I'm just starting law school so take what I'm saying with a grain of salt, but this is a pretty interesting case since I'm studying offer and acceptance right now in contracts class. It's a bit difficult to analyze this since the facts are scarce. A good case to look at for reference is Butler Machine Tool v. Ex-Cell-O Corporation.
The variations Arganov proposed in his counter-offer were pretty extreme: he made significant changes to the material terms. He also didn't appear to do anything to bring Tinkov's attention to these variations and made the counter-offer look very similar to the initial offer (i.e: it looked almost identical). I don't see any mention that he highlighted the variations, or included a note bringing Tinkov's attention to them, or asked Tinkov to initial beside them. At this point, I would say that Tinkov didn't consent to the variation and had assumed that Arganov had accepted their original offer.
BUT, since they apparently gave him the unlimited line of credit he had included in his counter-offer, it seems pretty conclusive that by their conduct they had in fact accepted Arganov's counter-offer.
Not sure how this constitutes fraud? Since when can't you alter the terms of a contract? It's not his fault they didn't read it. They sure hold other people accountable when they don't read theirs.
In common law systems (including the UK and US) a contract is a "meeting of minds" (that is, you and I both agree on the terms). The writing merely makes clear what has been agreed, but if one side has been tricked then its still fraud. So if a salesman says "never mind the fine print, it just says you can cancel the contract at any time" when in fact the fine print locks you in to paying silly amounts for the next 5 years, then that is deception and hence fraud.
In this case its reasonable to suggest that by submitting his altered contract without drawing the banks attention (e.g. by putting at the front "here are my proposed terms") then not only does the bank not have to abide by them, but he was guilty of deception by trying to trick the bank into signing up to them.
Normally these rules are used to protect consumers from fine print proffered by suppliers. For instance https://en.wikipedia.org/wiki/Interfoto_Picture_Library_Ltd_... established that unusual or onerous terms cannot be hidden in a page of fine print and still be enforceable. But the rules apply the other way around too.
Perhaps what was sent was two things: a form with various parameters (name, birth date, amount of credit, etc), and the contract.
The bank then only noticed the changes in the form (since they have to input it to their systems anyway), and didn't notice the changes to the contract (since it's a contract of adhesion, and thus not supposed to be modified).
Good points. Sucks that there aren't more facts available.
Contract of adhesion: Wow very interesting point. If Tinkov's offer is construed as a unilateral offer, acceptance was only possible by performance (signing and returning the offer).
You answered your own question. EULAs are often not strictly enforceable in many countries. Hence the "to the fullest extent permissible by law" phrase that keeps popping up in them.
Not to nitpick, but I remember an interesting case where the EULA was only available after opening the software... which made it ineligible for return at the retailer.
So? I purchased my kitchen appliances from a retailer, but went to the manufacturer's warranty when I needed repairs, even though the retailer has my money.
You made an agreement with the retailer- software sales are final. You make the EULA with the publisher/manufacturer/etc- you seek compensation with them.
It's really hard to return software, especially after it's been opened, as the retailer, who don't have anything to do with the EULA, are (rightfully) protecting themselves against people who install/copy the software then return the physical media for a refund.
For software acquired from a retailer. Microsoft provides limited support
services for properly licensed software as described at (aka.ms/mssupport).
If you purchased the software from a retailer and are seeking a refund, and
you cannot obtain one where you acquired the software, contact Microsoft for
information about Microsoft’s refund policies. See (aka.ms/msoffices), or in
North America, call (800) MICROSOFT or see (aka.ms/nareturns).
I don't want to! I simply want my transaction to be governed by same laws as with physical goods. Where they don't tell me what to do with my purchase.
> A few years ago (>|decade?) music sales and video games were final at my local BB because they assumed you just burned yourself a copy.
Most places I've shopped just say something to the effect of no returns on opened merchandise. No mention of why. I assume you're assuming what they're assuming.
I don't like returning, generally, unless the product really didn't meat expectations. However, I've never had a problem returning opened hard merchandise.
> Would a big retailer (Best buy, say) accept the return of software whose seal has been broken.
Probably not. However, if you read a EULA, you will notice most of them have a clause to the effect of "if you disagree with this EULA, you can return the software" and AFAIK its usually with the company with whom the EULA is and not with the retailer (eg if you buy Microsoft software, the EULA (and therefore the return if you disagree with the EULA) is with Microsoft and not Best Buy).
If you modify a form letter before sending it back without notifying the other party of the changes, I'd say it's reasonable that the contract is either invalid or should be treated as unmodified.
I don't know, having been through a number of B2B contract negotiations (in Australia). It is not at all surprising for one party to make changes without highlighting. I've even seen track changes on a word document disabled, changes made, and then reenabled so as to intentionally hide word changes.
You only have to notify people of a change, if it's already signed (and generally that's because your contract will have some form of amendment system that involves notification).
>It is not at all surprising for one party to make changes without highlighting. I've even seen track changes on a word document disabled, changes made, and then reenabled so as to intentionally hide word changes.
I'm sure it happens. This says nothing about whether these actions would hold up in court, though.
either Australia is either much more permissive about that or your negotiations got really nasty.
I've been through many B2B negotiations, many of them reaching awful levels of yelling, but the lawyers always red-lined their changes as they undid other side's changes dozens of times.
Whether or not there is redlining, when you go back and forth in a negotiation, it’s clear that there might be changes, and you would check for changes and perhaps do a complete review at the end of negotiations, before signing. It’s somewhat different if the initial contract offer is a preprinted form contract and it is returned apparently signed.
Akamai has done this to me; with their salesmen making material changes to terms and conditions without redlining (and without any related discussion), despite redlining other changes in the doc.
Akamai's abuse on this front is the reason that we stopped trusting 'track changes' and started doing full-text diffs.
IMHO there's a difference between two parties negotiating from a clean slate, adding and removing things back and forth, and someone sending out a "take or leave it" contract form with clearly no intention on modifying the terms.
Rarely do two parties negotiate from a clean slate, in fact the beginning of most contract negotiations I've seen is who's slate should we start with, mine or yours.
That's precisely the sort of thing we have courts, and vast quantities of precedent, to decide.
Don't make the classic programmer's mistake of expecting everything in the law to need to be as well defined as things are in mathematics. Judges will quite happily decide what a term means on the fly, consistent with precedent and reasonableness, to stop you getting away with anything completely ridiculous.
Exactly. I think programmers assume that law is a simple application of rules to facts, and that a computer could do it better/faster/cheaper than humans.
But in fact there is so much subtlety and nuance to it that I don't understand how computers could ever do it. I mean, you're trying to persuade a human being that your version of the facts is more compelling than your opponents. Last time I checked computers were not very persuasive orators or writers....
The usual process is to conspicuously red-line a contract, so your changes are clearly visible (traditionally, highlighted in red ink), along with a notification up front that you're sending back a revised contract.
From the article it's not entirely clear to me what form his modifications took:
> [He] scanned it into his computer, altered the terms and sent it back to Tinkoff Credit Systems.
By this do they mean he did something like "photoshop" the scanned contract, producing a result that looks as similar as possible to the original, but with some parts digitally modified? That would be a bit more misleading, if so.
My guess is that he wanted substantially similar terms, except for a few modifications. It's far easier to modify the existing contract than to write up an entire new one in that case. The other party still has the right of refusal. If they still do not wish to sign the contract after reading it, that is a choice available to them. If they choose to sign the contract without reading it...well...many people are bad at contracts...not the least of whom, are often banks.
Obviously, none of us know what specific language he used in talking to the bank, and IANAL, but if the bank said something along the lines of "here's the contract we'd like you to sign", and he replied along the lines of "here's the contract I've signed that I'd like you to sign", it would be acting in bad faith to not tell the bank you've changed the contract.
They did not receive notification under the hypothetical scenario I described (the hypothetical scenario where he doesn't tell the bank that he changed the contract).
I don't know of any banks that process CC contracts by email.
My guess is that he filled out the application forms, set the terms of the contract how he desired them, left a note on top of it all to the effect of, "BTW, I changed the terms, lol. You should probably read them.", stuffed it in an envelope and mailed it to the bank. A bank clerk probably received the envelope, looked to make sure the application form was filled out and the contract signed, then marked in the bank's database that the requisite documents had been received.
Consider an extreme case. Micro printing terms that unless you use a magnify look like a horizontal line between sections. If those terms are onerous and benefit only the side that added them, It's arguable (pretty easily IMO) that the side added them did so with intention and belief the other side would not notice them and sign contract whose terms they were not fully aware of. Fraud.
Less extreme is reprinting contract to look as close as possible to the original but with added extremely one sided terms. It's debatable how much that side intended for those new terms to be overlooked.
Life is a spectrum. That is why we have courts to argue where on that spectrum a particular example lies.
Contracts aren't deals with the devil. They are never meant to support "haha I tricked you now you are fucked" deals. They are legal support for an agreement between two cognizant and willing participants. Further more, at least in US, unsophisticated parties are protected from contracting away certain rights and from contracts which are wholly one-sided.
>> "...with intention and belief the other side would not notice them and sign contract whose terms they were not fully aware of."
This is a complete and accurate description of every contract I've ever been asked to sign. My apartment lease, my phone bill, etc were all written such that in practice I have no choice but to sign them blindly.
"All written such that in practice I have no choice but to sign them blindly"
I'm guilty of just clicking through in the general case but I've always read apartment leases. My wife's first apartment she just signed without reading and then when we went to move in together discovered there was no clause in the contract for early termination (apart from the required stuff for Reservists who are called up). The office's stance was quite literally: "sure, you can get out of your lease early - by paying us all the remaining rent or putting your name on this subleasing waitlist and waiting for someone to take your spot."
At the very least, find that part of the leasing contract and read it.
In Germany, for instance, if you fail to advertise important clauses correctly, the contract may void. This is often applied in cases like "download sites" which allow you to download Firefox and likes for free - but in the contract you sign up for some kind of subscription for 4.99 Euros a month.
Edit: abonnement -> subscription, thanks to @taejo.
He dropped the charges for 24Mln soon after Tinkoff started a fraud case against him [1], nobody really knows what happened later but they probably got some sort of agreement and he got a compensation.
A good example of why you should be sure your country is a safe place for contract disputes to be dealt with by the courts and not by men with ski masks and AK47s.
For everyone who's sympatetic to Agarkov, imagine someone doing this to you. Agarkov wanted to deceive the bank and took advantage of some bank's clerk not validating the user input.
So imagine someone doing this to you. Smuggling some really mean clause into the fine print which you probably won't read. How that would sound?
Oh, you read all the fine print? Really? I don't. Last time I've bought a travel insurance for around 10 Euro a year, it came with a 65-page PDF in language which you need to be a specialist to understand. It would have been incredibly easy for them to write in there that I have to sacrifice my first-born to them, or whatever.
According to Russian media, Agarkov scanned and altered the original document with an intention to deceive. There's a Russian word "подлог", roughly translated as "forgery", "alteration", "fabrication" into English. So what Agarkov did is exactly "подлог", this is an absolute match if you read the definition in Wikipedia.
There is a number of articles in Russian criminal codex concerning this action. The closes to this case is probably nr. 187 about falsification of credit cards or payment documents. Not an exact fit, but close.
Contract negotiation is kind of like a distributed version control problem, where each party maintains their own private internal revision stack and occasionally publishes versions out to the "main" branch (frequently hoping those changes don't get noticed). The crew at ClearContract [0] have built a pretty slick system for managing this kind of "adversarial version control" environments.
That's a pretty interesting solution to a pretty interesting problem. This happens all the time in the physical commodities markets - you insert or remove a document required to make payment on a letter of credit, shorten the time windows for payment, try to get the counterparty to pay for external costs (insurance, port agents, bunkers, fines, and an entire department just for this type of thing as it concerns demurrage), and so on.
So the problem is obviously there, and believe it or not, even among the least tech-savvy everybody is aware of this problem, how it's done, and current methods to minimize it. It's very important. For example, look at Vitol, the biggest energy trading house in the world (followed by Glencore and Trafigura, both split from the same company). This doesn't include metals or ags. Vitol has $300 billion or so in revenue per year. Strictly looking at their trading business, and considering minimum wholesale volumes around 25,000 barrel lots (barge sizes in the Gulf Coast), so wholesale crude and products trades in blocks worth between $1.5 and $2 million at today's prices. While this is an extremely simplified, ballpark analysis, assuming their trading business has a 2% net margin, they're selling $300 billion that they bought for $294 billion. Roughly, that's about 300,000 transactions for separate, physical movements of petroleum and products. Saving even a few days on payment terms across the board would mean they have to borrow money for a few less days, which would add up to millions of dollars in cash savings that begin to accrue immediately and continue to daily over time.
So, again, the problem is there, and various groups have attempted to build software (which actually did work, technically). The big problem is that implementation of these tools has been tried in areas such as Letters of Credit (negotiation between counterparties and banks for each one if doing transactional trade finance) and the rest of trade finance. The problem isn't the tools, it's that the companies kind of like to play this game, because if you see yourself as on the more sophisticated end of the market then this benefits you, and this system is tried and true, whereas the new system could be prone to errors or other unknown unknowns, where they don't know how to protect themselves.
edit: By the way, much of the above (especially as it concerns the individual specifications of each order, either physical variables in the commodities markets or financial variables in the bond and derivatives markets) is exactly the reason implementation of more streamlined alternatives for clearing and settlement have been so slow. It's not that the technology for actually doing it isn't there, it's that the bottlenecks leading up to that are still there. So if you have a good way for traders to automatically decide which fees and costs apply when and to who, please do tell, but then you've effectively automated the traders, as much of what they do is negotiating those terms.
As opposed to bank clients, who apparently have no reasonable expectations that a contract doesn't contain nasty traps hidden in dense legalese.
I'd say if a contract is so long and convoluted that the drafting party can't be bothered to manually verify it's still valid when returned, they have no business drafting that contract in the first place. After all, it's hardly reasonable to assume the other party read it, apparently.
Not at all. Bank clients are also afforded similar protection. There's a concept known as an unconscionable contract, which is a contract that a reasonable person would not sign.
Courts generally take a dim view of the enforceability of any contract which wasn't actively agreed to and understood by both parties. And that's why I don't worry, when I click that I have read and understood some agreement that I definitely haven't, that I might be agreeing to being part of a human centipede.
Though it should be noted that in such a system the bigger/stronger/more active party still has an advantage as they are more likely to have experience and resources to go to courts.
E.g., poor people are unlikely to take a payday lender to court
Perhaps payday lenders are a more evocative target, but credit card companies are far worse offenders with respect to complicated, ever-changing contracts. Actually there have been some payday lenders where the only penalty for not making all required payments is not being able to get a new loan. You don't need a deceptive contract for that.
But in that case there'd be so many people in the wronged party that some enterprising law firm would be very happy to set up a class action, if there were some point they thought they could win on as being genuinely unconscionable.
Well, i think printing out a paper that looked like original except it wasn't an original does constitute a fraud. Or at least it can be proven with some effort. Nothing suggested to the bank that the document has been modified.
The variations Arganov proposed in his counter-offer were pretty extreme: he made significant changes to the material terms. He also didn't appear to do anything to bring Tinkov's attention to these variations and made the counter-offer look very similar to the initial offer (i.e: it looked almost identical). I don't see any mention that he highlighted the variations, or included a note bringing Tinkov's attention to them, or asked Tinkov to initial beside them. At this point, I would say that Tinkov didn't consent to the variation and had assumed that Arganov had accepted their original offer.
BUT, since they apparently gave him the unlimited line of credit he had included in his counter-offer, it seems pretty conclusive that by their conduct they had in fact accepted Arganov's counter-offer.
[https://en.wikipedia.org/wiki/Butler_Machine_Tool_Co_Ltd_v_E...]