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Technology

Contracts: Company Insurance For The Future 63

Posted by Hemos from the don't-sign dept.
batobin writes: "This article gives a new perspective on how contracts work in the technology business. In the past, contracts and signed agreements have been used primarily to protect the individuals involved from legal action. They are now being used like a spider web. After they catch somebody, their purpose is to keep them subscribing/paying/buying their stuff, even if you don't want it anymore."
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Contracts: Company Insurance for the Future More

Contracts: Company Insurance for the Future

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  • Read the whole contract, do the maths, don't be a sucker.

  • About 8 months ago I signed up for DSL service - I had to agree to the terms of service in an immutable contract for a year.

    since then, the package that I purchased (perfect for me!) has been retracted - they've now repackaged the deal, stripped out all the extras, and lowered the monthly fee $10.

    So, I pay $50/month to get static IP - you can get Dynamic IP for $40 - but to get static now is $70/month!

    Every month I come out $20 AHEAD because of this contract! Plus, I can renew the contract and retain the service unchanged.

    It's not ALWAYS a bad thing...

    -Ben
  • They're there to protect the company. They can also protect you if you read them carefully and understand them. Case in point:

    My wife had signed up for a National Cellular service ( which we ended up intensly disliking ). After we received a notice of a Change in Service Agreement I read the contract a little bit more closely and found that we could opt out at this point with no penalty and without waiving our deposit. It then took about 5 faxes and numerous phone calls to support to effect this -- read all contracts that you sign up for on service etc.

    Anybody ever notice how funny it is to actually obtain the service agreements from Cellular companies before you sign up with them? Nearly impossible....

  • Must be within your 50% troll quota. Anyway, I bite:

    You forgot option 3:

    Actually providing good service

    Admittedly this strange concept seems less and less important...

  • 1 by the way has a single word.. "Compeate"
    and of course compeating is communist... er wait.. no...
    Yeah the whole idea of Communism was to ELIMINATE that stuff.. with compatition there is a winner and a loser... lose to often and you enter poverty.

    Captialism is more the idea of hard work pays of...
    Selling software isn't evil... forcing users to buy your product is evil...
    The diffrence...
    Preinstalled Windows is still a sold product but it is not capitalism as the end user has a choice between diffrent Windows computers.
    This has distoryed the market for compeating products as the end user will not pay TWICE for software just so he can have annother choice.

    Here comes Linux... don't pay at all...

    There is the group who would rather you not sell software. That you give it away.
    This is being just plain greedy...
    If a person wants to try to sell something (in capitalism) they should by all rights sell it...

    A side note in the 1980s many software pacages were liccensed source..
    In this you paid for a liccens not only for the software but for the source code. You were allowed to share changes etc but giving away the source was the same as giving away the binary... it's still a commertal product.

    The basic problem with closed source is that it has moved far away from capitalism with liccenses.

    Basicly our evil greedy Bill Gates pritty much just loves writing code. He enjoys programming and dose it for fun.
    But Bill Gates needs to put food on the table so he basicly sells his labor. Thats captalism.
    But users don't buy his work.. instead they STEAL it.
    The sad fact is normally intelectual property is vertually imposable to sell.
    Music needs to be on a CD to hear.. the CD is the binding reality that makes music a product that can be sold.
    Books need to be printed on paper to be read. The book is the solid reality that makes books products that can be sold.
    But software exists electronicly. Disks are easy to copy. But moreover the data on the disk can be transmited in any number of ways.
    As a result any one disk sold may become thousands of disks with a simple file copyer.
    Or worse.. just upload the data on the disk to a BBS... Now everyone who calls your BBS can have the same software.

    It really dosn't work well when your trying to make a living. But Bill Gates pushed on..
    He was basicly ripped off for 20 years before he discovered a way to prevent theft of his software and finnaly make a proffit.

    His most populare operating system.. Dos.. sold decently.. and it did so by liccens. If you sell PCs every PC you sell must have Dos preinstalled.
    It made sence.. It was the standard operating system of the PC.. You expected as much.

    Somewhere along the way he desided that his failed product Windows was being stolen by every Dos user.
    Why? Well.. to put it mildly.. Windows has allways been a joke... Those who paid for it found it to be useless.
    But Microsoft assumed Windows was a success becouse they figured it was the only product like it on the market.
    That would be a correct assumption. It also was compleatly with out any market demand.

    Microsoft basicly crammed Windows into the market.

    Liccenses like this.. are not capitalism. They eliminate compeditiveness. They distory the market.
    They are the only way you can sell software and make any money.
    Now if someone wishes to TRY and make money selling software in a captialist market...
    Go for it...
    But companys find monopolitic dictatorships to be the only path to proffitability when your product is easy to download.

  • Contracts are the tool of all legal entities. Persons, Corporations, Trusts etc. Contracts define the legal relationship between parties, thats it. If you don't like the terms don't sign the contract

    It is wrong to say that contracts only serve corporations. Now it is not wrong to say that there is often an imbalance of power during the process that determines the terms of a contract, but that is a very different animal.

    There are many jurisdictions in which there are strong sanctions for misuse of this power. However at its simplest level, if you don't like the contract, don't sign it

  • The original intent of a contract was to document a carefully negotiated agreement so that everybody knew what was negotiated. Everybody signs to say 'yeah this is the agreement that we came to'. That way, if it came down to a question of "was it 3 sheep or 4", you hust had to go back to the piece of paper that everybody signed.

    The current use of the contract is nothing like that. Thousands of average Joes get a thing stuck up in front of them with half a dozen pages of fine text and told "click this if you agree". When they click, they're just as tightly bound to the agreement as were the guys that carefully hammered out an agreement over hours (or months) of negotiation.

    The difference here, is that only one party has carefully 'negotiated' the agreement. When you sign a contract you are pretending that you carefully negotiated the contract that you sign. Whether or not you read it is pretty much irrelevant. Long wordy contracts actually make it less likely that a customer is actually going to READ a contract. This means that there is more and more that a company can essentially trick you into giving them.

    One of the sub-messages of the article is read before you sign. The contract is not for your protection. It is for the benefit of the company. This is especially true if you are making a multi-year agreement. Do the math to determine if you will be willing to walk away from the contract if it turns out to be useless in a year. If you woulen't be willing then you should probably look at talking away from it now. Make sure that they don't have the right to do nasty things like raise the price of the service.

    "But it was only $20/month!"

    "That was at the beginning of the contract. Since then we've had to deal with ... uhm, INFLATION -- Yeah, Inflation! and now we're passing it on to you."

  • I refuse to sign or accept a service contract any more. Mostly just because I don't want to be stuck with the service for any longer than I have to if I decide I don't want it any more. For example, I can add 500 minutes to my Sprint PCS service just by signing a year contract, but I have changed my plan a couple of times in the last year. Hell, the reason I went with Sprint PCS in the first place is because they didn't have a contract.

    One that really got me was the Flashcom contract. A 5 page contract for DSL service that has goodies like:

    • Flashcom may disclose information regarding Customer's use of the Services for any reason and in its sole discretion.
    • A customer who terminates the service after installation may be liable for any or all of the following termination charges; (1) an amount equal to the monthly recurring charge multiplied by the number of months remaining; and (2) an additional termination charge in an amount equal to any promotional credit, discount, or fee waiver. [In other words, they get your money, whether you want the service or not.]
    • Flashcom may send email messages or other forms of communication to Customer containing advertisements.
    • Customer shall indemnify and hold Flashcom harmless against any and all claims, losses, damages and liabilities sustained by Flashcom resulting from, arising out of, or connected with any breach of, or nonfulfillment of any representation, warranty, covenant or agreement. [With this, you are paying for service for the 2 year contract, whether they provide it to you or not.]

    These were revised on 8/21/2000. 8 months ago when I was looking for DSL, the contract said that at the end of 2 years, I would be automatically renewed for another 2 year contract unless I notified them in writing 1 month prior to contract termination. No way! Now it is month to month after 2 years and not quite as bad.

    Finally, I disagree with any legislation, etc. to keep companies from doing these contracts. If you want to do business with them, you agree to their terms. If you don't like the terms, you don't do business. I think people will eventually get pissed off enough that companies will start losing business and be forced to rethink their contracts. Perhaps that is why Flashcom changed their contract...

  • This sort of stuff is everywhere. You mentionned hairdressers (most of them really do deserve to get stuck on the same world as the telephone sanitisers).

    There was this really famous French chef, who recently opened a restaurant in New York (or some other town). He was running it on his reputation. Damn it, he wasn't even in the kitchen more than a couple of times a month! He reckons that if he's put up the money for it (even if that money's been borrowed from a bank or venture capitalist), interviewed the cooks, `created' the menu and recipes, and trained up the head cook, he can do whatever he wants... inluding sticking his famous name over the door and leaving it to the deputy.

    OK, so I'm not entirely opposed to that way of running things... but it seems that the NewYorkers were not happy. They see the Big Man's name, they expect to see him with his sleaves rolled up, getting some work done. Or at least being there, keeping an eye on things.

    Well, he wasn't. And these rich NewYorkers had who had booked tables with a three month wait heard reports from people who'd already been, found out it wasn't the "dining experience" that they'd been hoping to buy into, and started cancelling.

    What does the Big Man do? Does he change his way of doing business? Does he show up more often? No. He tells the staff "whenever someone calls to book a table, you take a credit card number, you charge the sucker, er I mean esteemed client, a $150 non-returnable advance".

  • But they miss the other major reason for contracts: getting you in the door with subsidised equipment and then trying to make sure that you eventually pay for it.

    IMHO, that's fair enough. If the contract is geared to making sure that they don't loose money by having people sign up, get free stuff, then cancel immediatly.

    Contracts are starting to go beyond that now. In some cases, canceling costs way more than just continuing to make the agreed upon payments. The company actually does better if they provide crappy service after you sign. That way, you stop using it, but continue paying.

  • Re:Purpose of Contracts (Score:3)

    by UnknownSoldier ( 67820 ) on Friday September 22, 2000 @04:50PM (#762105)
    > you would write half of all contracts with the companies; you don't, and you aren't.

    Sorry, but some of us DO write contracts that we sign. At my current job I wrote the full 100% contract. After I had been hired, I gave them my contract, the company then sent it off to their lawyer, made a few tweaks, I reviewed it, and we were set.

    Reading and writing contracts isn't THAT difficult! Heck, the founding fathers were lawyers and they never went to law-school.

    > It may be argued that you don't have to sign anything, and that is true;

    Yes, that is why I refuse to sign a driver's license. I am not going to waive my rights* to freely travel. Know your rights! Excerise them!

    Remember, If you don't READ _and_ UNDERSTAND what you are signing, then don't sign it.

    Cheers

    * Court cases for those interested: Right to Travel vs. Permission to Drive [teaminfinity.com]

  • Re:It's always been that way (Score:3)

    by sjames ( 1099 ) on Friday September 22, 2000 @05:53AM (#762106) Homepage Journal

    So we paid out for two more years for useless upgrades and tech support which we couldn't use as we weren't at the latest version (another nice clause) :)

    Should have been more creative. It IS the same box, it's just that we replaced the case, cpu, memory, drives, power supply, motherboard, and display card all at once. The keyboard, however, is original.

  • I entirely agree, employees should have a clause in their contract stating their authority in such matters.

    The really stupid thing is a lot of small businsses don't have decent employee contracts.

    For example how many small business have a policy regarding acceptable use of e-mail and the internet ?

    Too few I'd surmise,but they'll be the first to sack someone if the find they're send pron round the office or even reading /. in their working time :)

    Perhaps you're more clued up in the US, but at least in the 80's I remember cases of companies getting stung for contracts they didn't want.

  • f you were in an equal bargaining position with companies - you would write half of all contracts with the companies; you don't, and you aren't.

    Agreed 100%! I would go further and say that it's not even negotiated most of the time. For proof, go to Radio Shack and look over the contract for new cell service. Now, strike the clauses you don't like and ask the salesperson to have an authorized representative of Tandy initial the changes and sign at the bottom. What? The contract isn't negotiable?

  • It's always been that way (Score:3)

    by HarmlessScenery ( 225014 ) on Friday September 22, 2000 @02:07AM (#762109)
    "In the past, contracts and signed agreements have been used primarily to protect the individuals involved from legal action. They are now being used like a spider web."

    Did I miss these 'good old days' when contracts were only used for everyones benefit ?

    Contracts have always been written solely for the advantage of the company which created them.
    The only difference is that 'Joe Public' is now being exposed to contracts (software, mobile phones, ISP's etc), in many cases for the first time - and people are getting burned more often.

    Businesses have had this problem for years.

    My personal favourite was a 4 year 'tech support / free upgrades' contract for some software we had. After year 2 the tool was upgraded significantly and our Unix box wasn't man enough to run the new version - but there was a clause preventing us from transferring the software to a new box.
    So we paid out for two more years for useless upgrades and tech support which we couldn't use as we weren't at the latest version (another nice clause) :)

    We were more careful after that.
  • Hehe. You know how in bad movies about bank robbers they always turn the tv on after the big heist just as their story comes on? Well, as I read your fine post, I figured it would be nice to have the song playing at the same time. I thought to myself "Hey, I'll just turn on the crappy local MTV imitation channel; they only have like 15 videos so there's a good chance it'll be on."

    And of course you wouldn't be reading this if it hadn't been :-)

    I love long shots and coincidences like that. A few months ago I rented a DVD and started watching it on my weird setup (a vnc-controlled headless Win98 box with an Encore kit would play the disk and I'd watch it on my main machine using a TV tuner card hooked up to the dxr3's s-video out.)

    Halfway through the movie, the drive started failing as it often did halfway through a movie and the windows box locked up. While waiting for it to boot, I switched xawtv's video source from S-Video to Televion and was confused for a moment to see a scene I'd just watched 20 minutes earlier off the DVD. It would have been so cool if I'd started watching that DVD a little later so the phase shift hadn't been noticable. Oh well, pretty cool nonetheless.
    --


  • That's pretty phat, yo'...

    I'd love to have a recordin' of mah song ta kick back an' lissen to, but ah might need someone to rap it fo' me; I ain't no Dr. Dre, o' even Eminem fo' that mattah; 'leastin ah haven't tried it yet.

    Yo' setup sounds pretty wack, tho', yo, an' xawtv useta piss me off, givin' me video corruption an' shit. But that's prob'ly just the cheap-ass TV card I wuz tryin' out wid it. It was okay fo' video tapes, but anythin' else jus' plain don't work, o it looks like SHIT...

    I'm glad ah linked to this copy, so mo' people can see it, an' I got a clean place to get feedback, yo'. I jest don't know what to do next, 'cause I ain't changin' my name now. :)
  • Yes, half the world works like this. And for half of the world, it works. The difference here is that the ISP market is so fast that three years is an eternity.

    Normally, if I buy a contract for several years (say, a car lease), I have a reasonable expectation that their half of the contract will still be good at the end of that time (that is, the car will still work pretty well). Here, if you sign up for a 56K connection for three years, remember that 56K will be like 2400 baud by then.

  • Ooo, technology is moving quickly. Signing a contract means you're committed to something. "I can't weasel out of my financial committments.". Wah, wah!

    Actually, signing a contract means you get tied to a company that only offers one thing with your service: "We guarantee we will take your money for a year (oh, and we'll probably laugh at you a lot, you moron)."

    To illustrate [dslreports.com].

    --
  • Promissary estoppel

    The law states that if someone had the 'apparent' authority to make a commitment as an agent for their prinicipal, even if they did not in fact have that authority, the principle is liable for it. A janitor obviously shouldn't have that apparent authority, but that may be the tact the salesperson is using to bully the company.

    IANAL, I just took a business law class :>
  • >First off, spell check yourself.
    Your right.. I should.. I'm lazy... enough said..

    >And to say that monopolistic dictatorships are the only way big companies can make money, that's just dumb. Companies can make TONS of money if they create something people need/want and they do it WELL. The problem is, that they are more concerned with getting things onto the market fast, making a quick buck, than making a good product.

    I didn't say this was true of all markets just software.
    ID is an incredably good counter example.. Quake and Doom are not things you can just download.
    (The source code yes.. the binary yes.. the art work NO)

    But when you start getting into smaller programs like wordprocessors etc.. Stuff that fits on a single flopy disk... that stuff can be downloaded pritty easly.. it makes it vertually imposable to protect your IP rights...
    All the copys of the DVD DeCSS floating around show how hard it is to get rid of any software once it's on the Internet.

    Microsoft themselfs had this problem with Microsoft Basic roms floating around...
    Today he's ripping us off at one time however everyone was ripping him off...
  • Honestly, do you really think that that is worse ? As a European, I'm very glad that I don't have to re-subscribe for (say) my cellphone service

    Same here. But that system is more open for abuse. Once someone is tricked into something its very likely it'll go on for some time while the chances are more slim in the US.

  • Contracts can be bothersome (Score:1)

    by Anonymous Coward
    Sometime for people like me contracts are bothersome because I am constantly shifting and therefore have to keep informing these guys of a change in address and inspite of that they always mail the letters or mags to the old add. And if money is involved I actually loose a lot because of default in submitting the amount in time. Some of the new occupants never bother to redirect either.

    Ishrat@founderscamp.com [founderscamp.com]

  • A while ago, a popular computer magazine offer me a free issue. They ended up sending 3 issues and instead of asking if wanted to continue the subscription, they made demands about paying for the last 2 issues.

    Tossers!!
  • Not only do these contracts limit individuals, they limit our society as a whole.

    This whole article seems to focus on the negative side off there contracts and I don't really agree with that. Sure; when taking the 28k8 modem into consideration it is bad when you sign that to last for 6 years and after 5 years you still run on 28k8. Or is it? What happens if that speed changes? Lets say that I'm very happy with 28k8 (I'm happy with my 56k6 at the moment so it IS possible :)) and I'm not interested in all those upgrades. Due to the immense developments this company sells 56k6 connections and I see my 28k8 drop to 14k4. Yikes!

    But... Hold on.... Didn't I sign a contract stating that this company promised me a clear 28k8 connection? Sure, contracts can limit people and companies but they can also insure your rights very clearly.

    Besides; I think that Europeans (at least we in Holland) will (/ are) suffer(ing) more then the people in the US. I've noticed this from the very first moment when I read an American magazine; you guys have to re-new your subscriptions and such (every 1 - year) while we can sign up papers which state that the subscriptions will go on untill I tell them I don't want it anymore. And yes; this also exists in contract form.

  • May I have your attention please,
    may I have your attention please,
    will the real bruce perens please stand up,
    I repeat will the real bruce perens please stand up
    .....we're gonna have a problem here.........

    Ya'll act like you never seen a slash poster before
    mouse all on the floor
    like mom and daddy just burst in the door
    and started whoopin yer ass worse than before
    they first had endorsed
    buyin' ya a crappy computer (aaaaaah)
    It's the return of the...
    "awww..wait, no wait, you're kidding,
    he didn't just say what I think he did,
    did he?"
    and Mr. Cray said...
    nothing you idiots, Mr Cray's dead
    he's locked in my bassment
    microsoft women love Sig '11
    chicka chicka chicka bruce perens,
    "I'm sick of him, lookit him
    walkin around, grabbin his GNU know what
    flippin' to GNU know who"
    "yeah, but he's so smart though"
    yeah, I probably got a couple of screws up in my head loose
    but no worse than what's goin on in your sister's webcam (eheheheh)
    sometimes, I wanna get on ZD and just let loose
    but cant, but it's cool for RMS to hump a dead GNU
    My mouse is on your link, My mouse is on your link
    and if you're lucky, I might just give it a little click
    and that's the message that we deliver to little kids
    and expect them not to know what a free software is
    of course they're gonna know what Microsoft is
    by the time they hit 4th grade
    they got MS-NBC, dont they?
    we ain't nothing but omnivores
    well, some of us carnivores
    who read other people's mail like crackwhores
    but if we can read your e-mail like it's available
    then there's no reason that a man can't forge spam from your account
    but if you feel like I feel, I got the antedote
    trolls wave your penis birds, sing the chorus and it goes........

    I'm Bruce Perens, yes, I'm the real Perens
    all you other Bruce Perens' are just imitating
    so won't the real Bruce Perens please stand up,
    please stand up, please stand up
    cause I'm Bruce Perens, yes, I'm the real Perens
    all you other Bruce Perens' are just imitating
    so wont the real Bruce Perens please stand up,
    please stand up, please stand up

    Sig 11 don't got to cuss in his posts to get Karma
    well I do, so fuck him and fuck you too
    you think I give a damn about my Karma
    half of you trolls can't even stomach me, let alone stand me
    "but bruce, what if you win, wouldn't it be weird"
    why? so you guys can just lie to get me here
    so you can sit me here next to Natalie here
    shit,Enoch Root's momma better switch me chairs
    so I can sit next to trollmastah and Post First
    and hear em argue over who modded it down first
    little troll, flamed me back on IRC
    "yeah, he's fast, but I think he types one-handed, hee hee"
    I should download some audio on MP3
    and show the world how you released it BSD (aaaaaah)
    I'm sick of you little troll and l33t groups
    all you do is annoy me
    so I have been sent here to destroy you
    and there's a million of us just like me
    who post like me, who just don't give a fuck like me
    who code like me, walk, talk and act like me
    and just might be the next best thing, but not quite me......

    I'm Bruce Perens, yes, I'm the real Perens
    all you other Bruce Perens' are just imitating
    so won't the real Bruce Perens please stand up,
    please stand up, please stand up
    cause I'm Bruce Perens, yes, I'm the real Perens
    all you other Bruce Perens' are just imitating
    so wont the real Bruce Perens please stand up,
    please stand up, please stand up

    I'm like a head trip to listen to
    cause I'm only givin you things
    you troll about with your friends inside you rabbit hole
    the only difference is I got the balls to say it
    in front of ya'll and I aint gotta be false or sugar coated at all
    I just get on the web and spit it
    and whether you like to admit it (riiip)
    I just shit it better than 90% you trollers out can
    then you wonder how can
    kids eat up these posts like gospel verse
    it's funny,cause at the rate I'm going when I'm thirty
    I'll be the only person in the chat rooms flirting
    cyberin with nurses when I'm jackin off to porno's
    and I'm jerkin' but this whole bag of viagra isn't working
    in every single person there's a bruce perens lurkin
    he could be workin at Micron Inc., spittin on your SDRAM
    or in the printer queue, flooding, writin I dont give a fuck
    with his windows down and his system up
    so will the real perens please stand up
    and click 1 of those fingers till you drag up
    and be proud to be outta your mind and outta control
    and 1 more time, loud as you can, how does it go? ...........

    I'm Bruce Perens, yes, I'm the real Perens
    all you other Bruce Perens' are just imitating
    so wont the real Bruce Perens please stand up,
    please stand up, please stand up
    cause I'm Bruce Perens, yes, I'm the real Perens
    all you other Bruce Perens' are just imitating
    so wont the real Bruce Perens please stand up,
    please stand up, please stand up

    I'm Bruce Perens, yes, I'm the real Perens
    all you other Bruce Perens' are just imitating
    so wont the real Bruce Perens please stand up,
    please stand up, please stand up
    cause I'm Bruce Perens, yes, I'm the real Perens
    all you other Bruce Perens' are just imitating
    so wont the real Bruce Perens please stand up,
    please stand up, please stand up

    haha guess it's a bruce perens in all of us........
    fuck it let's all stand up
  • What part of the article did you disagree with?
    The quotes you are responding to are from the
    /. intro, not the article itself.

    The main point of the article was that you
    shouldn't sign contracts that will lock you
    into soon-to-be obsolete technology. What's
    to disagree with?

    I would imagine that not having a state-of-the-art
    card-key/camera system probably isn't that big a
    deal, so it is less of an issue.
  • Well, it's the good ol' story about the molochs that want to cage us common people like animals. There's more to it though, and it's not covered in this story. It may seem like ISP's are having their profits rocket sky high, but the fact of the matter is that a lot of them are living on borrowed time. They're Consuming investor money to do research, pay expensive IT-pro's and spend a lot of cash on equipment and bandwidth fees. The truth is: What used to be so darn profitable, giving access to the Internet, turned into something that costs more than it will ever profit. Just look at the price at which Cable plants sold the past year. That is a lot of dough to be covered by a bunch of $30 accounts. ISP's will have to change their core business to being an ASP or CSP and that is something most of them are not ready for and for a lot of them it is questionnable whether they'll ever be. I'd go for the safe way of getting people to sign up for a long period too, if I where them. If you don't have something profittable to offer now, then get them to be your friend and start hunting for something new to offer them before their account expires.
  • Well its not always that simple.

    The classic is example is salesmen selling photocopiers to businesses.

    A well known trick was to try and get anyone at the company to sign a contract... a usual ruse being find the cleaner on duty and say we've got a delivery for this photocopier, would you mind signing for it.

    Now the poor cleaner had been tricked into thinking they were signing for a delivery, as we all no people don't usually read what their signining.

    Thankfully these tactics are outlawed now but I'm sure something similar is happening somewhere in the world today.
  • So why should you be concerned with signing a little contract to get the newest and greatest thing? It looks so cool now that you can't ever imagine wanting something to replace it. Slap yourself in the face and dunk your head in the toilet to wake up from the dream. Remember five years ago when you got that 28.8? Now is the exact same situation. Imagine if you signed a contract with your ISP, agreeing to pay for 28.8 access for six years. It was so absolutely cool, yet now it moves slower than a dead tortoise wearing lead shoes.

    While this is true, it's also true (for the forseeable future) that anything you buy is soon going to be obsolete. There's never a good time to say "OK, things have reached a plateau, I'll buy now", since it's never going to reach a plateau.

    But when you buy something, Moore's law (and it's equivalents elsewhere) must be kept in mind. Paying for a 1 years worth of DSL now, when you know it'll be cheaper 6 months from now, can be an acceptable tradeoff. Paying for 5 years of DSL would probably be a very bad idea.


    Suppose you were an idiot. And suppose that you were a member of Congress. But I repeat myself.
  • Frankly, this is the same sort of silliness that infests the minds of people who think that they can actually get rich quick on a tech IPO. Repeat after me: "There is nothing inherently innovative about the market."

    A company wants to stick you with a POS machine for three years. In return, you get to pay them to use their ISP (at a perhaps slightly reduced rate), *and* you're a captive audience for their banner ads, spam, and physical junk mail. The only innovation here is that they've figured out how to snag more suckers.

    Look at the music industry (god, how that phrase catches in my throat-- "idustrialized creativity" *brr*) for a short moment. Instead of jumping all over the 'net as a cost-reducing transport for their product, they're just jumping all over the 'net. They don't want to innovate, they want to keep things as they've been for the last several decades.

    No-one is interested in innovation anymore. All they want is some asinine new angle (read: :cuecat) to sell to investors, and to patent to death (read: one-click). They come up with a minor idea, and hope to get a free ride on its coattails when its popularity "inevitably" takes off.

    Of course, a lot of these organizations will be utterly screwed if the public ever smartens up. Selling expensive hardware as a loss leader is an extraordinarily risky move, and everyone should expect these organizations to either vanish or declare bankruptcy several months after they appear.

  • Besides; I think that Europeans will suffer more then the people in the US. I've noticed this from the very first moment when I read an American magazine; you guys have to re-new your subscriptions and such (every 1 - year) while we can sign up papers which state that the subscriptions will go on untill I tell them I don't want it anymore. And yes; this also exists in contract form.

    Honestly, do you really think that that is worse ? As a European, I'm very glad that I don't have to re-subscribe for (say) my cellphone service. Less paperwork, and unless you keep an eye on the tarrifs they can't screw you. Remember that you are the one that has conrol over the endless contracts: you leave them if you don't like it anymore. (Sometimes you need to wait a certain amount of time, okay...but that was your choice when subscribing anyway) Besides, most companies that offer such "endless" subscriptions will send you information -in time- on pricing changes.

    This "endless" contracts don't really apply to all products: I never saw a magazine use them. Mostly you have to re-new your subscription every year...for magazines. The endless contracts are typically for electricty, telephony, water and gas (not the kind to put in the car). I only know one contract that is endless and I even can't cancel, and that is called "taxes" :-)

    Besides, I hope that you know that in Europe "bundeling" of two different products is unlawful. (Sevices are a products too) They can offer you bargains (like the cellphone they give you for Guilder together with you subscription), but they have to sell you either separately if you ask so.

    This is just about reading the fine print...nothing more nothing less

  • Here in the UK, most cellphones are sold with a one-year contract. The contract states usually that you will pay x pounds a month for a year for line rental and often get a bundle of free minutes with it. Often these contracts tie you to a specific tariff although Orange [orange.co.uk] make the point that the contract is with Orange and not the tariff (so you can change giving a month's notice if your circumstances change). In return for being signed up for the year you can often get the phone very cheaply, or in some cases, free. However a get-out clause is very rare although it allows you to cancel a contract within 14 days. Customers of Cellnet [cellnet.co.uk] used a get-out clause (which basically says that if they increase the charges substantially they can cancel the contract and keep the handset) when Cellnet changed the charging structure and made some people's bills skyrocket. Also, it must be noted that since the networks subsidise the cost of the handsets this often leads to very much higher line rental.

    One company is trying to change that, Virgin Mobile [virgin.com] are selling phones at full price and offer relatively cheap calls for no line rental at all. (The other networks offer no-line-rental prepay options but the phones are subsidised a bit and the calls are hellishly expensive.

  • Most contracts are equal tradeoffs...
    You agree to give me a decent product and I agree to pay you money.. Thats a contract we commit to every day.. sadly often one party fails the comitment (Not allways the busness side BTW)

    It talks about "Free computer" deals etc..
    They aren't so hot but they are worth while...

    I might not be able to afford a brand new computer but $30 a month I can handle...
    I personally took a diffrent route.. I bought my computer over time by buying parts over time. I didn't have my computer all at once but for $100 a month I got a decent computer. And I own it outright.
    Now I pay less than $20 a month rather than nearly $30.

    But for people who need the equipment NOW that $30 a month is a good deal.
    I however plan to upgrade my motherboard and case really soon now...

    But this strikes me as very similer to the problems we are having with Microsoft...
    But Microsoft isn't offering anything of value in return...

  • The logic in this article would seem to apply to marriage contracts as well; for example:

    You may have heard a variation of the joke: "If the devil can't come himself, he sends an old woman". This plays off of the cruel reality showing that the romantic market moves faster than my 400 pound Uncle Herb running to a buffet. I remember five years ago, thinking my 35-year-old wife would last me forever. Now we have women that are that are 50 to 100 times prettier,not to mention younger, walking around the same streets that connect your house to the world.

    So when women want to get involved in a relationship today, they can understandably be worried about this swift market. What if they can't compete in the future? It is for this reason that they have developed a contractual system. They have what you want, NOW, and to get it from them, they want your money not just now, but a year from now as well. It's like their retirement package.

  • There was a young man from Aberdeen,
    Who as a cool dude tried to be seen.
    He walked the tight-wire,
    Juggling golf clubs of fire;
    Retired a frustrated has-been.
  • The company actually does better if they provide crappy service after you sign. That way, you stop using it, but continue paying.

    This may be true if the company is not trying to add or expand the customer base - however, if they are actively seeking new customers, a shoddy product with a bad reputation will be a significant obstacle to overcome.

    However, as we know, many companies do in fact overcome these difficulties through marketing - case in point: AOL.

    -jerdenn

  • Yes, people are allowed to refuse to sign things, but then again, people are allowed to not accept software licenses.

    People are signing up because they are being offered lots of money all at once, $400, and getting something they want now anyway, and isp. Unfortunately they are only looking at the "Bright side of life," and not realizing that they just gave up 3 years of their lives.

    Also, have you ever read a legal contract? I always at least skim everything I sign, but usually any more then that makes me want to pass out, or vomit.

    The problem with lawyers is, once a few people have them to cover their asses, everyone else needs one to cover theirs as well. It's a nice big circle that gets anal-retentive people who don't mind pouring over minute details lots of money.

    I think I had a point along the way. I guess it's up to the flamers to decide.

  • Comment removed based on user account deletion
  • Spot on, Kris. The sooner losers like the guy writing this article (and some of the bleeding hearts who replied on the other site's forum) learn to take some personal responsibility instead of throwing a tantrum and screaming for daddy every time they do things wrong, the better.

    Let's see. They can't be bothered to check how long what they've bought is going to be reasonably up-to-date. They can't be bothered to check whether it's at a reasonable price. They can't be bothered to read the contract. And even worse, they can't be bothered to work out IF THEY ACTUALLY NEED IT! And somehow, this is supposed to be the fault of the person selling it to them? Grow up, for god's sake!

    If I went to a shop and said, "I want a stuffed llama", then when they give me a stuffed llama I have no rights to say "What's that? I didn't really want a stuffed llama after all, I actually wanted a cheeseburger."

    Grab.
  • This post reminds me of a recent story about Priceline customers who are complaining because the airline tickets they buy have ridiculous limitations. It occurs to me that this is not a technology limitation, just an implementation problem.

    Right now, when a consumer uses the reverse auction to purchase something, like an airline ticket, Priceline does not provide them with a good enough way to specify what they will accept. A better design would allow the purchaser to specify the terms of the purchase upfront, in other words: specify their own contract.

    INAL, but I understand an important part of contract law is determining what to do when things go wrong. If things always went right, contracts would rarely be needed, or least they would be much simpler. So I'm not proposing that everyone should write his or her own contracts. What should happen is that an educated consumer could select a consumer friendly contract from a pool of choices.

    The reverse auction process should allow the real cost of the contract clauses to be determined. The corporations currently have so much power, that they can put very restrictive clauses into the contract without much impact. I think a reverse auction of this type would reduce the massive advantage a corporation currently has in a typical consumer purchase transaction. Of course, I'd expect that a consumer might have to pay slightly more if they specify an advantageous contract.

  • Purpose of Contracts (Score:4)

    by Veteran ( 203989 ) on Friday September 22, 2000 @04:43AM (#762136)
    There is one, and only one reason, that anyone ever wants you to sign something; to use it against you in a court of law.

    Anytime someone wants your signature be aware of that fact. People may tell you "Oh this is just a formality" but don't be fooled. All you are doing by signing any document is giving someone legal ammunition to use against you. If you want someone to sign something, it is to bind them legally to do what you want isn't it?

    This becomes very important as UCITA becomes the law of the land - as pushing a button on a computer screen - or even tearing open a shrink wrap becomes the legal equivalent of signing a document.

    The libertarian myth is that contracts are freely arrived at deals between parties in equal bargaining positions. Anyone who thinks that they are in an equal bargaining position with Microsoft and their cadre of Wolfram and Hart style lawyers has got serious delusions of grandeur. If you were in an equal bargaining position with companies - you would write half of all contracts with the companies; you don't, and you aren't.

    It may be argued that you don't have to sign anything, and that is true; of course you also don't have to eat, drink water, or continue breathing - you are also under no legal obligation to do those things either.

    When the choice is "Sign the employment contract or don't work" most people choose to sign the employment contract - for all the same reasons that they would sign over their house if 'Big Tony' had a nine millimeter pointed at their head. When every company you try to work for has similar employment contracts - you have no choice; you either sign, or you die of starvation.

  • There are often significant fixed expenses and risks associated with getting (and later losing) a new cutomer. This is particularly true for cell phone companies, where they company actually partially pays for the cell phone. But it's true (at least in an accounting sense) for ISPs and other businesss. Fixed term contracts are usually designed to account for those expenses in some reasonable way so that customer don't get hit with a large up-front expense.

    Of course, as a customer, you should be thinking of that 1 year cell phone contract not as $30/month plus a $100 cell phone, but as a $460 purchase with a convenient payment plan. And once the costs for the phone have been recouped by the company, they are turning a significant profit.

    A big problem with such contracts is that they remove much of the incentive for a company to provide good service. If service quality deteriorates during that time, customers still can't easily leave. So, bad service won't affect in the bottom line right away, and the usual feedback look between profits and quality is broken. In a sense, companies that write these kinds of contracts may be doing themselves a disservice, because they get much less information about their product from their customers.

  • You are so right.

    Just about a year ago, I signed a 2-year contract for cellular service with a great deal on the phone.

    Now, prices are quite a bit lower for better (more minutes) service. I am allowed to switch to the newer, better deal, but only if I agree to extend the contract for another year.

    If I decide to cancel the current contract and go somewhere else, I still have to pay for the remaining months in full. So, I am trapped.

    On the other hand, I am getting exactly what I agreed to a year ago, so in some sense I am satisfied. But, the contract system has worked exactly as described to keep me from moving away or from getting a better deal where I am.

    Tim
  • Couple of things.
    First off, spell check yourself. It makes it easier to read, and bad spelling makes you look less intelligent.

    The idea that Bill Gates likes writing code, and does it for fun is laughable. I'm sure at some point he wrote some code, too bad he didn't write DOS or Windows. He bought both of them. He made money, not because he could write code, or even help create good products. He made money because he is a marketing genius.

    I really dislike MS, but you've gotta admit, they've done a damn good job of selling what they have to the world. (Who cares if it's all legal)

    And to say that monopolistic dictatorships are the only way big companies can make money, that's just dumb. Companies can make TONS of money if they create something people need/want and they do it WELL. The problem is, that they are more concerned with getting things onto the market fast, making a quick buck, than making a good product.

    That's why OSS is cool, because the people involved are the ones that need/want it. They have a vested interest in making a good product. If you're gonna get paid anyway, why waste the extra hours? If you're not getting paid in the first place, why bother to do something half-way?

  • ...has got serious delusions of grandeur

    Delusions of grandeur I can handle. It's the folks that have delusions of adequacy that are harder to tolerate.

  • I know that most folks here shudder at the thought, but the deal is not the financial commitment. The deal is that once they have your money, they have no need or desire to provide you with a reasonable level of service. Health clubs have been doing this for years. Most people go to a health club for a few months then quit going, so health clubs sign people up for 1 year contracts. The problem is that once you sign that contract, that's the last you'll see of the professional trainers etc. that were promised. Instead, what you get are apathetic people who hide if you need help figuring out a piece of equipment, "trainers" who are just high school football players moonlighting for extra cash, etc. They figure that since they'll never see you after three months from now, it isn't any use trying to be helpful anyhow. Hiring competent trainers etc. would just be wasted expense with no bottom line advantage.

    My basic conclusion, after all this, is that I have one answer to the one-year contract: "If I sign this, what incentive do you have to treat me right?". The best health club I ever belonged to had no contracts (it was a month-by-month deal) and had a level of service unmatched by anywhere I've been since, although, alas, it was also expensive.

    -E

  • Sure, it's my article, but I can still answer criticism. This is news because it wasn't always like this. You'd have to be a fool to think that some of the insane contracts going around are just to protect companies and individuals involved. It's not news in the sense of "Sally hit John". It's more of a "wake up, this has been gradually happening for the last couple years".

    By the way, I'm reading all of your comments, and they're all very good. I appreciate them.
  • I think the key issue here is that these contracts are for "perishable" goods, but the contract's apparent cost is artifically deflated by having a term much longer than the duration of the perishable item being sold.

    It's strange to think of computers (or computer services!) as "perishable," but think about new car leases. No car, even one sitting on the dealer's lot the entire time, is a "new" car a few years after its model year. So if you're looking for a "new" car (e.g., to project a successful image to clients) you'll want to replace your car every few years no matter how well it's running.

    Computers, access technology, and ISP technology are obviously all perishable over a timeframe of 18-36 months. (The exact timeframe depends on your needs - a system used for the home office will probably need to be upgraded much more frequently than a general family system or kid's system.) We should see contracts that last 12-18 months, but that causes sticker shock so they artificially draw out the length of the contract.

    Someone else mentioned health club contracts, and I suspect we'll see some of the same abuses that caused so many problems with health clubs. (E.g., some people bought contracts, the club closed within months, but they still had to pay to use a non-existent facility since the contract was with an independent financing agency.) How long until people buy systems where the ISP soon folds but the hapless user still has to pay $30/month to access a non-existent ISP?

  • The libertarian myth is that contracts are freely arrived at [in] deals between parties in equal bargaining positions. Anyone who thinks that they are [sic] in an equal bargaining position with Microsoft and their cadre[s] of Wolfram and Hart style lawyers has got serious delusions of grandeur. If you were in an equal bargaining position with companies - you would write half of all contracts with the companies; you don't, and you aren't.

    The answer has been long obvious to me, to wit, a consumer's union (a non-profit organization) or even a commercial company, that writes contracts specifically meant to be fair and even-handed for a great variety of common contractual situations. You could then look askance at (say) a used car dealer who hates such contracts and will not accept them. This application would go well with distributed networks of automated responses to contract requests at point-of-sale terminals, moderated for more and more people by their (low-cost PDA) programs which negotiate invisibly with the vendor's own in-store contract programs.

    It's only a matter of time, most probably.

  • 1st - please don't flame, the article is worth reading, but I disagree with it.

    quote:
    In the past, contracts and signed agreements have been used primarily to protect the individuals involved from legal action.
    Maybe this is just a difference in terms, but most contracts protect corporations, not individuals / consumers.

    quote:
    They are now being used like a spider web. After they catch somebody, their purpose is to keep them subscribing/paying/buying their stuff, even if you don't want it anymore.
    Yes, this is one way to look at it, but the purpose of these contracts is to ensure the revenue flow, and financial projections of a corporation. I think you'll agree that these companies are not trying to make you buy things you don't want (although that may be the case), however stock analysts require that a company can show recurring revenue.

    Heck, even our security company (i.e. physical card-key/camera security) required a 5-year term as they were planning on going public! I do agree that there are many copycat companies to the "free computer with 5 years internet", however there are hundreds of other corporations that simply seek a viable business model in this economy.

    The point in this response is that:
    1. Lawyers write contracts
    2. Lawyers work for corporations
    3. Corporations want their stock to go up
    4. Recurring revenue is one of the highest ranked factors of stock valuation.
    5. New Economy service companies can't survive without recurring revenue.

    Unfortunately, we'll see this more an more, for everything from long distance telephone service, to airlines (miles extended to complete loyalty etc...), to grocery stores...
  • Ahhhh .... the wonders of technology inflation ... it might not appear on the economic metrics but effectively with Moore's Law, you are obsoleting your existing IT infrastructure which forces you into endless cycles of upgrades.

    Unfortunately manufacturers don't like the alternative ... allowing you to sell their "contract" on the open market as you avoid being a captive audience (thus losing those lovely gatekeeper fees for directing you to their dotcon partners). Think about cars, how you could lease the latest and greatest, then trade in for the next model after a year and they flog it to the guy willing to accept a lower price. Unfortunately, they would get very pissed off if someone created a secondhand market for phone contracts (ie agree to take over repayment schedule) as then they can't sell you the next gee-whiz with additional bells and whistles (with price-tag to match).

    The alternative is the pay-as-you-go stored-value card which allows you the freedom to swap carriers if you dislike their level of service (which they of course discourage through additional connection fees). The problem is that someone has to pay for all that wireless infrastructure and that someone is the consumer (certainly the shareholder is not going to take the lumps if it can be avoided).

    LL

  • Add this to UCITA and... (Score:3)

    by pvcf ( 150815 ) <paul@frattaroli. o r g> on Thursday September 21, 2000 @11:08PM (#762147)
    Ring! Ring!
    JQP: Hello?!?
    MS: Hello, this is Microsoft, is this John Q. Public?
    JQP: Yes. But...
    MS: Well, we have determined that you are in violation of your license agreement as we do not approve of the way you are currently using your Microsoft software.
    JQP: But, I'm not using your software anymore. I've uninstalled it from my computer and disposed of the distribution media and materials.
    MS: That is the problem. According to our latest license agreement, which was released 2 hours ago, you are no longer allowed to not use our software.

    Well, a software license agreement isn't a contract per se, but that wouldn't stop most companies like MS from trying...

    ....Paul

  • And this is news, why? (Score:4)

    by Kris_J ( 10111 ) on Thursday September 21, 2000 @11:11PM (#762148) Homepage Journal
    Ooo, technology is moving quickly. Signing a contract means you're committed to something. "I can't weasel out of my financial committments.". Wah, wah!

    Please, half the world works like this. I was watching something a few months back where hairdressers were getting to the point where they wanted to force customers to sign something or hand over a credit card number in case they cancelled the appointment with no time for the slot to be filled. This sort of stuff is everywhere. Just read everything you sign! You're allowed to refuse to sign things.

    Yawn.

  • I think the article is pretty much correct in saying that a major reason for contracts is too lock you into something that looks good new but might not in several years.

    But they miss the other major reason for contracts: getting you in the door with subsidised equipment and then trying to make sure that you eventually pay for it. This is of course a major reason for contracts in the cellphone business where you can often get the phone for free if you sign up for three years (that's the sort of deal common here in NZ anyway), but it's also a big factor in internet technology for things such as cable modems, ADSL, and satellite dishes, all of which have hardware that costs a major chunk of change. The early adopters (like me :-) will pay the full cost of hardware upfront, but the average Joe won't. Subsidies and contracts are about the only way to grow into the Joe Sixpack market.

  • ... not the consumers. Anyone that thinks that a contract is in place to protect the consumer is living in some kind of socialist fairy-land, because the point of a contract in the modern world is to ensure that a corporation has a legal basis for getting payment from their customers.

    Not that this is a bad thing - people love getting away without paying for things, and corporations have a right to receive proper payment for the services and products they provide to customers. In a capitalist economy contracts are always going to exist, because people are inherently selfish and you need to have a legally binding method of forcing them to pay.

    New developments in contracts and licenses are merely making sure that this legal obligation to pay is still enforcable in the new digital domains that are becoming prevalent today. Like them or loathe them, they're an inevitable outgrowth of the rise of digital technology in a capitalist society, and they are necessary for the continued growth of our economy.

  • Unfortunately, they would get very pissed off if someone created a secondhand market for phone contracts (ie agree to take over repayment schedule) as then they can't sell you the next gee-whiz with additional bells and whistles (with price-tag to match).

    Hmm, no. I don't know about the US market, but in this country they'd be absolutely delighted!

    Phones are sold at as a loss-leader - I paid $120 for my phone; at the time its replacement cost was around $400. The reason I got it cheap is because the network was happy to take a major loss on the up-front sale, because they now have me tied into a minimum-one-year contract for the service. And if I leave them after just a year, they'll actually lose money on the deal, because typically the break-even on any given customer is in the 14-18 month region.

    So if there was a second-hand market for the phone contracts, then I could sell my contract on to someone else, who would then keep paying the network for the service - the network continues to get the on-going revenues and didn't have to stump up for another heavily subsidised phone.

    Of course, since the market is in its current position, I am almost certainly going to wait until I want a new phone and then close my existing contract (it'll be outside the minimum length period by then) and take out a new phone contract to gain the up-front discount on the shiny new phone (which by then had darn well better include PDA/Digital Camera/MP3 playback too).

    ~Cederic

  • The alternatives to having a service contract over a period of time are:

    1) Constantly rushing round like a demented lackey, desperately trying to get business and undercutting each other all the time. and
    2)Selling software, for money.

    Since Slashdot has decided that the second is morally wrong, and the first seems to suck a bit, contracts are the obvious way forward.

  • A well known trick was to try and get anyone at the company to sign a contract... a usual ruse being find the cleaner on duty and say we've got a delivery for this photocopier, would you mind signing for it. Now the poor cleaner had been tricked into thinking they were signing for a delivery, as we all no people don't usually read what their signining.

    Thats why we have contracts :-) In the cleaners contract there should be a small passage stating that he has no authorety what so ever to approve aquisitions for the company he's working for. Knowing that its not his business what so ever, I'm sure he will point the salesmen toward the right person. So basicly it still comes down to well setup contracts and reading them.

  • You're cutting Slashdot far too much slack here.

    Slashdot has decided that money is morally wrong. Therefore the unconditional support of Napster, the GPL, DeCSS,and warez.

    Bruce

  • Microsoft and a Remote Desktop? I guess that is something like "Back Orifice 2k included!"

  • Is this really new? (Score:4)

    by kabir ( 35200 ) on Friday September 22, 2000 @12:21AM (#762156)
    Admittedly I have always tried very hard (and reasonably sucessfully) to avoid getting to involved in this side of the business, so I may be way off base here, but it doesn't seem to me that this sort of use of contracts is at all new. In fact, this is the only use of contracts I've really been exposed to over the last five years.

    From what I have seen the contracts have never really been about protection from legal action, but rather as a specific assingment of duties which enable legal (or other, prenegotiated) remedies when the customer stops buying the service/product/scam in question. I just assumed this was an old, standard way of doing things (dirty pool though it may be).

    What other uses has anyone seen for contracts? I'm interested, as I've aparently completely missed them.
    --
  • They are now being used like a spider web. After they catch somebody, their purpose is to keep them subscribing/paying/buying their stuff, even if you don't want it anymore.
    I agree with this statement. I ran into a case in point while at a customer site yesterday. The lady there explained to me that she had signed up for a Compuserve account with a three year contract and that she's totally unhappy with the service. However in order to get out of the contract, she has to pay them $400. Yikes! Talk about a sticky situation.

    On a different note, while working on her machine, I had to use her Compuserve account to download a driver. Sheesh. I remember when once upon a time Compuserve wasn't a bad service. I see AOL has turned it into a clone of the regular AOHell interface, which I quickly minimized, then opened IE to do my browsing. Utterly sickening to see.

    Friends don't let friends use AOL.

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