Shrink Wrap ContractsRichard 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