Miners, Consumer Protections (UCC), and Pre-orders

[firefop]

You do realize that was not "Hur, hur, hur, get a refund, then!", right?

You were talking about calculating your potential earnings from November 2012 to the present.  My point is that you could have asked for a refund at any time within that period, but didn't.  So I don't think you would be entitled to "damages" within that timeframe.  And that those damages would be zero in any respect.  I suspect that earnings calculated for a 12 month period after you would have received your orders would still be quite substantial, and are a much more justifiable target for damages.

And lastly (and as a non-lawyer), while I personally think BFL probably has the legal right to act as they have, it was a shitty thing to do, and they should not have.  But on the other hand, you appear to have worked very hard to make it happen.



grnbrg.

PS:  Ivan says "Hi." back.  Or something like that. 

As to calculation of damages. I would point out that it would be impossible to calculate accurately. Since we would have been dealing with vastly different difficulty numbers if BFL had actually delivered last year. Since they didn't I don't see how you could reasonably determine the damage between order time and the time the order was canceled.

[k9quaint]

As to calculation of damages. I would point out that it would be impossible to calculate accurately. Since we would have been dealing with vastly different difficulty numbers if BFL had actually delivered last year. Since they didn't I don't see how you could reasonably determine the damage between order time and the time the order was canceled.

I was thinking the same thing. One could only estimate.
If BFL had delivered 120GH/s to Xian in November 2012 then one could use the earning power of the early Avalons as a comparable case. 

[Xian01]

I was thinking the same thing. One could only estimate.
If BFL had delivered 120GH/s to Xian in November 2012 then one could use the earning power of the early Avalons as a comparable case. 

Yes, I was hoping to treat it as an estimate. I wanted to divide the actual 120GHs figures in half or possibly even down to a quarter for a more possible present day valuation.

My gut is telling me the number of BTC is not insignificant after making either adjustment.

[Phinnaeus Gage]

Thinking about suing?

Thinking about hurting Sonny Vleisides at BFL?

Think again!

http://www.martindale.com/Gregory-W-Vleisides/1035415-lawyer.htm

Vleisides Donnelly & O'Leary
4006 Central, 2nd Fl.
Kansas City, MO 64153-1155

Respectfully, please stay on topic, there is another thread to behave this way on. 

My apologies!

Very nice thread, Endlessa.

Peace.

~Bruno~

[centove]

Next up: What else can MSantori get besides the $200?  Can he also get the value of all of the money he would have made from the widget?

I really don't think he could nor should he as this would set a dangerous precedent. What if the value of said goods that widget was to create went down? Can the manufacturer of said widget be held liable for that?

For another perspective. Lets say I make gold mining equipment. I state the performance of said equipment will be <x> equipment performs to that standard. However gold prices have dropped. Am I liable? Lets take it a step further, I don't sell you the equipment, you find another source for something similar. But it takes longer to get delivered. However the price still goes down. Is the manufacturer liable for the loss? And how much of the loss?

[Endlessa]

400.2-106 . . .

(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.

So, in order to "Terminate" a contract, there is a need for an explicit clause in the contract or a law that specifically allows for doing so. In the absence of both, the contract cannot be terminated.

In addition, what rights are there in an undefined contract?  Are they explicitly denied a right to termination because the contract itself is undefined? or is that an implied right?

What do you mean by an "undefined contract"? Contracts of sale at least define the item sold and the price.

Sorry that was a bit of bad wording on my part.   It was late and I think I was getting tired.  Towards the end of the night I was reading about contract termination.  I did run across several places were termination was being discussed.  In turn, I realized that most of the places'/businesses have this ability are using "Terms and Conditions" that contain explicit termination clauses.  By "undefined", I meant in the absence of a terms and conditions explicitly expressing a termination rights or expressing specific delivery dates, it seems that this then falls to whether  or not the local jurisdiction has additional laws that qualify a seller or buyer for the right to terminate the contract of sale.  Otherwise, both parties are locked into an infinite contract of sale until they mutual agree to adjust the terms to allow for a mutually agreed upon exit.  

Sellers (there are a couple new ones in the US and Europe), most likely, should explicitly address this section of UCC through terms and conditions to ensure their right to address their needs.  Otherwise, they are relying on the "chance" that local law might supply an exit.

Buyers should be aware of any terms and conditions (especially concerning terminations, cancellation and refunds),  as those can extend additional rights to the seller when accepted at the beginning a contract of sale or renegotiated by both parties later.

I'm hoping to distill this into the edit section of my starting post.   This stuff is so much more nuanced than Civil Rights

Oh btw here was a great article I found last night http://legal-dictionary.thefreedictionary.com/Seller's+Obligations. I'll put it as a reference on the start topic.

Something else interesting I ran across that I never realized.  It appears that with this kind of implied contract/warranty even casual conversation can affect the terms. Example:  Buyer: "Hey I'd like that in pink box man." then seller, "Absolutely!". At first glance, my intuition says that's hilarious.  After some of the reading I've been doing,  That could be construed as a newly created condition on the sale.  I'm starting to think that buyers and sellers both should be very careful with direct communication and indirect communication. IMO, casual internet communication between buyer and seller should be all together avoided (aside from mutual assurances that things will be paid for and products will be delivered).  I could be off base on this, but .  . . Most of these laws seem to have been written back when people talked face to face and signed physical paper (yes, of course they were).  Words become more powerful when written in text than they were when spoken to each other.  If it's written in text because binding for a lot of these statues and codes.  This can be dangerous for both buyer and seller.  Seller can unintentional create new terms and so can the buyer.  Then you can also end up documenting your own repudiation.  Especially considering what seems to happen on the forums.  Statements like, "People should cancel their orders", "I should have cancel my order", "I should never do business with those guys", etc could possible be construed as intent not to perform on the part of a buyer, imo.  It's a funny world, but I don't consider business funny.  Anyhoo, that's enough of a rabbit trail for now  let me know what you think. Sorry for rambling, but the more I wrap my head around this, the more exciting understanding it is becoming

[Endlessa]

Again Guys I appreciate your need to discuss Xian, but please do it in the Thread about that topic.  This is a thread for academically discussing consumer rights and hopefully generating awareness for people seeking knowledge.  It's not a thread to gain legal advice or support, as that should be done with a lawyer or minimally on your thread.  


Thanks ahead of time for respecting that.

[drlukacs]

You do realize that was not "Hur, hur, hur, get a refund, then!", right?

You were talking about calculating your potential earnings from November 2012 to the present.  My point is that you could have asked for a refund at any time within that period, but didn't.  So I don't think you would be entitled to "damages" within that timeframe.  And that those damages would be zero in any respect.  I suspect that earnings calculated for a 12 month period after you would have received your orders would still be quite substantial, and are a much more justifiable target for damages.

And lastly (and as a non-lawyer), while I personally think BFL probably has the legal right to act as they have, it was a shitty thing to do, and they should not have.  But on the other hand, you appear to have worked very hard to make it happen.



grnbrg.

PS:  Ivan says "Hi." back.  Or something like that. 

I respectfully disagree. The point is not about getting back the money in November 2012, but rather getting delivery in November 2012. If delivery is delayed, and it affects the earning capabilities of a person, then these are legitimate consequential damages that are payable by the seller.

[drlukacs]

Next up: What else can MSantori get besides the $200?  Can he also get the value of all of the money he would have made from the widget?

I really don't think he could nor should he as this would set a dangerous precedent. What if the value of said goods that widget was to create went down? Can the manufacturer of said widget be held liable for that?

For another perspective. Lets say I make gold mining equipment. I state the performance of said equipment will be <x> equipment performs to that standard. However gold prices have dropped. Am I liable? Lets take it a step further, I don't sell you the equipment, you find another source for something similar. But it takes longer to get delivered. However the price still goes down. Is the manufacturer liable for the loss? And how much of the loss?

You are certainly not responsible for any change in the gold prices as long as you deliver on time.

If you fail to deliver or deliver late, then the price of the gold between the reasonable time of delivery and the actual time of delivery affects the amount of lost earnings and thus the consequential damages.

[drlukacs]

What do you mean by an "undefined contract"? Contracts of sale at least define the item sold and the price.

Sorry that was a bit of bad wording on my part.   It was late and I think I was getting tired.  Towards the end of the night I was reading about contract termination.  I did run across several places were termination was being discussed.  In turn, I realized that most of the places'/businesses have this ability are using "Terms and Conditions" that contain explicit termination clauses.  By "undefined", I meant in the absence of a terms and conditions explicitly expressing a termination rights or expressing specific delivery dates, it seems that this then falls to whether  or not the local jurisdiction has additional laws that qualify a seller or buyer for the right to terminate the contract of sale.  Otherwise, both parties are locked into an infinite contract of sale until they mutual agree to adjust the terms to allow for a mutually agreed upon exit.  

I agree that the additional laws may be relevant, and that is indeed the reason for such laws to be in place: to govern contracts where the terms and conditions do not address a specific topic. The difference between UCC and more specific consumer protection laws is that the latter cannot be "contracted out" -- in other words, a provision that states "This Act does not apply" is invalid. On the other hand, in some jurisdictions, UCC-like legislation can be "contracted out" by explicit language in the "Terms and Conditions".

You also seem to be mixing "indefinite contract" (which is something like a subscription) with the contract for the sale of a specific number of units of a specific goods.

[centove]

Next up: What else can MSantori get besides the $200?  Can he also get the value of all of the money he would have made from the widget?

I really don't think he could nor should he as this would set a dangerous precedent. What if the value of said goods that widget was to create went down? Can the manufacturer of said widget be held liable for that?

For another perspective. Lets say I make gold mining equipment. I state the performance of said equipment will be <x> equipment performs to that standard. However gold prices have dropped. Am I liable? Lets take it a step further, I don't sell you the equipment, you find another source for something similar. But it takes longer to get delivered. However the price still goes down. Is the manufacturer liable for the loss? And how much of the loss?

You are certainly not responsible for any change in the gold prices as long as you deliver on time.

If you fail to deliver or deliver late, then the price of the gold between the reasonable time of delivery and the actual time of delivery affects the amount of lost earnings and thus the consequential damages.

The point I was trying to make is that if the price had gone up it is unlikely that a complaint would be heard, so you can't have it both ways. Calculating damages on a speculation sets a very bad precedent. Not to mention that there is an element of luck involved in the whole mining area. Say you got your widget, then the pool you were on ran into a streak of bad luck and didn't find as many blocks as it usually does. Is the manufacturer liable for that as well? Or say UPS looses your package and it's delayed for a week, do you sue the manufacturer for lost revenues?

I will agree that any damages should be the difference in price for a equivalent replacement. So if company X sold a piece of hardware that specifies that it could do 600 calculations a second for 5k then canceled said purchase and refunded the 5k. And company Z sells something that can do the 600 calculations a second for 6K then the damages should be 1k.

That to me make sense and is consistent.

[drlukacs]

The point I was trying to make is that if the price had gone up it is unlikely that a complaint would be heard, so you can't have it both ways. Calculating damages on a speculation sets a very bad precedent. Not to mention that there is an element of luck involved in the whole mining area. Say you got your widget, then the pool you were on ran into a streak of bad luck and didn't find as many blocks as it usually does. Is the manufacturer liable for that as well? Or say UPS looses your package and it's delayed for a week, do you sue the manufacturer for lost revenues?

I will agree that any damages should be the difference in price for a equivalent replacement. So if company X sold a piece of hardware that specifies that it could do 600 calculations a second for 5k then canceled said purchase and refunded the 5k. And company Z sells something that can do the 600 calculations a second for 6K then the damages should be 1k.

That to me make sense and is consistent.

The question is not what you think is right as compensation, but rather what the law says about it.

Damages, like many other things in civil matters, are calculated based on balance of probabilities. The average revenue of a given hash power is well known. So is the exchange rate between BTC and USD.

If a reasonable delivery date, according to the court, was November 13 (I just made up a date), then any reasonable loss of revenue caused by the failure to deliver by that date is the liability of the seller. If the price of gold/BTC/whatever was low during that period then the liability is smaller. If the price was high, then the liability is higher.

The manufacturer is not liable for back luck, of course. But the court will look at the average revenue that such a device can generate. You must remember that this is not a criminal "beyond reasonable doubt" type of case. If you have large pools, and your mining capacity is relatively small compared to it, then the standard deviation/variance of your revenue will be very small. So, based on the Central Limit Theorem, the probability of obtaining near-average revenue is well over 50%, which is what one needs for "balance of probabilities".

UPS losing the package is a slightly different story, depending on insurance, and transfer of title issues. It is a more complex case, but of course it requires the seller to be able to prove that the item was indeed sent.

[k9quaint]

Several other questions regarding Widgetco. :

Would Widgetco be allowed to use the money they collected from pre-orders to run research and operations before they have shipped the orders?
How would that money be accounted for on the balance sheet?
Would sales tax have to be paid when the item is shipped or when the money changes hands?

[drlukacs]

Several other questions regarding Widgetco. :

Would Widgetco be allowed to use the money they collected from pre-orders to run research and operations before they have shipped the orders?
How would that money be accounted for on the balance sheet?
Would sales tax have to be paid when the item is shipped or when the money changes hands?

It is a good question, but I am not sure if it is relevant to consumer protect and contracts. This is more a question for an accountant.

[k9quaint]

Several other questions regarding Widgetco. :

Would Widgetco be allowed to use the money they collected from pre-orders to run research and operations before they have shipped the orders?
How would that money be accounted for on the balance sheet?
Would sales tax have to be paid when the item is shipped or when the money changes hands?

It is a good question, but I am not sure if it is relevant to consumer protect and contracts. This is more a question for an accountant.

I was musing about damages and what Widgetco might do with the pre-order money. Did they use it as an investment or loan for operations? Did they earn interest off it? If so would interest over the course of the order be considered part of the damages?

[drlukacs]

I was musing about damages and what Widgetco might do with the pre-order money. Did they use it as an investment or loan for operations? Did they earn interest off it? If so would interest over the course of the order be considered part of the damages?

What they do with the money does not affect the damages, unless their actions demonstrate intention to defraud, in which case punitive damages may also be sought.

Your grounds for damages is the non-performance on the contract and its consequences. What they did with your money after you paid it to the seller is not really your business, unless the issue of fraud is involved.

[MSantori]

Several other questions regarding Widgetco. :

Would Widgetco be allowed to use the money they collected from pre-orders to run research and operations before they have shipped the orders?
How would that money be accounted for on the balance sheet?
Would sales tax have to be paid when the item is shipped or when the money changes hands?

From a pure breach of contract perspective, Widgetco's use of the money isn't relevant. It might be relevant for some other causes of action, as drlukacs suggested.

[DBG]

You do realize that was not "Hur, hur, hur, get a refund, then!", right?

You were talking about calculating your potential earnings from November 2012 to the present.  My point is that you could have asked for a refund at any time within that period, but didn't.  So I don't think you would be entitled to "damages" within that timeframe.  And that those damages would be zero in any respect.  I suspect that earnings calculated for a 12 month period after you would have received your orders would still be quite substantial, and are a much more justifiable target for damages.

And lastly (and as a non-lawyer), while I personally think BFL probably has the legal right to act as they have, it was a shitty thing to do, and they should not have.  But on the other hand, you appear to have worked very hard to make it happen.



grnbrg.

PS:  Ivan says "Hi." back.  Or something like that. 

Wow grnbrg, I'm so used to seeing your name, it kind of surprised me to see that you only have 8 posts on BCT.  Do you have another nick as well?

[drlukacs]

Wow grnbrg, I'm so used to seeing your name, it kind of surprised me to see that you only have 8 posts on BCT.  Do you have another nick as well?

This threat is for legal questions and discussion. I am not sure how your question is relevant to the topic of the threat.

[MSantori]

As promised, let's discuss now how WidgetCo might be liable for more than just the cost of the widget.  Let's assume that MSantori is in business for profit, and he ordered the widget for his business.  Further, the widget really only has one purpose - to "widge"*.  It was designed for this purpose and really doesn't have any other practical application.  "Widging" is a process by which the widget generates diamonds, a valuable item in MSantori's and WidgetCo's communities.  If MSantori would have had his widget, he estimates he could have generated another $300 worth of diamonds - roughly - since WidgetCo should have shipped the widget.

Is MSantori entitled to an additional $300 from WidgetCo?

In New York, lost profits are a form of consequential damages.  They may be recovered only if three elements are met: the damages were "certainly" caused by the breach, the actual amount of the loss can be calculated with reasonable certainty, AND the damages were fairly within the contemplation of the parties at the time of entering into the contract. Applied to my fact pattern, Widgets only have a singular purpose: widging.  There is no doubt that, if he had received the widget, MSantori would have set it to widging and generated valuable diamonds.  The first element, I think, is satisfied.  Skipping to the third, there is no question that, since Widgets only widge, that Widgetco and MSantori would have considered that had Msantori not received the widget, he would be unable to widge and would lose profits. The third element, I think, is satisfied.

What about the second?  Can we calculate the amount of the loss with "reasonable certainty"?  I'll leave that to the forum.  I'm interested to hear what you all think!


*I am from the US, so if this word means something vulgar in some other country's slang (it really sounds like it should), understand that my use of it is not intentional.