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Monday, April 26, 2021

The end of contract law

A seller's experience being ripped off by a buyer with the full legal assistance of the payment processor shows how the Internet economy is increasingly post-contractual.

So I went back to court today with the impression that I would have a quick and simple trial with the buyer. A couple of amateurs. It was before the same judge as my trial with PayPal. So the judge consolidated the two cases. So I was again met by a high-priced attorney representing PayPal. We end up in the court room for another 2 1/2 hr trial in what can only be described as a legal menage a trois between myself, Paypal, and the buyer. Three different parties, three different interests. To open, PayPal‘s attorney presents about an inch thick file with all of the research and case law as he sees pertains to the previous trial that is still under consideration. At one point, the judge made a comment that PayPal has to have spent more than $14,000 to defend a small claims case. I suspect that PayPal is taking this so seriously because for $70 and no experience, I think I have made a worthy case to punch holes in their user agreement. I suspect this may have much larger implications and consequences on the line for them.

I found it somewhat awkward and put me at a disadvantage to first have to argue that I fulfilled all of my obligations to the buyer as a seller. There are many unnecessary details to this case that I won’t go into detail here, but in our communication, the buyer was offered insurance and declined and agreed to be responsible for the risk of shipping. So I had to argue that he was responsible for any potential loss. At the same time, I had to argue that the transaction between the buyer and myself was complete. It was PayPal who came in after the fact to reverse those charges and take the money from me. And I argued that this was done in breach of their contract as it specifically does not cover financial product or investment of any type. The buyer argued that since he paid with PayPal, he believed he was under the terms of PayPal which required confirmation of shipping, signature confirmation, etc. The judge also made the comment that the buyer could say he completed his obligation by making payment. It was PayPal that took the money from me, not the buyer. This was something he would have to consider. PayPal argued that because we were both in breach of contract and had a dispute between us, that it is their right to arbitrarily decide.

In short, it is a triangular mess but with some important points to consider for the judge and PayPal as a whole that could have much wider ranging implications. The judge states that he will have to research the decision and it would be 3 to 4 weeks, at a minimum, before he would have a written decision....

I received a 24 page verdict from the judge.  I have honestly not read it in its entirety as it has many references to previous case law and legal minutia that does not interest me.  In summary, unfortunately things did not break my way.  My first case against the buyer was dismissed for the small claims court lacking jurisdiction over a Canadian citizen.  There are many pages of explanation, but basically I can file in a Canadian court, if desired.  In reading the judge's commentary and perhaps reading between the lines, I believe I would win the case.  The question is would it be worth the hassle.  I will consider whether or not to refile in a Candian small claims court, or their equivalent.  I do not believe I will be shipping to Canada again in the future.  Not worth the hassle. 

As for the case against Paypal, again the verdict did not break in my favor.  While I was successful in showing precious metals are in fact not covered under the Buyer's Protection Program, ultimately the judgement states I can not say Paypal was in breach of contract while I myself was also in breach of the same contract.  By failing to acquire pre-approval for shipping of precious metals, I breached the contract.  This breach, in essence, gave Paypal the right to decide at their discretion.  In summary, I do not plan to accept or utilize Paypal for any transactions involving precious metals in the future.  I see posts that others view this as a "red flag" and they would not enter into a transaction with a seller who does not accept Paypal.  I suppose I am more than willing to pass on those buyers.

Hope this can help someone else in the future.

One thing that is now eminently clear is that both judges and arbitrators only give lip service to the idea that the consumer cannot reasonably be expected to be aware of all the legal fine print. Arbitrators in particular will absolutely hold the consumer responsible for every jot and tittle they know perfectly well that he hasn't read, and they will do so despite being completely unfamiliar with their own arbitration rules. And by "completely unfamiliar", I mean literally not knowing what the actual Rule 1 says. This is why the California legislature is regularly passing stronger and stronger protections for consumers, because both the legal system and the private judging system refuse to accept the reality of the corporate deck being stacked completely against the consumer.

Thus, they will readily ignore the contract, the law, and even their own rules in order to let the corporation off the hook if they can find any excuse to do so. Fortunately, the law, especially in California, is considerably harsher on corporate misbehavior than people commonly believe, so it is very far from impossible to beat them in court, so long as no obvious mistakes are made. For example, it is obvious that a state court has no jurisdiction over a Canadian, although of course if the seller had originally filed in Canada, Paypal's lawyers would probably have argued that the seller had no standing in Canada and who knows what a Canadian judge would have to say about that.

Anyhow, this post-contractual legal environment spells eventual disaster for the neo-liberal global economy, and is another indication of the shift to nationalism and localism.

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31 Comments:

Blogger wahr01 April 26, 2021 5:43 AM  

Regarding "globalism":

A free market depends on the rule of law, and the international realm is lawless.

Anyone doing business across international borders does so at their own risk.

Blogger Unknown April 26, 2021 6:14 AM  

This is one of the main reasons corporation love arbitration, except for union members:

You the consumer/little guy have a contract with bigco. Maybe an employee, maybe a customer. Bigco does you wrong.

You are forced into arb. Bigco can put arbitrators on their list, and will take them off if the arbitrator does not favor them. The little guy has no such juice.

With unions it is very different, the union is also a repeat customer. They have the same power and the same expertise.

There must be a way to harness that, maybe some sort of association for consumers that acts the same as AAA used to act to bond out motorists and fight back against crooked sheriffs and justices of the peace.

But I haven't figured out how to govern the organization to prevent takeover, and market the idea.

Blogger Bernard Korzeniewicz April 26, 2021 6:45 AM  

100% confirmed. My relative worked for PP, they have ~ 101 ways of scamming a buyer. And only one "whatever happened, a Chinaman is always right".

Blogger Stryker4570 April 26, 2021 6:55 AM  

Mistake #1 by the seller was using PayPal to begin with. They are notorious for freezing accounts and seizing funds based on arcane and arbitrary interpretations of their own rules. They froze a friend's account and locked up $16,000 for months, almost destroying his small business. I belong to several E-Commerce forums, and people getting screwed by PayPal is a common theme. If you need payment gateway solutions, do your homework, and don't give PayPal the slightest consideration.

Blogger Doktor Jeep April 26, 2021 6:59 AM  

So judges and arbitrators screw kids in the same dungeon as the people running corporations.
Got it.
Best to never use their systems and products again. Just to be safe.

Blogger ÆtherCzar April 26, 2021 8:02 AM  

Worse... corporations will simultaneously claim you agreed to and accepted every jot and tittle of the terms where it suits them, while turning around and arguing that you could not possibly have been aware of the details of the terms and relied upon them.

Blogger cyrus83 April 26, 2021 8:02 AM  

Used to use Ebay and Paypal years ago. Two things I insisted on after getting burned a couple times were that shipments had to be covered by insurance, and international shipments had to be handled by Ebay. I would not ship direct even to Canada.

Amazingly enough, USPS insurance paid the few times they damaged stuff in transit.

Blogger Matt April 26, 2021 8:18 AM  

"At one point, the judge made a comment that PayPal has to have spent more than $14,000 to defend a small claims case."

Hey, it may not be a W on paper, but that's not a terrible consolation prize. Good work.

Blogger ThatWouldBeTelling April 26, 2021 8:42 AM  

A couple of years ago our host summarized this well:

[...] what these corporations are doing is literally destroying the basis for a developed economy. And not only what they are doing now, but what they have been in the process of doing for the past 15 years. The EULAs, the Terms of Service, and the selling of software of a service, and the SJW convergence have all collectively routed around the rule of law which is necessary for sustained economic growth over time.

In countries with strong rule of law:

1. Property rights over land, equipment, and personal items are clear and protected by law.

2. Contracts between people, businesses, and the government are effectively enforced by the legal system.

3. Political accountability is high and corruption is low.

4. Business regulations are clear and enforced in a transparent manner.

In such environments people make long-term investments and build large organizations. In contrast, if the property rights and contracts are not enforced and the business regulations are not clear, most of the economy consists of small family owned firms with little modern equipment. A high-tech, prosperous economy would not develop.

Effectively, there are no contracts anymore in the digital economy. There is no predictability anymore. There is no accountability. There is no responsibility. There are no requirements for performance anymore. In sum, the US digital economy is rapidly becoming the equivalent of a third-world economy, complete with crony capitalism and digital robber barons.

Blogger Canadian Warlord April 26, 2021 8:47 AM  

I suspect international disputes will be of nafta size, or ignored. Another way to get rid of those pesky small businesses.

You know, the cornerstones of an economy. Who needs that?

Blogger pyrrhus April 26, 2021 8:51 AM  

If the buyer appeared in court, he consented to the jurisdiction of the court unless it was a special appearance to contest jurisdiction only,,,

Blogger OneWingedShark April 26, 2021 8:55 AM  

ÆtherCzar wrote:Worse... corporations will simultaneously claim you agreed to and accepted every jot and tittle of the terms where it suits them, while turning around and arguing that you could not possibly have been aware of the details of the terms and relied upon them.
Don't you realize this is now established precedent in the legal realm?
The wholesale embrace of "absolute legal immunity" that judges have assigned themselves absolutely is this: it is a declaration that a judge is beyond the law… and yet what judge would fail to insist the law, the same he has declared himself immune from, should protect him?

End the practice, end the protection, and I guarantee you things will change quickly.

Blogger Unknown April 26, 2021 9:01 AM  

My first case against the buyer was dismissed for the small claims court lacking jurisdiction over a Canadian citizen.

VD
For example, it is obvious that a state court has no jurisdiction over a Canadian, although of course if the seller had originally filed in Canada, Paypal's lawyers would probably have argued that the seller had no standing in Canada and who knows what a Canadian judge would have to say about that.


exactly my point about the The Super League being a practical impossibility to both get a judgment against the British teams AND have that judgment enforced. especially considering that it's a single billionaire against multiple billionaires.


and, of course, it's weird how often ((( certain people ))) will use arcane legal difficulties like this to their own advantage ...


8. Matt April 26, 2021 8:18 AM
Hey, it may not be a W on paper, but that's not a terrible consolation prize. Good work.


the problem being that a small business man can't take many of these Pyrrhic victories before being driven out of business.

Blogger Fletch April 26, 2021 9:06 AM  

At this point, almost anything that encourages transactions and interactions to be more local is a net positive.

"Ebay and its consequences have been a disaster for the human race."

Blogger eclecticmn April 26, 2021 9:53 AM  

Just found this
https://www.americanthinker.com/blog/2021/04/apple_claims_no_reasonable_consumer_would_believe_hitting_buy_button_means_you_forever_own_the_digital_content_they_sold_you_.html

April 26, 2021
Apple claims ‘no reasonable consumer would believe’ hitting ‘buy’ button means you forever own the digital content they sold you
By Thomas Lifson
...
Apple countered by arguing that “no reasonable consumer would believe” that content purchased through iTunes would be available on the platform indefinitely. But US District Court Judge John Mendez wasn’t buying it, as first noticed by the Hollywood Reporter.
...
Apple is also up against a second class-action suit related to terminating Apple IDs. In this one, lead plaintiff Matthew Price claims he lost $24,590.05 in iTunes, the App Store, and in-app purchases, along with $7.63 in account credit, which became inaccessible when Apple terminated his account.

Blogger carnaby April 26, 2021 10:06 AM  

1. Don't use PayPal. Ever. For any reason.

2. Don't leave signature/insurance up to the customer.

3. If you ship sufficient quantity of products, don't buy insurance. The insurance companies are not in the business of losing money. This means that you can self-insure and break even at worse. You just need to get a feel for how much the insurance companies are adding to the cost of doing business, add that amount on to the price (if you weren't already).

4. You can look at the shipping address on an internet map and decide for yourself about the exposure of the location. If it looks like it gets a lot of traffic, require a signature. If the shipment is going to an apartment building, require a signature.

In 5 years of making many thousands of shipments via USPS, they have never lost nor damaged a single one. I had exactly ONE stolen by a porch pirate. I have come out substantially ahead in self-insuring my shipments and the overall cost is lower for the end customer too.

Blogger Unknown April 26, 2021 10:25 AM  

pyrrhus wrote:If the buyer appeared in court, he consented to the jurisdiction of the court unless it was a special appearance to contest jurisdiction only,,,

My state got rid of special appearances to contest jurisdiction. They figured if you got served that was good enough, and if you wanted to take the risk of not showing you can argue jurisdiction later after the default.

Blogger ChewbacaTW April 26, 2021 11:07 AM  

I have a friend who got screwed out of a few thousand when Bush was still president. PP have been shysters for quite a long time.

Blogger Yukichi Sensei April 26, 2021 11:32 AM  

It also breaks down contracts and rule of law when honest and hardworking nations are forced to compete with total corrupt and evil folks. No contract can be made in that case, nor should their be.

Blogger Wheels April 26, 2021 11:34 AM  

It's about time that courts concede that 100+ pages of the Terms of Use, and certain conditions of use are unconscionable.

OF course PayPal and other behemoths will spend whatever it takes to uphold their Terms of Use, as it is their first and last stand to thier existance as they know it.

No signature confirmation and not shipping to the billing address is a poor practice for higher value items regardless of Terms of Use.

Blogger Newscaper312 April 26, 2021 11:38 AM  

@eclecticmn

Thanks for that reminder about digital media.
Before the free music streaming really took off, I had purchased quite a bit of MP3 music from Amazon. I really need to go back and finish downloading all of it.
FWIW I never did get rid of all my old CDs. Simply took them out if the bulky cases and put them in big binders. Do still have my old CD player for the stereo if times get too weird. Assuming electricity is still a thing of course.

Blogger Pirate April 26, 2021 12:05 PM  

"Fortunately, the law, especially in California, is considerably harsher on corporate misbehavior than people commonly believe, so it is very far from impossible to beat them in court, so long as no obvious mistakes are made."

Soooo, is California actually the good guy in this case? In spite of all the sociopaths they have shuttled off to other states in order to wreck their housing markets and turn voting majorities purple or blue, is there the occasional bit of good coming out of that state somehow?

Blogger JG April 26, 2021 12:23 PM  

I ship about a 1500 packages a year worldwide. 0.6% of the packages are lost and don't make it to the customer. Insurance is more expensive than re-shipping in my experience but you may have a different experience than me as I manufacture the products I sell.

Blogger RA April 26, 2021 1:38 PM  

I dumped my vinyl albums a few years ago. But I'm holding on to my CDs plus I also bought a fair number of MP3's. I made it a point to download every last bit and keep my own offline backup for it.

I have been using eBay and Craigslist for a long time. My volume isn't as much as some I've seen, maybe 500 to 600 sales over the last decade. One thing I've done to avoid issues: I only use eBay's Global Shipping program for international sales. Some potential overseas buyers have pitched a fit at me, but I tell them so sorry I'm delegating that headache to eBay and you will just have to pay up for it. No problems so far, knock on wood.

Only one issue with a possible porch pirate: I shipped to a rural area and judging from street and satellite view, it looked okay. It turned out that the postman tossed the package into a neighbor's yard way down the road. Well the buyer and all of his neighbors had been complaining to the local postmaster about that postman for years but if I read between the lines, he is apparently a POS POC and can't be touched. Something else one may have to watch out for. As if porch pirates weren't bad enough.

Blogger Colonel Blimp April 26, 2021 3:59 PM  

I would have thought all this were decided on by 2004. Ebay and paypal are relics now. Once you could effectively con the seller into not wanting to spend money to ship things back that were unwanted or "broken" anything under 50, even a hundred if large enough were just rampant for fraud and theivery. I sold my last thing on ebay in like 05..

Blogger MichaelJMaier April 26, 2021 7:38 PM  

EVERYTHING is crap. Paypal is a shit company. They allow fraudulent sellers and refuse to intervene for their customers. Bought from an ad and it turned out to be a Chinese company selling me pirated knock-offs. My photographic proof didn't sway Paypal in the least. The Chinks pay well, I'm guessing.

Shipping is crap now too, because now all the big shippers will not require signatures for delivery. "COVID". So FED EX can AND WILL deliver "signature-required" boxes without requiring the signature. You're not home and your neighbors steal your box? Oh, well that's your fault for not being home or not looking at your porch every two minutes. Because they don't even knock when dropping off your box.

Oh, and now they're charging money to divert to a UPS or FED EX depot for you to pickup. Never mind that that saves them money on shipping costs....

Everyone's ducking responsibility and it's anyone else's fault.

Blogger eclecticmn April 26, 2021 8:09 PM  

Louis Rossmann rants about how insurance is a racket. One guy bought loss of business insurance or some such, which covered your business getting shut down. I cannot remember the details. The hurricane struck and knocked out all power. He filed and was denied. They said that water had knocked out the NYC transformers and he did not have flood insurance. His business had no water damage. Pandemic insurance did not cover COVID-19. Etc.
https://www.youtube.com/results?search_query=louis+rossmann+insurance

Blogger Jack Amok April 26, 2021 11:50 PM  

The end of Contract Law? Naturally. Why would we expect Contract Law to live past the death of the Rule of Law itself. It's all who-whom now.

Blogger Akulkis April 27, 2021 12:33 AM  

>> End the practice, end the protection, and I guarantee you things will change quickly.

There's a higher law than case law, statute law and even the Constitution.

It's called Natural Law.

To wit:

Statute law says that if I kill you, I will probably go to prison.

Natural law says -- regardless of how much time that I serve in prison, you're still dead.

Nobody, not even judges, are immune from Natural Law.

Blogger Akulkis April 27, 2021 12:46 AM  

@27

Yes, Insurance is a racket. Mutuals (such as Mutual of Omaha), and a few other forms are non-profits, and so not a scam. Any indemnification company which has investors or owners (other than those paying premiums for coverage) seeking a profit, MUST overcharge the policy holders to clear a profit above and beyond the costs incurred by paying out claims; wages and salaries for personnel; office space; and other overhead expenses.

Blogger RC April 27, 2021 9:32 AM  

Akulkis wrote, "Yes, Insurance is a racket."

Yes it is, especially outside of standard consumer policies.

On any claim they run the numbers like a game theory problem and choose the probably lowest cost option. If that means they deny your claim, even your defense costs, they still sleep soundly at night. Of course this leaves you, having paid ten or twenty years of premiums funding not only your own defense but a separate lawsuit to force them to honor their obligations. It is an abhorrent, destructive game, one the insurers usually win.

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