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.