Here’s a discussion to test your knowledge of contracts.
Noid and Droid are technology buffs that met online through the website @Drone_On!
@Drone_On! specializes in all things based on drones including the sale of drones for hobby or commercial use. Noid builds and sells drones for autonomous drone paintball games. Droid runs a hobby shop for gamers and technology buffs.
Droid thinks that paintball drones will make a great addition to his hobby shop business but is unsure of how many drones he can sell. Noid is anxious get a major customer for his paintball drones and would love to sell all his annual production of 600 drones to one customer so he can concentrate on developing his next generation of paintball drones. After exchanging emails Noid and Droid agree they should make a contract for this business opportunity.
On the @Drone_On! website there is an electronic form contract that the website offers as a ‘free service’ to its website users. The electronic form is for the purchase of goods and services between any of its website users. There are blanks spaces in the electronic document that can be filled by website users to identify the elements of the agreement, including:
a) Identifying who is the Buyer and who is the Seller,
b) What goods or services are being offered,
c) The price and payment terms for the goods or services,
d) The dates and times for delivery or performance of the offer,
e) The address or location for delivery or performance,
f) The date of the agreement,
g) Signature lines for the parties to the agreement.
Noid and Droid each download a copy of the electronic from from @Drone_On!. Each of them has to make a $25 donation to process the download request because @Drone_On! states it is a non-for-profit association intended for the benefit of its website users. Included in the electronic form is a Binding Arbitration clause which says:
” In the event of a dispute or alleged breach of this agreement, the parties agree to submit their dispute to the American Arbitration Institute (AAI) where such dispute will be settled in accordance with the principles set forth in the Martian Chronicles as written by Ray Bradbury.”
The Martian Chronicles is an old but famous science fiction novel about the colonization of Mars by humans and is very popular with aging hipsters.
The website further claims that the electronic form is “guaranteed to be 100% successful” for its member users.
Noid and Droid are very excited about the business opportunity but also think they should put the agreement on paper and personally sign it to make sure it is a good contract. They mutually agree that, as drone devotees, a drone should be used to deliver the contract for signature and return copies to Noid and Droid. They further agree to use the Amazonia drone delivery service as the preferred means of correspondence.
On Noid’s form Noid identifies himself as the Seller and identifies the entire annual output of his paintball drones as the offer. He will send one drone as a demonstrator unit and deliver his output at 50 drones per month on the first day of each month. The drones will be priced at “$200 each or 50% of Droid’s retail price, whichever is greater”. Payment is due within 30 days of the shipping date of each drone shipment. Above the signature line Noid adds the sentence “This agreement is binding on the parties if it is not rejected by either party by September 15. On September 1 Noid has an Amazonia drone pick up his un-signed agreement to deliver to Droid at his hobby store.
Without knowledge of Noid’s contract, Droid fills in his downloaded form also identifying Noid as the Seller. In Droid’s agreement he offers to buy five drones at a price of “$150 or 40% of Droid’s retail price, whichever is the least price”. Droid agrees to “pay for the drones within 30 days from when the drones are delivered to the hobby store”. Droid further offers to “buy additional drones upon similar terms as required by customer demand, if any.” Above the signature line Droid adds the sentence “This contract expires if not signed by September 30”. On September 1 Droid has an Amazonia drone pick up his signed agreement to deliver to Noid at his drone shop.
On September 1 both Amazonia drones cross over a private property owned by an anti-drone activist known in the community as the Drone Ranger. The Drone Ranger has a peregrine falcon named Silver which he has trained to attack and retrieve drones which he views as trespassers on his private property, even though the drones typically fly 150 feet above the Drone Ranger’s land. The Drone Ranger releases Silver who manages to attack and bring down the drone sent by Noid. Droid’s drone passes over without incident and lands at Noid’s drone shop on September 2. Noid signs the form prepared by Droid, thinking it is his prepared form from @Drone_On! After making a copy for himself, Noid re-sends the jointly signed agreement on the Amazonia drone back to Droid. On the return trip, over the Drone Ranger’s property, Silver the falcon, successfully intercepts the re-sent drone.
On September 14 Droid contacts Amazonia to report that he has not received a drone delivery of the contract. Amazonia, knowing of the Drone Ranger, sends a courier to see if the drone was intercepted. The Drone Ranger gives the captured drones to the Amazonia courier with an angry threat to ‘sue the pants off Amazonia’ if they continue flying drones over his property. To avoid further problems, Amazonia uses a car to complete the delivery of the contents of the respective drone contents to their intended recipients. Amazonia makes the car deliveries on September 16.
It is now October 1.
1. Is there a contract between Noid and Droid? If so, what is it?
2. The Drone Ranger sues Amazonia. What is his his complaint? Who wins?
3. Amazonia counter sues the Drone Ranger. What is the counter complaint? Who wins?
4. Noid and Droid each separately sue @Drone_On!. Is the substance of their complaints similar or different? Who wins?
5. On October 1 Noid ships 50 paintball drones to Droid. In the shipment, Noid includes an invoice for ‘$10,000 plus 50 times 50% of the (retail price- $400, if retail price is greater than $400, otherwise 0)’. The shipment arrives on October 5. Droid returns 45 drones. On November 5, Droid sends Noid a check for $750, noting that the retail price for the 5 drones was $420 each. What does Noid do?
6. What are the rights and obligations (if any), of Droid and Noid as of November 5? This can include a lawsuit rights or liabilities, if they exist.
7. Tell me anything else you think should be said about contract law and emerging technologies.
8. Bonus. Suppose Noid is 17 years old and turns 18 on September 15. Does this make a difference in how you would discuss the issues in this post? Would it change any outcomes or add any actions that could occur?
