Can a manufacturer make using a product purchased secondhand constitute accepting a contract?

Question

Say I buy a physical product secondhand from an individual for cash, with no particular terms attached to the transaction.

Then, say I visit the manufacturer's web site, and encounter a terms of service contract offer for the product I already own. It designates using the product as an action that I could take to agree to the contract.

Would I now be agreeing to this contract offer if I use the thing I bought? Or is using a thing I bought from a third party not an action that someone would reasonably think indicates agreement to a contract offer from its manufacturer?

This is different from this question, because in this case the product has already been previously used, and was purchased without any accompanying box or manual or little packaging insert offering a contract. The seller might have breached a contract with the manufacturer by selling me the product without anything to make me form a contract with the manufacturer, but presumably that is between them.

Answer 1

Sale of an object is via a contract, to the effect that the owner of an item transfers title to the object to a customer under the condition that the customer do specified things (most typically, hand over something of value). If the owner fails to communicate an intended obligation to the customer, it is not part of the contract, and the customer only has to do those things that he actually agreed to. Once title is transferred, the original owner has no claim on the object.

The original owner (the manufacturer, or distributor) therefore cannot impose a contractual obligation on a third party (likewise the third party cannot impose an obligation on the original owner). There may be special statutory obligations imposed on a manufacturer that survive a chain of sales, but a manufacturer cannot impose on a third party customer any obligation to do something, except in the case of copyright or patent law. Even in the case of purchased software on a physical medium, the first sale doctrine means that a customer can re-sell the physical medium.

Whether or not you see a manufacturer asserting that "if you use our product, you agree to these terms", there is no legal merit to that claim. The doctrine of privity of contract says that a contract cannot confer rights or impose obligations upon anyone who is not a party to that contract, and you as a third party customer were not a party to that original sale (contract).

Answer 2

A contract is a two way agreement. It doesn't mean that a company can enforce punitive actions against you, it simply means that by agreeing to the terms of your side, the other side also agrees to be bound to the terms on their side. It also limits a company's liability in case of injury or property damage as a result of misuse of their product.

Consider a cell phone:

• If you enter into a service contract with the provider you agree to do certain things on the condition that they provide the services they have agreed to provide. If you use the phone according to the service agreement they are obligated to provide the service and you are obligated to pay for it.
• If you are asking that they repair the phone under warranty then they have a right to ascertain whether you have been using it as it is intended to be used, per the contract. If it is apparent that you have been using it as a backstop for hammering rivets they may determine that you breached the contract by using it in this way, thereby voiding the warranty and releasing them from their obligation to repair it.
• If the screen shattered while you are hammering on it and a piece of glass became embedded in your eye as a result, if you sued the manufacturer for medical costs they would be able to push back if they could show you were using it in a way that they did not intend.

You always have the option to avoid a contract and use a piece of equipment, (purchased new or used) in any manner you wish, but in doing so you release the manufacturer from any obligation they might have under the terms. So go ahead and hammer on that phone, they have no power to stop you…

Answer 3

A relatively new wrinkle in this second-sale doctrine relates to the software embedded in the product. Consider this scenario:

Bob purchases a computer second-hand from Bill. It has a full installation of Microsoft Windows, the Microsoft Office suite, and several video games. Bill purchased that software at the same time he purchased the computer new from the manufacturer. He intends to sell everything to Bob.

The issue at hand is that Bill purchased a computer (hardware device, physical object), but the software consists of a license to use intellectual property, not solely ownership of a physical object. Traditionally, these were linked, so for example purchasing an album from the music store meant having a license for private performance of the copyrighted work on the record. Public performance of the same required (and still does) separate licensing. Those licenses may or may not be transferrable, subject to the original contract terms.

As another answer addressed, you can always sell the physical medium. You can do anything with it you like, up to and including reverse engineering the design. What that answer failed to address, you may not be able to sell your rights under the initial license agreement (eg, Vernor v. Autodesk ). So, that version of Amy's Accounting software that Bill got as an educational edition may not be legally transferrable to Bob, who is neither a teacher nor a student, as required by Amy's license which does not permit transfer or resale.

A lot of software today is trying to evade this issue altogether, while improving their own cash flow, by moving to a subscription model, where you rent access to the software for a fixed period of time, rather than a perpetual license to use that particular version.

The main wrinkle here is firmware. What if, for example, the widget in question is say, a farm tractor. Can you sell the tractor? What about the license to the firmware/software? As far as I am aware, firmware licensing vs first sale doctrine has not been the subject of any court cases yet, but one could easily happen.