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Comment by jackowayed | Hacker News Reader

The above clause of the TOS is the reason not to sue. The seller agreed to a TOS that says that if PayPal decides that it is counterfeit, they refund the money and the item is destroyed, without any restriction on what care PayPal has to take to decide that it's counterfeit. So PayPal acted within the terms of their agreement.

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Generally speaking, unilateral provisions in contracts render the contract unenforceable by the party they benefit. The fundamental principal behind common law contracts is the "bargain principal". There must be some "consideration" paid by both parties before a contract is valid (I will give you this, in consideration for your giving me that). A clause in a contract that said, "we have the right to breach this contract at any time we choose" would render the contract void, because there is no "bargin" involved. Such types of promise (a promise to give something with nothing in return) are called "charity" and are not enforced by law. You can tell Jery Lewis, "I promise to give you $20 at your next telethon", but he can't sue you if you don't pay.

So... that means that the either:

1) The provision in the contract can't mean "we have the write to breach whenever we feel like it"

2) or, that the TOS are unenforceable.

The wording in the TOS is designed specifically to not mean "we can breach whenever we want", but instead to mean "if you sell counterfeit goods through our service we will destroy them and not refund your money".

The words "we ... reasonably believe the item you sold is counterfeit" were deliberately chosen for this purpose. The fact that paypal can use its sole discretion just tips the scales in their favor. If they have reasonable evidence that something is fake, then they can destroy it, even if they haven't done due diligence to prove it's a fake.

The question comes down to wether or not paypal had reason to believe the item was counterfeit.

Their are certain cases where only a customer complaint would be sufficient to establish a "reasonable believe".

For example, if Picasso bought a painting that was said to be a Picasso original, and he called paypal and said "I didn't paint this, it's a fake", they would definetly be within their rights if they distroyed it, even if further investigation could have revealed he was lying.

In this particular case... you could potentially argue that the customer's complaint was in no way sufficient for paypal to reach a "reasonable believe". This does make the whole thing wildly open to judicial interpretation, however.

Even aside of the present article I found this interesting and useful. Thanks for the informative comment.

Its a shame that contracts have these kinds of protections in them that most people are unaware of as they get pummelled by these sorts of contracts.

Agreed with TomAnthony, interesting stuff. Takes me back to the days when my best friend was avoiding the big kid on the block because he owed him a soda. I guess this is a really tough case because the line of reasonable/not reasonable for this decision is extremely blurry.

The fundamental principal behind common law contracts is the "bargain principal".

Principle. (JSYK)

I wrote it on my iPhone @ 2 am....There are many typos.

In any case, once someone posts a comment I can't edit a post, so by posting a reply about a typeo, you only ensure that it will never be fixed....

Better than it be out there, posing as correct.

TOS mean as much as the lawyer you have. PayPal can't get you to agree to things that are illegal, and improperly designating counterfeits would/should qualify. Especially when PayPal is a defacto monopoly.

tl;dr lawyer up.

TOS mean as much as your small claims court judge decides it means.

They had a professional appraisal on the violin that said it was authentic. Paypal has its TOS saying they can call anything counterfeit and their TOS says they can't be held liable for it.

Sorry it's a judges job to say if you can or can't be held liable for your business terms and practices.

Seems like he would be holding the buyer liable in small claims, not paypal.

You can put that you own the customers soul in a tos or other ridiculous claims, but It will never upheld. This won't hold up in court.

caught -> court: oddest typo I've seen yet

It does sound similar. I regularly catch myself making pronounciation-based typos even though I definitely know the correct spelling.

For most Britons the two words are homophonous, which makes it a great deal less odd.

(Americans also make typos which look odd to Britons, for example "mute point".)

The mere existence of a contract is not evidence of its legality/enforceability.

But someone's got to stick their neck (and wallet, if only temporarily) out to challenge these.

Unless you are someone who cannot afford the legal fees that would allow you to challenge said legality/enforceability. Which is pretty much anyone.

A $2500 case would go to small claims court in most US states where legal fees are not as much of an issue.

It's much bigger than a $2500 case any lawyer worth his salt is going to argue that the seller has suffered irreversible damage to his brand as a seller.

In California, the small claims court fee for this case would be $50, and lawyers are barred from representing either party.

Until the appeal, I believe.

It looks like you're right. I wasn't aware of that.

PayPal is not qualified to know if the Violin is real or not, So there would be grounds that it would be impossible for them to know without an expert.

Especially when the seller claims he had a professional appraisal done on it.

Are you a lawyer? Because it doesn't look like users are actually required to hold PayPal harmless in the event of property loss due to bad counterfeit decisions.

Are you a lawyer? You appear to believe that a signed contract is inviolate. I am not a lawyer either, but I've dealt with contracts enough to know that the clause in this contract has "reasonable" in it for a reason, and that "reasonable" does not mean "whatever we think is reasonable".

It does say "in our sole discretion," though... Which is pretty much "whatever we think is reasonable."

So there's that.

The contract does not say, for example, "when we, at our sole discretion, toss a coin and arbitrarily decide one way or the other".

I think that tossing a coin and using reason are different, and I believe that a court would uphold my expectation that reason was used. Paypal will then have an opportunity to present their reasons. In this case, IMHO, it would appear that a "reasonable standard" of "reason" was not used.

No, I'm not, and I didn't represent myself as one. I'm not sure what you find objectionable about my comment. I was wondering if the person I was replying to actually knew more than me or if he was speaking with undue certainty, so I asked.

The reason I said that isn't entirely because of the TOS but also because of the cost and logistics. Various courts could potentially decide that such clause isn't legal.

In any event, even if the clause is legal you can challenge the decision to declare the item counterfeit. If the court finds that the decision was procedurally deficient or unreasonable it can be overturned.

A great deal depends on what kind of representations the seller made to potential buyers. I think it's significant that the story does not include a link to the original auction/for-sale listing, or copies of the correspondence between buyer and seller. There's no mention of seller offering to refund buyer's purchase price or what kind of dealings they had, leading me to suspect (though not conclude) that the two parties to the transaction had fallen into dispute. It's possible that the buyer just got cold feet and unilaterally invoked his/her option to get a refund, but that would seem rather unusual. I've had a few eBay transactions over the years that were mildly scary (large sum paid out, radio silence from the other side for more than a day), but they're almost always just normal communication problems that are quickly resolved.

Right, I get that the TOS covers what they did, but couldn't the argument be made that they acted on their TOS irresponsibly? It doesn't sound like they did much to verify/investigate whether the violin was indeed counterfeit.

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