Corporate Code, Inc, sells business software-accounting and book-keeping programs, blank business forms, inventory control functions, and the like-in different combinations, in different packages, at different prices. Each package includes a shrink-wrap

Question

agreement that limits warranties and remedies. Developmental Research Corporation (DRC) buys a Corporate Code package and uses the product. Later, DRC files a suit against the software seller, claiming that the product was flawed and that the flaws caused DRC to suffer business losses. DRC asks for relief that exceeds the limits in the shrink-wrap agreement. What is a shrink-wrap agreement? Are such agreements al-ways enforced? Under what circumstances is a court likely to enforce this agree-ment?

Answer 1

A shrink-wrap agreement is an agreement whose terms are expressed inside a package that contains computer hardware or software. The terms usually focus on warranties, remedies, or other issues related to the product's use.
Shrink-wrap agreements have not always been enforced. The most important factor is the time at which the manufacturer communicates the terms to the end-user.

A court is likely to enforce the agree-ment in this problem, and similar agreements, if the buyer had an opportunity to read the agreement before using the product. These agreements are enforced partly because from a business perspective, it is more practical to enclose the full terms of a sale in a pack-age rather than, for example, to read them over a phone while taking an order for a product. Such an agreement might not be enforced, however, if a court reasons that the buyer learned of the terms after the parties made their contract, and the buyer did not then agree to the terms. On this basis, the terms would be proposals for additions to the contract, which would require the buyer's express assent.