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Sales persons are sometimes advertising their service as "contract free", so that they would get a better chance to convince you to sign up for their service. I guess the reason why this works is because to average person "contract free" typically means that you don't have to read fine print on a written contract that most of the time works against you.

However, isn't this misleading advertising to claim that there is "no contract", because there always will be a contract - either verbal or written on a paper under different title (e.g. Application Form, "Unicorn tears")?

Based on answer I received here, the person claimed that it does not matter what is the title of the document - so document with title "Application Form" could incorporate another document via reference that specifies terms. Effectively you actually end up having a contract, but the only difference is that you did not explicitly sign the referenced document and did not have a chance to read it; and this works against you. Or another person confirmed here that there does not have to be any paper signed at all for judge to think that there was a contract in the first place. Also, another person told here that the terms don't need to explicitly be mentioned in the first place, if price (and possibly late fees) were omitted from contract, then judge will figure out what is fair.

What would judge do if you were able to prove that other party claimed that their service is "contract free"?

If sales person was honest would he have to explain to the other party that "contract free" actually means:

You know our service is only "written contract fee" and not "contract free". However, this is the exact reason why you would have to be really dumb to enter into business with us orally or just via Application Form, because now instead of just dealing with the fine print issue that you would have had with written contract, now you will also have to deal with incorporation by reference issue where we can incorporate terms and conditions from Application Form into our website or somewhere else; also, now instead of knowing what are the exact fees (e.g. ETF, late fees) that we would charge from you we will simply charge whatever we think is "fair amount". If you disagree with the amount of fees we charge, then no worries judge will decide what is fair for you. However, remember, just because that we did not disclose such fees in contract it does not mean that we can't charge them from you.

Does monologue from "honest" sales guy above really explains how our legal system works, if there is "no contract"? Note that this question is only asked from legal point of view and not from building good relationship point of view.

I will wait for multiple answers before accepting the right one. I will give preference to that answer that will be backed up with precedent case where judge discusses meaning of "no contract".

  • Get a real lawyer to tell you if you have a case. You are asking for specific legal advice in your questions and we can't give it to you. At just $800, the price was cheap for the experience gained. If you (your friend) can't or won't read what you sign, pay a lawyer to. – Patrick87 Dec 12 '15 at 22:34
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    @Patrick87 Then I have to ask you what is purpose of this website? I think the question is quite clear "Does there exist such thing as "no contract" when doing businesses with other party". Also, other websites on stackexchange (like stackoverflow) share opinions in open source manner, basically one person asks question, another answer it by trying to backing it up and then everyone else benefit from it. – Jonny Dec 12 '15 at 22:39
  • The question "is there such a thing as contract-free agreements?" Is a fine question for this site. Asking for specific legal advice is not. Why? Giving specific legal advice without being a retained lawyer is generally bad. Your other questions make it clear you intend to apply whatever you get here to your friend's case. Please, don't do that. Please talk to a real lawyer if you think it's worth it. At $800, it's not, but that's your realization to have. – Patrick87 Dec 12 '15 at 23:29
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    @Patrick87 In this question can you point me to the part where I ask legal advice? Note, that when I post a question on this site I typically ask a specific question(s) (typically highlighted in bold) and then I mention the motivation on why I am asking this question (which applies to a real case or hypothetical case). If you don't like the motivation part please feel free to ignore it. If I was to answer such question I would appreciate that person asking it includes also motivational part, because then I can understand how he or she thinks. – Jonny Dec 12 '15 at 23:49
  • Wouldn't 'contract free' really just mean there are no contract terms that can be enforced against the customer? E.g. no obligation to continue paying. – bdsl Dec 13 '15 at 1:58
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Let's say I buy a phone. Typically you can buy a phone with something that is advertised as "no contract" or for example "with a 24 month contract".

In reality, "no contract" means "we have a contract where you hand over the cash, and the phone company hands over the phone, and there are various guarantees that are either implied or explicit, but there are no terms in the contract that force you to hand over money to the phone company beyond payment for the phone in the future if you don't want to".

So there is a contract, but the contract is such that you as the customer have no obligations towards the seller once you have paid for the goods.

"No contract" would happen for gifts, or as an example if you download open source software in the USA for free.

There will be a difference between a "no contract" contract between business and consumer or between two businesses. Most countries have consumer protection laws so if a deal is advertised as "no contract" and the business demands further payments, they will likely lose. Between two businesses, each side is fully responsible to study the actual contract terms.

  • Can you clarify with an example what exactly you meant with "Between two businesses, each side is fully responsible to study the actual contract terms."? Maybe I understood your answer the wrong way, but I think you try to suggest that in B2B case judge would most likely simply dismiss "no contract" claim irrelevant whether the other party can or can't prove that it was made? – Jonny Dec 16 '15 at 1:05
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    There are claims that are made during negotiations, and in the end there is a contract. If you are a consumer, consumer protection laws will protect you (to some degree) if the claims are not matched by the contract. If you are a business, the contract counts. It doesn't matter if you can prove that a claim was made, if it's not in the contract, it doesn't count. – gnasher729 Dec 16 '15 at 20:03
  • As a customer it seems you have no obligations towards the seller ever under this type of contract. Before you've paid for the goods the contract doesn't exist. – bdsl May 27 '18 at 10:40
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Whenever I have heard the term "no contract" it really meant "no obligation" which from my POV is a reasonably accurate synonym.

For example, cell phone companies often try to sign up new subscribers and put them on a two year contract to use their wireless data services. However, I have seen companies offer "no contract" (i.e., no obligation to use their services) if you are a former customer of a different wireless company.

Similar example. People often use the term "no lease" when what they mean is there is a month-to-month lease instead of a longer term one.

  • I agree with you that on the street most people use "no contract" as synonym to "no obligations". However, "no obligations" is ambiguous as well. For example, with "no obligation"/"no contract" cellular prepaid plan you are obliged to pay for the service you received. However, are you obliged to pay also for cancellation fees? interest? I am just trying to find a line for the meaning of this phrase in legal world. Even in tech industry we have plenty of buzzwords that go through evolution and change meaning. Probably in marketing "no contract" is a buzzword that goes through evolution too – Jonny Dec 14 '15 at 2:37
  • @Jonny: If you are searching for a heuristic line to draw for purposes of semantic clarity or convenience, I suggest the following: If the term of the contract is no longer than, say, month-to-month then consider it no contract for most purposes and most situations. – Mowzer Dec 14 '15 at 2:41
  • Ok, so you are proposing that meaning of "no contract" means, for example, month-to-month terms. Which I think at the same time also imply that no early termination fees should apply if other party is willing to live with contract terms for a month after giving notice. Though, it does not imply other fees that are also obligations. Also, here in the comment we are discussing the street definition of "no contract" which may or may not be viewed differently by judge, if case would escalates to court. I tried to find on openjurist.org precedent case, but could not find one unfortunately. – Jonny Dec 14 '15 at 3:08
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There are contract free transactions; they are called gifts. When one person provides consideration to another with no legal entitlement to consideration in return; when you give money to the Red Cross, for example.

Alternatively, people can make reciprocal promises without the intent for those promises to be legally binding; that is, enforcement is by honor alone. Courts will not, indeed cannot, interfere in such an arrangement. If someone reneges the only censure comes from their own conscience.

If this is not the type of arrangement you are thinking of then the legal term for it is "scam" or "con". These things are illegal but people do them because they are lucrative and the odds of getting caught are low and the penalties are laughably small when compared to other "get rich schemes" like armed robbery.

  • thanks for confirming my suspicion that there always needs to be a [written|oral] contract in such arrangements (unless arrangement really is a gift). However, has there been a precedent when such case escalate to court and how was it resolved? I would argue that if one side illegally claimed that there is "no contract" then "meeting of minds" did not happen because there was no common understanding between both parties, because one side was doing conceiving the actual contract terms through fraud. – Jonny Dec 13 '15 at 20:54
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I'm not a lawyer.

I think many of those are contracts and therefore you can have obligations under them, whatever they're called or not and regardless of duration (e.g., one femtosecond or five centuries). Many contracts can be entirely verbal; a case was won by a business which spent money for a factory because of a B2B handshake agreement to buy products (therefore be careful about shaking hands). A conflict between written terms and verbal statements generally is decided in favor of what was written and signed, even with an individual and even if the exclusion of the verbal is not explicitly in writing; if the written price is higher than the verbal, the written price controls. A court could recognize a contract based on the proof submitted by the parties. Contract-free should mean that there's no contract but it probably doesn't if everything constituting a contract is present, which is tough on lay people but is probably law. There can be relationships other than gifts that are contracts even though they're not called contracts; and some noncontracts are still binding. (@Jonny and also @gnasher729, @Mowzer, and @Dale M.)

Whether calling a contract not a contract is misleading advertising, while I think it generally is, may depend on local law on consumer rights and many interstate firms may be exempt from some local law if pre-empted.

Whether you had a chance to read it is a separate matter. You might have to prove that you had no choice but to agree and that you were forbidden to read the document that was incorporated by reference even though you asked to read it. Having no choice but to sign is often an issue covered by duress, like having a gun pointed at your head, but needing a phone because without it you can't get a job (let's say) is not usually duress (maybe you can get some other job paying any wage or get welfare). Contracts are generally presumed as voluntarily entered into and therefore the presumption in court is against whoever agreed without reading. There can be an issue of quality of notice, but it rarely comes up, which tells me that the standard is likely high. There may be issues of statements made or omitted inducing you to agree when otherwise you would not have, but omission is a harder case. Incorporation by reference is where what you agree to incorporates something else by reference, not the other way around. Reading contracts is not always easy and the law gives little relief for that.

The store shelf relationship (also @joshua and @bdsl) probably is a contract that is fully performed once the goods are in the buyer's hands and the money is paid. Taking the goods and not yet paying for them is likely a violation of the contract that's violated if you walk past a certain point (say, the door) without paying (besides being a criminal issue).

Quite a bit of what's done is legal even if it makes for a bad business relationship.

The reason this site is not for legal advice when sites about computers are for advice on how to use, buy, fix, etc. a computer is likely because of law on practicing law and there's a box on the right side of these pages saying it's not for legal advice. What's a request for legal advice will generally be interpreted widely, not narrowly, so ask generically and omit facts not needed for a generic question (albeit at a risk of an answer being off-point). (Also @Patrick87.)

There are books on law, although many of the most reliable ones are harder for most nonlawyers to understand, and possibly law offices that coach for less than the cost of representation, although they also do less. A judicial precedent depends not only on law applied and facts applied to but also which court; many precedents are only persuasive, not binding, for the reader's case.

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