Shrink Wrap Contracts Richard Warner

ProCD v. Zeidenberg  ProCD sold a CD that contained every phone number and address in every telephone directory in the United States.  It sold it to businesses for $5,000 - $10,000.  It also wished to sell it to consumers for personal use. Of course, consumers would not pay thousands of dollars for this.  The solution: price discrimination by contract.

Contractual Price Discrimination  The use of a CD ProCD sold to consumers was governed by a license in which the purchaser agreed not to use the CD for commercial purposes. The license indicated that you were to call an 800 number if you were interested in a commercial use.  The consumer price was around $150.  This is price discrimination: one price for businesses and another for consumers. It is a common and perfectly legal practice.

Presentation of the License  “Every box containing its consumer product declares that the software comes with restrictions stated in an enclosed license.”  The license is inside the box since it would be too long to print on the outside.

Facts of ProCD v. Zeidenberg  Zeidenberg bought the consumer package and ignored the license.  He made the information available on the Internet to anyone who would pay his price for access to it; the price of course was less than the price ProCD charged its commercial customers.  Zeidenberg claimed he never agreed to the license. He claimed that the terms on the outside of the box are the terms of the agreement.

Zeidenberg’s Argument  An offer is a manifestation of a willingness to enter a bargain so made as to justify the offeree in thinking his assent will conclude the bargain.  What was the manifestation in this case? The terms on the outside of the box. How can the inaccessible terms on the inside be a manifestation?

Acceptance of the Offer Versus Acceptance of the Goods  The answer is to distinguish between the acceptance of the offer and the acceptance of the goods.  Zeidenberg accepts the offer when he buys the package.  He then has an opportunity to inspect the goods and the terms offered and can decide whether to accept or reject them.  A buyer accepts goods under UCC § 2-606(1)(b) when, after an opportunity to inspect, he fails to make an effective rejection under § 2-602(1).

 There are many situations in which the buyer has no notice of the terms until after purchase.  This is typical in insurance and consumer goods. Custom and Practice