An Exemplar Company
Wednesday, October 22, 2014
“Boilerplate” Contracts Matter: BlackBerry Edition

Earlier we blogged about forced arbitration clauses in mobile contracts, and at the time I struggled to contrive situations where hundreds or thousands of people would want to sue a carrier. As they say, you can’t make this stuff up.

In October, BlackBerry users suffered a total outage of service for a period of days, and now BlackBerry’s parent company, Research in Motion (RIM) is facing class action lawsuits in the U.S. and Canada. The first article reports that the U.S. complaint relies on an implied contract between BlackBerry and End Users as its starting point for getting damages out of the mobile carrier.

But BlackBerry wouldn’t leave something like that to a merely implied contract. Of course, they have a rigorous Blackberry Solution License Agreement. This agreement provides that all users have accepted its terms by “downloading, installing, activating or using the [BlackBerry] software . . . .” (emphasis mine). So much for implied terms. These terms are “express” because they are expressed explicitly in writing (but orally communicated terms are express, too!).

Arbitration Rears its Head

Again You guessed it—this Agreement calls for mandatory arbitration both in Canada and the U.S. in § 26(d) on page 20. So, according to this Agreement at least, those plaintiffs above can’t start this battle in a court.

And what about class actions?The same §26(d) provides “No dispute between the Parties, or involving any person but You, may be joined or combined together, without the prior written consent of RIM.” So they apparently can’t team up, either.

Wait—Go Back. What’s the Difference Between Express and Implied?

It’s best to talk about this in the context of warranties.

§19(a) and (b) on page 14. These are warranty disclaimers. Everyone is familiar with express warranties, like the mileage warranty on a car or a 1-2 year warranty on an electronic device. Those are express warranties because they’re mentioned in advertising materials. The good news is that there are warranties implied in everything that you buy! But these warranties aren’t replacement warranties. Usually they only warrant that the thing functions at a basic level, is not harmful, and is suitable for the purpose that it advertises it serves.

The bad news is that many of these implied warranties can be disclaimed. “As is” usually suffices, and you bet you’ll find “as is” in §19. In fact, you’ll find even more language saying that you agree your BlackBerry might not work at all, and that if it does work, it may be unsatisfactory, the service may be interrupted, and that your transmissions may be inaccurate or go undelivered. Sounds like a great product, huh?

Anything Else I Should Know About in There?

§20 on page 16. This kind of limitation of liability appears in many contracts. In this case, users have agreed that they won’t hold RIM liable for incidental damages. Incidental damages are the bad things that happen as a result of some other failure. For example, a phone malfunction doesn’t cause you immediate harm in the same way that, say, a pacemaker malfunction would.

But you might lose business because you couldn’t receive an email, process a payment, or do anything else you were relying on your BlackBerry for to achieve other goals. Well, you’ve “signed” away the right to sue for that. And even if you do have a claim, you’ve agreed to only take a maximum of $500.

Is It Really That Restrictive?

Tentatively . . . no. Even though the Agreement reaches very far, some of the terms are wishful thinking, and RIM knows it. That’s why this language appears before the warranty disclaimers:

Some countries do not allow the limitation or exclusion of consequential, indirect or other damages in contracts with consumers and to the extent you are a consumer the limitations or exclusions in this section may not apply to you.

Remember that each of the 50 United States has its own consumer protection laws. Some of these laws prevent the disclaimer of implied warranties, and even though the Agreement chooses New York as the state law that will be applied to it, a court in another state might ignore this for public policy reasons.

It’s impossible to know which terms will be enforced and which ignored until the claims are filed and the dust settles.

Be sure to read and understand your own documents, and insist on proper protection for your business. When in doubt, ask a professional!

Questions? Comments? Contact the Author.