific people or entities.
Please help me to develop and correct any information is here. I enjoy the interaction and education
So let's jump in here:
Your ready to spend a few thousand (or tens of thousands) dollars on some mining hardware? You really need to make sure you understand your risks before risking hard earned BTC.
What covers the consumer when doing online pre-orders?
There are the terms and conditions of the sale and then there is implied warranty.
Terms and Conditions are extremely important to understand when spending large amount of money. They can dictate a lot of rights in the absence of a formal contract. Please read them.
Implied warranty covers a basic set of assurances regarding commercial and private trade. It is perhaps one of the most important laws you need to wrap your head around. Wikipedia covers it nicely.
http://en.wikipedia.org/wiki/Implied_warrantyThis point forward will cover what I've learned about the United States laws covering Implied Warranty. These conditions are unified in a federal code referred to as UCC(Uniform Commercial Code):
http://en.wikipedia.org/wiki/Uniform_Commercial_CodeThis provides a framework that is implemented in each state's localized law:
http://www.law.cornell.edu/uniform/ucc.htmlGenerally speaking, my current understanding is that, when pursuing consumer protections claims, it's filed in the state of the business itself. (can anybody confirm?) It's important to read and understand the protections of your own state and the state of entity you are doing business with. Things get even more difficult when doing international trade. Anybody that can offer insight on this would be awesome. I imagine there would be very little cost effective means to enforce any agreement.
There are some terms I ran across that might not be fully understood by the layperson when understanding your rights. For this part I will pick on Missouri law (only because It's what I was researching while learning).
Some definitions of importance (huge credit for user drlukacs for being so kind as to walk me through most of this):
Where does "pre-order" qualify to be covered by UCC?
400.2-105. (1) "Goods" means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (article and things in action. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (section 400.2-107).
(2) Goods must be both existing and identified before any interest in them can pass. Goods which are not both existing and identified are "future" goods. A purported present sale of future goods or of any interest therein operates as a contract to sell.[/b
And just as an aside I'll get to in a few, the word "repudiate" as it's used legally for contracts:
to indicate an intention not to perform.
Ok here are the key points and code of law bits I understand to be relevant:
400.2-309. (1) The time for shipment or delivery or any other action under a contract if not provided in this article or agreed upon shall be a reasonable time.
Obviously concerns us with pre-order, so if you don't have a definitive date you are relying on what's considered by a court to be reasonable as the dates are changed (think about what technology has exhibit in the past. . . Duke Nukem' forever anybody).
§ 2-712. "Cover"; Buyer's Procurement of Substitute Goods.
(1) If the seller wrongfully fails to deliver or repudiates or the buyer rightfully rejects or justifiably revokes acceptance, the buyer may "cover" by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
(2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (Section 2-715), but less expenses saved in consequence of the seller's breach.
(3) Failure of the buyer to effect cover within this section does not bar him from any other remedy.
If they don't deliver or express an intent not to deliver, you can not only get your money back, but ask for the difference of funds it would take to purchase a "substitution" product and "any incidental or consequential damage". Though, another aside I will get to in a bit, this does NOT necessarily oblige them to do business with you. (My understanding is they can refund you and not do business with you for any reason not classified as a protected class . . sex, age, race, etc.)
§ 2-713. Buyer's Damages for Non-delivery or Repudiation.
(1) Subject to Section 2-723, if the seller wrongfully fails to deliver or repudiates or the buyer rightfully rejects or justifiably revokes acceptance:
(a) the measure of damages in the case of wrongful failure to deliver by the seller or rightful rejection or justifiable revocation of acceptance by the buyer is the difference between the market price at the time for tender under the contract and the contract price together with any incidental or consequential damages under Section 2-715, but less expenses saved in consequence of the seller's breach; and
(b) the measure of damages for repudiation by the seller is the difference between the market price at the expiration of a commercially reasonable time after the buyer learned of the repudiation, but no later than the time stated in paragraph (a), and the contract price together with any incidental or consequential damages provided in this Article (Section 2--715), less expenses saved in consequence of the seller's breach.
(2) Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.
This is my least favorite legal ease to parse. It combines math and legal terminology, I'd rather get punched in the face, but I will do my best. My horrible explanation (please somebody help me elaborate this) is going to be. . . Taking in to consideration the costs imposed on and market value of the product in addition to damages incurred by the wronged party the guilty will pay for what they caused the other party's loss to be. . . ish . . .hahhaa ok, somebody seriously help me here.
So anyhoo (*quickly runs away from that last paragraph*), due to recent explosions in the community, at this point, I was lead to ask the question "Can a vendor cancel your order because they get tired of the business relationship?". I couldn't find anything in UCC that explicitly dealt with issue or denied a business the right to chose not to do business with a person. (aside from previously discussed protected classes). It appeared to me that they could do it, but I'm no great legal mind, so I sought verification from a forum that specializes in consumer law. Off to the webs!!!!
Here's what I got back after explaining the scenario:
Endlessa: Can the company just cancel an order that was paid for and waited on for X months?
Greater Mind (Not actual name): Of course the company CAN cancel the order. It already DID cancel the order.
Woot that made me feel super smart /s . . .but I had to ask it to verify my understanding
Endlessa: Is this actually breach of implied contract or any other kind of contract?
Greater Mind: "Delivery Date is currently scheduled for XXXX" is so vague as to be meaningless. Seems tentative to me and implies that there might be future changes in the delivery schedule.
Ok that's helpful
finally a good question
feeling much better now
Endlessa: Does "seller fails to make delivery or repudiates" apply to this? Why or Why not?
Greater Mind: in the absence of a guaranteed deliver date, I don't see where the buyer has any other options but to cancel his order and go elsewhere or wait until the product is available. And the seller can certainly opt to cancel the order and refund the money if the customer turns out to be an ahole who spreads his vitriole all over the internet.
Wow now we're getting to the heart of it
( found this surprisingly close to home as I just told the customer was expressing frustration in the community forums)
Endlessa: Does cancellation alleviate any future obligation of the company?
Greater Mind: Yes.
Well that was short and concise.
Other comments of interest
There is nothing in the limited information you posted that would indicate that any illegality occurred ....
So where does that leave us?
Well, imo, atleast in Missouri you can expect delivery and if delivery doesn't occur in a "reasonable" amount of time or is repudiate (basically they say, look I'm not going to deliver this) then you can "cover" your costs and damages plus get a substitute product without spending extra money. This doesn't obligate a company to do business with you, so if you piss off your vendor, they can (and have) cancel your order. Nothing I've seen outside of an explicit contract or SLA forces any U.S. business to do business with a person they don't want too, even if payment was already sent. So guys, until you decide you can't handle the risk and cancel your order, be respectful to your vendors. Other than that please let me know what you think and feel free to let me know where I might have "jumped the rails" a bit
Edit SectionAnother bit of code we are beginning to explore and I'm hoping to get verification of relevance:
Definitions--"contract"--"agreement"--"contract for sale"--"sale"--"present sale"--"conforming" to contract--"termination"--"cancellation".
400.2-106. (1) In this article unless the context otherwise requires "contract" and "agreement" are limited to those relating to the present or future sale of goods. "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time. A "sale" consists in the passing of title from the seller to the buyer for a price (section 400.2-401). A "present" means a sale which is accomplished by the making of the contract.
(2) Goods or conduct including any part of a performance are "conforming" or conform to the contract when they are in accordance with the obligations under the contract.
(3) "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On "termination" all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives.
(4) "Cancellation" occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of "termination" except that the cancelling party also retains any remedy for breach of the whole contract or any unperformed balance.
(L. 1963 p. 503 § 2-106)
If you would like to jump to the beginning of that discussion
https://bitcointalk.org/index.php?topic=217036.msg2286577#msg2286577Another interesting bit of code:
§ 2-309. Absence of Specific Time Provisions; Notice of Termination.
(1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time.
(2) If the contract provides for successive performances but is indefinite in duration, it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.
(3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable. A term specifying standards for the nature and timing of notice is enforceable if the standards are not manifestly unreasonable.
If you would like to jump to the beginning of that discussion
https://bitcointalk.org/index.php?topic=217036.msg2288560#msg2288560Additional article on Buyer and Seller Obligations to consider:
http://legal-dictionary.thefreedictionary.com/Seller's+ObligationsI will do my best to keep this updated.
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any help pointing me to the underlying code would be greatly appreciated.
