Technically, the man did nothing wrong. His bank agreed to the altered terms.
I've seen some credit card and bank card forms that include language which make the agreement void if its terms are altered in any way, but if it doesn't have that, there's nothing really stopping you from doing the same.
That said, legal teams for credit card companies and banks are notorious for finding ways to beat you with technicalities and/or drag their feet through the court system so your own bills rack up. They can claim bad faith, and/or fraud (which is a hot button) and add to the mix a DA willing to create a name for him/herself by putting away a scumbag white-collar "criminal" (I.E. Joe, the Photoshop user) and you've got a lot of risk behind it.
This is the less well understood aspect of robo-signing. And a variation in the Russian system, since in the US you don't get back a "signed agreement" instead you either accept the terms or your don't. If you change them you need to go to the bank and have them sign the changes, and that triggers a discussion about "What changes?" and that leads to the Bank saying, "Uh, no, guess you don't want a card, ok."
But in organizations where such things are routinely signed by a clerical worker and returned (things like alarm service come to mind) you can make these changes and sometimes get away with them. At least in one case where I asked the clerk at Safeway to sign off on an altered terms and conditions on their loyalty card the manager came over and said that nobody in the store was authorized to sign on Safeway's behalf.
Clearly that did not work for the Russian bank which has already had the agreement litigated.
We take credit card/bank card forms for granted in that nothing is returned to you except another copy of the same (hopefully) agreement, the card and monthly statement. Not the copy of the document you signed with their corresponding signature.
I wonder if this case will prompt some changes in the way they conduct their card affairs.
We take credit card/bank card forms for granted in that nothing is returned to you except another copy of the same (hopefully) agreement
Really? I'm surprised by that. In recent years I've only signed new bank paperwork as a company director, but in all cases where that happened in real time in a branch, I've asked that they make a photocopy of exactly what I signed for me to keep for my company's records. They have always done so immediately, without objection, and without the signed version leaving my sight.
Of course the discussion here has made be a bit curious, I wonder if you could "sign up banks" instead of having them sign up you. Lets say you mail a bank your preferred credit card contract to the bank, which basically said "by sending me a card you agree to the terms of this contract." and then layout the card contract you would be willing to accept. I wonder what the conversion rate would be. I'm guessing 0 but without evidence that is just a guess. Might be fun to run the experiment.
Do they still send cards in the mail? It would be interesting to see if something they sent as an unrelated advertisement would be covered by your contract if you can prove they received the contract and the card was mailed after.
This could be a whole new era of spam prevention, by being personally as full of it as every EULA. Just send out contracts, "by contacting me in any way you agree to the following...". Companies would be terrified to send anything at all to anyone.
Round here (ZA) its fairly common to see a party having a copy of the contract signed only by the counterparty. i.e. Each party ends up with a contract signed by the counter party. Technically that makes neither copy a valid contract, but - close enough I guess.
Here too. And has its sense. You have the proof the other party agreed the contract. I do not need to sign to demostrate I am too. My word right now is sufficient.
This reminds me of the diplomatic practices of ancient mesopotamia -- when an agreement between two city-kings was finalized, each king got a master tablet listing half the agreement -- all of his own obligations. At no point did a symmetrical tablet listing every clause of the agreement ever exist.
They were pushing a loyalty card, I added the clause that they couldn't collect or use any behavioural data collected from this card in any marketing, coupon, or other research program, nor could they share that information with with anyone not employed as a full time employee of Safeway Inc.
They didn't go for it :-)
Back when my kids were young and we had a neighborhood baby sitting co-op, all the Mom's met once a week. We set up a program where we got 15 different cards, every week we put all the cards in a basket at the beginning of the get together, then everyone took a card when they left (the basket was shaken up to randomize cards). That gave everyone a card to use but only aggregate statistics on the whole group rather than individual statistics.
The name was always Jane Smith.
These days Safeway has "fixed" that practice by tying gas rewards to a particular card number. That forces people to use the same card if they want to get gas rewards. I don't know but I suspect it was in response to activities like ours which mitigated their efforts to collect data.
In grad school, there was one office door that had an envelope taped to it marked "Safeway shuffle" or something like that, with an explanation to take a card and leave a card. It had a similar effect.
I have had at least three Safeway cards issued to me without having filed any paperwork. Each time the card was issued the clerk asked whether I already had a card. I responded in the negative. The clerk pulled a card out from under the till or a drawer, scanned the card to apply a discount, and then handed me the card to keep.
In fact, you can often keep the activated card (at all kinds of stores) even if they do ask you to fill in some papers. Just ask to take the forms home to fill them in and return later and take the card, too.
This is true, and your buying instruments (unless you always pay cash) or even your time of purchase/store choice will correlate out those three cards as all "you". We are very much creatures of habit and this is what Safeway and people like Target rely upon.
Now without the baby sitting co-op to randomize data I've offered my card to people ahead of me in line who don't have one, but again the gas rewards are changing that equation as well.
I've long since avoided Safeway (going on two decades), but back when I both visited the store and had a card, but under a different name (usually some variant of "Fred Flintstone" or "Mickey Mouse"), I found that my actual name eventually ended up on the receipt if I every paid by check.
Lesson: don't pay by check.
Lesson: don't patronize stores with shopper surveillance cards.
Most recent notable experience: a few visits to Border's Books, in which the store's "loyalty card" was pushed ever more vigorously. I responded "no, the NSA's already listening to my phone calls and reading my emails, no need for them to get my reading list as well" (this was years before Snowden, though after the AT&T listening room was revealed). The cashier was impressed by my integrity, and commented as much, as I paid cash for my purchase.
The last time I was asked if I had their card was during the final week of the store's liquidation sale. And I was thinking 1) why even bother and 2) where will that data go after the company shuts down (it turns out it was bought by Barnes & Nobel, which may itself go the way of Borders before too long).
Many stores let you enter your phone number on a keypad if you've forgotten your loyalty card at home. If you don't feel like signing up for a store's card to get a discount, just try entering 867-5309 (from the Jenny song) in your local area code. 99% of the time it works!
For anyone who asked my phone number i always used 555-1212 which was the 'universal' number for directory assistance for a long time. If people questioned it I said, call that number, ask for me, they will tell you the number to call :-)
These days Safeway has "fixed" that practice by tying gas rewards to a particular card number. That forces people to use the same card if they want to get gas rewards. I don't know but I suspect it was in response to activities like ours which mitigated their efforts to collect data.
As a non-USian who does not know this system, can somebody please explain what "gas rewards" are and why they would prevent the kind of card shuffling explained by ChuckMcM?
Depending on your purchases at Safeway (grocery store) a partner gas (petrol) station (Chevron) will give you $0.10 - $0.80 discount per gallon of gas. For that to work you have to present to the gas station the same Safeway "club card" that you used to buy your groceries.
The size of the discount is tied to the amount of purchases made with that card present. So if you make a lot of purchases you get a bigger discount per gallon at the gas station.
If you share the card or exchange it with others, the first one to use the discount gets that savings, the next person does not. The discount resets on use, and it can be re-established by the next set of purchases on the card.
What that does is creates an economic incentive for someone to use the same card (maximize purchases to maximize discount) and not share it (discount is one time only, and to the current holder of the card.)
In the US, most large grocery store offer a card that you can use which gives you various rewards, and in turn allows them to perform analytics on their customer base.
Historically, these rewards were related to coupons for products in the store. However, this means that there is no benefit to using your particular card instead of someone else's.
More recently, the grocery stores have added other bonuses. The one that I'm most familiar with is for fuel / petrol. They team up with some fuel brand, say exxon, and when you've purchased enough on your loyalty card, you get something like $0.05 of your per gallon fuel costs.
The scheme with the poster above breaks down, because you need the physical loyalty card to use the fuel discount, and it's unlikely that everyone is refueling their car an equal amount each week, and that everyone is purchasing an equivalent amount of product at the store each week.
What are you people so afraid of? It's standard marketing. You go in a database with millions of others and your data is aggregated and analyzed. Nobody is hunting you down based on what products you purchase from the grocery store.
Are you so sure that the data couldn't be useful in the future? Perhaps the grocery and health insurance industries might team up to identify folks with unhealthy diets, or unusually high consumption of prescription or OTC medications.
Hopefully our representatives will pass laws preventing such things. Many systems in the US are flawed, but hopefully we are moving in the right direction and our privacy will be protected by consumer protection agencies. Yes, everyone who signs up for programs such as rewards cards are able to find out the stipulations and use of data, but it's unreasonable to assume that every participant can predict the full scope of their actions.
Same goes for every one of the thousands of products we purchase, isn't it a waste of time, money, and national health to put the responsibility of researching products and services in the hands of individuals? Why are companies allowed to sell me snake-oil, cigarettes, and other harmful products?
Why isn't there a law that prevents marketing data from being tied to personal identifiable information?
There are significant security flaws in the ways that contracts are traditionally executed. This case illustrates just one of those flaws. Other flaws include alteration after signing, signature copying and forgery, and repudiation (meaning "I didn't sign that"). Most of these arise from the information security weaknesses inherent in paper documents and emailed PDFs.
I have given a lot of thought to this problem. I even had a startup once devoted to solving it. My current thinking is that some form of digital signatures--perhaps PGP--is the best solution to all of this. As I discussed in a previous HN thread, we have a long way to go before the PGP user experience is acceptable for most computer-literate people. (When I say "user experience," I mean much more than the GUI. I mean the whole process of learning about PGP, creating keypairs, signing keys, etc..)
Note that merely obtaining a signature under false pretenses is a crime. Of course, the definition of "false pretenses" is the sticking point. Technically, the customer did not make any false representations. It seems he merely expected the bank not to notice his "proposed" contractual changes. That would not seem to satisfy the elements of the crime, though I wouldn't bet my own freedom on that.
Regarding bad faith: It would be interesting to see if the court would find a breach of the implied covenant of good faith and fair dealing. It's iffy. Generally, such a breach would arise from either party's conduct outside the signing of the contract itself. I.e. you do something underhanded to thwart the other party's enjoyment of his contractual rights, without breaching any specific term in the contract.
Could a breach of the implied covenant arise from the negotiation process itself? In my cursory search, I didn't come across any cases like that, but they could exist. In this case, there does seem to be some willful deception on the customer's part. One could argue, based on the circumstances, that he expected the bank not to notice his alterations. Perhaps this would be considered bad faith.
One could also argue that the contract is void as there was no meeting of the minds. This can be a difficult case to make when there is a written contract. Nonetheless, in unusual circumstances, which this appears to be, a written contract can be voided for this reason. Here, one could argue that the two parties thought they were signing contracts containing radically different text, and thus there was no meeting of the minds.
Note that you can't just claim this any time you want to get out of a written contract. The default assumption is that your signature indicates you read and understood the contract. You have to show some unusual circumstance--such as one party's surreptitious alteration prior to signing--if you want to claim there was no meeting of the minds. And even then, a win is far from guaranteed.
If the bank can claim fraud because you changed the terms and conditions hoping they wouldn't notice, could we claim fraud for them sending the initial T&C in such small print hoping we wouldn't notice them? It should go both ways as the banks are trying to hope you don't read the terms and conditions.
The bank can claim that all it wants, but this whole idea of "I didn't read the contract I signed" has never been a valid defense. Even in the case of those online Terms of Use, only recently has anyone been able to get a court to agree that they're even slightly unreasonable. But a physical contract like this? Sure, you can say, "I didn't read it", but the judge will just say, "You probably should have." and rule against you if that's your only defense.
You're right that "I didn't read the contract" is an invalid defense in the general case. However, this is an unusual situation. The peculiar circumstances would likely lead the bank to believe they were signing a different contract which they had in fact read. And there is (arguably) some willful deception on the customer's part.
In other words, it's not just carelessness on the bank's part. That alone would not be a sufficient argument. Rather, it's carelessness coupled with the customer's willful exploitation of that carelessness. That may be enough to tip the scales in the bank's favor.
>>> Regarding criminal fraud: That might be tough to prove.
The problem is that fraud charge may be hard to prove, but may be much easier to initiate. And criminal investigation, even not resulting yet in a charge, may be rather annoying matter. For example, they could get (given a friendly judge) an order to seize all your computer equipment to look for signs of fraudulent activity. And keep "looking" for years, while you can't use them. And so on. If they arrange a cooperation of a friendly prosecutor, they can cost you lots of money while never getting to the court. Since they are paid by the taxpayers and you're not, you lose.
He couldn't afford to pay the credit card bills after 2 years what makes you think this guy has a lot of electronics in his house.
I would wager he probably has 1 crappy old computer a printer and a smartphone (just my guess as an eastern European).
He could care less if all that crap gets locked off.
As far as I can tell even that fact that he kept his end of the contract to the best of his abilities for 2 years can be used as proof that he isn't fraudster.
If we assume that at least some unethical prosecutors exist (which seems verifiable) then this risk exists any time you do something to annoy someone who has influence over said unethical prosecutors. So then it's no longer a question of what the law is, but of pure, cynical politics. When you get into that realm, all bets are off.
Under normal circumstances, there is no negotiation when a bank sends you a credit card application. They expect you to just fill it out and send it back unaltered. Since this is the expected way to handle credit card application contracts, I expect the bank could easily argue that there was no meeting of the minds, as they could not have been expected to re-read the entire contract looking for alterations, and in fact it's reasonable to argue that the man who altered the contract did so knowing the bank would never notice.
The bank sends you an agreement that you did not ask for. Why would it be different for the customer to send back a signed contract the bank did not ask for?
Customers are always cautioned to read the fine print. I would not know why this would not be valid advice for banks (or any other business) as well.
Because the bank can reasonably expect to be sent back the contract they sent out, not an altered copy, unless they are specifically told that there are changes. If the guy sent his altered contract with a cover letter that mentions changes (which the bank ignored), he may have a case. Otherwise it's clearly deceptive.
"Alexeev then sent his updated agreement to the bank, and shortly thereafter received the bank's signed and certified copy, as well as a credit card."
It's been a while since I signed up for a new credit card, but I don't recall getting back anything "signed and certified." Terms and what-not, sure, but that sounds like the bank sent back his (updated) contract.
Apparently, I've gotten more houses than credit cards, because that's exactly how you handle contract negotiations there.
>they could not have been expected to re-read the entire contract looking for alterations //
I don't think a bank will want to go down the line of arguing the contract shouldn't be binding because they shouldn't have to read the small print - that sounds like an overall loss for the bank in general.
The argument is not that you shouldn't read the small print - the bank lawyers know what the small print means - the argument is that they can't look for tiny changes in known small print if they're reasonably expecting it to be identical to what they sent.
That's like I would initiate a contract with you and after we read it together and you agree it's what you want to sign I covertly slip a page into the pack that completely changes the terms and trick you into signing it without you actually knowing it's there. You can reasonably claim you intended to sign the original one, not the one I secretly modified - and I expect the court be more sympathetic to you than to my claims "you should have watched my hands all the time!" Of course, it'd require you proving that I did this, but if you can, your case sounds pretty strong to me.
Slipping in an extra paper is not the same at all; you are adding terms to the contract that the signer could not possibly have seen. By changing the small print you are being sneaky, but they had a chance to fully examine what they were agreeing to and were lax in that.
>The argument is not that you shouldn't read the small print - the bank lawyers know what the small print means - the argument is that they can't look for tiny changes in known small print if they're reasonably expecting it to be identical to what they sent.
Doesn't this case show that they cannot reasonably expect the contract to be identical to what they sent, in respect to all future contracts?
1 - The bank signed a copy then gave one to the customer to sign. If the customer changed the print at this point, it would no longer be valid.
2 - What this guy did, the bank gave him a copy, he modified it, then signed it, then sent it back, to which the bank approved. Which is still technically valid.
This is what I would try to do if I were the bank. They would have to write off the credit card balance, because voiding the contract cuts both ways. But considering that the bank is potentially liable for much greater damages, it might make sense.
Will it work? It's hard to say. Courts are generally skeptical of the excuse that "I didn't read the contract."
Perhaps it comes down to this: Does a party who makes proposed edits have any obligation to point out such edits? Or does the responsibility lie wholly with each party to read the contract in its final form?
Good lucky going to court sayingthat you only read the credit card brochure so you thought you didn't have to read the contact before signing... Whichis exactly what the bank did.
If the bank get out of this one, and Russian contract law is the same, it will be going over all the precedence to this date.
My bet is that neither side will have it all. Contact will be upheld, but values will be ruled out of some legal common sense.
I have found some more info on good faith and fair dealing as it pertains to this type of case. Robert Summers' 1968 article "'Good Faith' in General Contract Law and the Sales Provisions of the Uniform Commercial Code" has a section on bad faith in the negotiation phase of contracts. That's exactly what we need.
I don't want to quote at length, and there's no particular passage that nails this case, but my overall sense from the article is that the contract could be voided for want of mutual assent. Or that perhaps even the contract could be judicially modified back to the bank's version.
Anyway, here's the most concise (heavily edited) quotation I could find from the article:
"There are many ways, short of fraud, by which one party can take advantage of another in driving a bargain. For example...his disinclination to read a printed form...At the least, if a person consciously takes advantage of such weaknesses, he acts in bad faith."
But, as of 1968, he said: "Case law under this section is scant." Has this changed? Quite probably. Do I have a Lexus or Westlaw account to find out? No.
I am honestly rooting for the guy. The way these contracts are made put the full burden on the customer and absolve the contract makers. I see similar things done with recent xbox TOS where you revoke your own right to make a class action lawsuit.
But in the end of the day, it's irrelevant, banks will use stronger language next time.
I'm not going to say that that all banks are angelic and innocent. But I would take the long view on this issue, and come down in favor of honesty and transparency in contractual negotiation. You may not like the victim in this case, but what if the same thing were done to a more sympathetic victim by a less sympathetic adversary?
> banks will use stronger language next time
Except that such language could be deleted by the customer. In this case, a customer has demonstrated an ability to make arbitrary changes to the contract. Assuming he is legally savvy, he should be able to alter any terms that would damage his case. This, of course, assumes that the contract is held to be enforceable. I still have strong doubts about that.
Could "false pretenses" also include the letter head on the document? If you were to scan the document, change the lettering and produce an exact replica except for the fine print, could that fall under false representation since the bank was not the author of the document.
Possibly. Though I could also argue that I've been in contract negotiations where drafts are edited by both parties and passed back and forth, yet one party's letterhead remains on the top. In other words, I could say the letterhead does not, as a matter of accepted convention, indicate that one party was the sole drafter.
I doubt that would work. Besides, the ones I've seen include a link to the original text on their website as well. Now if I take a screenshot of that (or maybe hit Archive.org for it) at the time of signing and if the text is different, I may be able to claim that the bank is forcing me to follow an agreement different from the one I signed.
But that's an extremely long shot and it still needs to rely on the bank fudging the records first.
> Technically, the man did nothing wrong. His bank agreed to the altered terms.
Yep, which is why he won the first case. The terms are ridiculous though (fee of $200,000 if the bank cancels the card), which is why I would expect it to be deemed excessive and thrown out (same as EULAs that demand someones firstborn).
Yeah, thrown out or severely reduced probably. It's pretty obvious he was very confident (and maybe a bit foolhardy) doing this or he wouldn't have put such a large number.
I'm curious as to whether he's done something similar previously.
Side note: There's a little-known legal provision that lets people sue a tele/direct-marketer if you ask them to take you off their list and they still keep contacting you. You have to take down the company name, get the name of the caller and ask them if they have "do not contact/call" and to put you on it. If they keep calling you after that (I think 3 times is the limit within 30 days or so), you can take them to small claims court.
A court might not give him everything that he's asking for, but this situation isn't exactly like a EULA. Those are contracts of adhesion: drafted entirely by one party and offered on a take-it-or-leave-it basis to a (generally) less-sophisticated party. Courts have special rules about construing provisions in those situations, but such rules wouldn't necessarily apply here (since the contractual language was the product of joint drafting). Of course, I'm not a Russian lawyer, so my 2 cents are probably worth more like 2 rubles....
> I've seen some credit card and bank card forms that include language which make the agreement void if its terms are altered in any way.
How's that supposed to work? Bank offers agreement. You offer totally different agreement although superficially similar. It's not altered. It's new. If bank agrees then I don't see how it could get away. After all they are big supporters of the rule that if you signed something you declared that you agree with it and if you actually don't it's your loss.
> Technically, the man did nothing wrong. His bank agreed to the altered terms.
I was very surprised that the Russian court system found the contract valid. Surreptitious changing a contract prior to signing can make the contract invalid where I live. It might be a question of ill-intent, and that the court did not find it as such in this case.
It works like that. You print an empty contract from internet in two copies. Then you sign both copies, and you send it via mail to the bank. Bank signs both copies as well and sends one back to you. Then it provides the service.
Bank just offers you agreement to sign. Guy just offered the bank different agreement and the bank accepted it by signing.
Probably that's why in my country banks rather sends you already signed two copies of the agreement and you are supposed to sign both of them and send one back.
Document A might have text talking about voiding if you change document A, but that won't do anything to a document B proposing a brand-new contract, not yet signed by the bank.
Deep down I really want this man to win his case, if only just to show the flaw in fine prints that have screwed over many legally-challenged (for lack of a better term) people. You can argue that it's one's responsibility to look out for, read, and understand fine prints in any contract one signs, but then why are they in fine print in the first place? So as to not detract one's attention from the borderline dishonest big prints like INTEREST FREE LOAN* or something like that? So that you can make money off that few unfortunate souls who overlooked the fine prints?
He won the first one, which left him only having to pay off the amount he owed (no cancellation fees). I hope he doesn't win the second one, as I'd expect ridiculous fees to be unenforceable on either side.
If a massive credit card agreement had a cancellation fee of $10, I'd expect to have to pay it. If the fee was $200,000 then I'd expect a court to say "Don't take the piss".
Just like we keep arguing that ridiculous terms in EULAs shouldn't be enforceable even if someone clicked ok, the bank shouldn't be held to this.
The contract was deemed valid though, which I think is awesome.
Lending someone the money to buy X, where your collateral is X is quite different from assigning a several hundred thousand dollar charge to the cancellation of a credit card. If you honestly don't think that's the case then I don't really know how to continue.
In the UK, if bank fees are excessive we can take it to the Financial Ombudsman service. There is supposed to be a level of fairness.
> but I still hope the man wins.
I don't. If he did, then it would make it ok for the bank to do exactly the same thing.
Just like we keep arguing that ridiculous terms in EULAs shouldn't be enforceable even if someone clicked ok
IANAL, but I believe the general legal (as opposed to moral) arguments for ridiculous clauses being unenforceable is that contracts of adhesion face a strict inspection for unconscionability along with the suspicion that there might not be a true meeting of the minds if circumstances made it unlikely for one party to even be aware of what they were agreeing to.
Which applies quite clearly here. They sent out a contract, and received a different one back. I wonder if he contacted them and added a letter saying "I have changed the following terms..."
I don't think you can argue that the bank was aware of what they were agreeing to.
> But the bank as a company should be expected to know what it signs
I disagree. This is one of those instances where I believe it's more important to preserve an equitable standard rather than penalize someone simply for being bigger.
Let's say hypothetically that the courts agree with you, and that in Russia the legal system is strongly based on precedent as it is in the US (I don't know anything about the Russian legal system).
Would any company be exposed to this manner of small-print tweaking? Would this include LLCs as well as corporations?
What if an office supplier injects ridiculous terms into an agreement it signs with a corner grocery store, imposing 6 figure termination fees, and prices that increase exponentially every week? How about a web hosting agreement between a hosting provider and a startup, granting the hosting provider full IP rights to anything hosted on their servers?
These may not appear to be comparable to the David & Goliath-esque situation of a credit company and an individual, but I'm pretty sure this is not really a can of worms anyone wants to open.
I disagree. Penalty clauses* have been unenforceable at common law for long before actual consumer protection legislation was even thought of. I'd be pretty leery of destroying such a good principle, backed by centuries of common law contractual tradition, just to single out banks and make penalty clauses enforceable against them.
*Penalty clauses are ones that specify excessive damages, to punish someone who breaches a contract -- as opposed to "liquidated damages" clauses, that specify damages which pre-estimate the loss that you'll suffer if I breach the contract, which are allowed.
So OK penalty clauses are really abusives but what about simply granting oneself favorable terms (like guaranteed interest rates, free services, etc.) ?
There is something to be understood about modern Russian culture - being successful cheater and uncaught thief considered a virtue, praised in a folklore with an iconic characters as Ostap Bender or, on a lower level, untouchable criminals, so-called Thiefs-Above-Law.
The unprecedented level of corruption in Russia is in a large extent due to this cultural beliefs. Being a successful bureaucrat or corrupted official is a dream of millions, be it a student of Academy of Government Service, or just a novice applied for a job of a traffic cop.
Most of so-called businesses are based on a fraud, designed and set up with the fraud in mind, as an exit strategy, based on exploitation of minorities, cheating of naive and uneducated and banal brute force.
Of course, such thing happen all over the US or other countries, the difference is the percentage. In Russia cheating and fraud are dominant strategies due to lack of any real economy or production.
The dream of easy money makes us the world largest porn producer, malware manufacturer (nothing very clever, just primitive deception) and a world's leader in drugs usage. We are deliberately copying, adapting and sometimes creatively enhancing all the possible ponzi schemes, corporate frauds found in US, without trying to mimic anything decent.
So, nothing to see here, yet another punk inspired by the cult books about Ostap Bender.
btw, these cards of Tinkoff Credit Systems was a nice cheating in itself - in a small print there was whopping 35% interest rate, huge fees for cancellation and inability to pay back ahead of schedule.)) So, they worth each other.
> There is something to be understood about modern Russian culture - being successful cheater and uncaught thief considered a virtue, praised in a folklore with an iconic characters as Ostap Bender or, on a lower level, untouchable criminals, so-called Thiefs-Above-Law.
This appears many in unequal or unjust countries in the world (for example North Africa), and it is easy to understand: When the powers that be are not seen as just, it's easy to motivate cheating against their rules.
"folklore with an iconic characters as Ostap Bender"
That's a last century's character - too modern to be folklore. Now let me get my 'balalaika' and go dance with some bears - this would fit very nicely in the image you are trying to enforce.
I did something similar with the non-compete and non-disclosure agreements my employer wanted me to sign when our company was purchased. It was a four page document and I simply altered the terms to suit what I thought was fair (I had no intention of stealing their IP, but I also didn't want them owning everything I created).
The HR representative signed both copies, gave me one and filed the other. The funniest part is that when I left a few years later, they couldn't find the one I'd signed and asked me to sign another during the exit interview ... I declined ;)
I did something similar once when I was freelancing. Knowing the company had some payment issues in the past, I modified the contract so that I could delay delivery until I'd been paid in full (rather than invoicing upon delivery).
When they inevitably didn't pay me on time the CEO called me up to ask why they hadn't received the finished product from me. When I pointed out I'd modified the contract - which he had returned, signed - he said in a rather hurt voice "...but I never read it - I just assumed it hadn't been changed!". There is a lesson there!
If they didn't initial these handmade changes (but rather just missed them) - i think they wouldn't be enforcable.
They "lost their copy" likely for this purpose - so that they could argue that you "added changes" after the contract was signed.
They sent the document as a Word document and I changed the document ... In the past I've done the strike-through and initial way too. They initialed each page and signed the last page and I've got a fully executed copy. They didn't lose their copy on purpose and when the HR representative pointed out that they could inform my new employer about the terms of the NC and NDA, I told them I'd altered the original and that they didn't have my permission.
As I said before, I wasn't interested in taking their IP but rather eliminated the parts that are onerous to the employee and that might put my side projects at risk. I should also point out that I'm still on good terms with this company and have helped with various IP issues that weren't finished when I left.
what, how is this fair? housing lease agreements have initials on each section and page for this reason, so on big long contracts you can't change a small part. if you lose a copy of a contract, and the other party has a copy that is signed and dated by you (in all locations required), isn't that case closed?
Is there a legal basis for this? I do this all the time, if I'm given a stock form to sign and I don't like it I just change it--it's much easier than trying to get it changed by them. Most employees don't care and don't know how to handle something like this so they just process it normally.
Without other side consciously agreeing to your changes via initials - this is alike to graffiti on the wall.
Fun for artist - little nuisance (not much more) for building owner.
I did more or less the same thing for the company I'm at now, and included a separate note in my response indicating what I changed and why. They seemed more than happy to sign it.
The next version of the agreement (we sign it once/year) actually included language very similar to my changes. Admittedly, I don't know if I impacted that or if it was independent, but it did make me feel good.
If you as a customer are held accountable for fine print that you never read, why isn't the reverse? This should be a no-brainer if you ask me. Hypocrites
The bank is going to argue that he forged documents. They'll probably win not because he is in the wrong but because of the (quite proper) turmoil that would result. It's a rare judge that'll uphold the rule of law when it might be inconvenient for big institutions.
If the same thing that happened in reverse, what would you expect to happen?
Lets say that you were given some terms and conditions to read, the and the bank swapped them out for others just before you signed. The new terms contain a condition that you must pay them several hundred thousand dollars instead of 10.
Which way would you expect the court to rule? Which way do you think it should?
At common law, the heart of a contract is consensus 'ad idem' - agreement to the same thing. I can only enforce a contract against you if a reasonable person in my position, at the time of contracting, would have believed that you had accepted the contract (including the same terms that I want to enforce).
Usually, having a written contract that both parties sign means that condition's easily met. But pretty clearly, swapping some small print out just before you sign might undermine that, depending on the situation. See e.g. Hartog v Colin & Shields [1939] 3 All ER 56.
(Obviously, this is irrelevant to the person in the article, as Russia is not a common-law country. And I don't know if it's relevant to American HN readers either: my possibly flawed understanding (as a Brit) is that most consumer contracts in the US are not governed by common law, but by the UCC, of which I know nothing).
In US contract law governed by common law principles there is something called the mirror image rule. An offer must be wholly accepted or else rejected. If any terms are modified that is treated as a rejection and counter-offer.
The UCC, which in the relevent part only covers the sale of goods, abrogates this rule and allows and contract to be formed so long as the material terms are identical. The provisions of the resulting contract are governed by UCC 2-207 and the process of determine them is given the colorful name the "battle of the forms".
That's the beauty of using objective (rather than subjective) intent as the test. You don't need to prove belief. Subjective belief is irrelevant. What you need is objective facts, and a court that pretends it's a reasonable person in the position of e.g. the offeree, knowing everything they knew, and decides what it would have understood by the offer.
The point is: you interpret words as they'd be understood by a reasonable person in the position of whoever the words were spoken to, not as they were understood by the person who spoke them.
E.g. consider the Hartog case. Key sentence: "...the plaintiff could not reasonably have supposed that that offer contained the offerers' real intention." ("Could not reasonably have supposed" is legal shorthand for "A reasonable person in their position would not have supposed"). If they had genuinely thought that the offeror meant it, it wouldn't have mattered.
No test by fire needed.
(NB this is English common law. I've been told in the past (https://news.ycombinator.com/item?id=5402595) that the UCC in the US is a whole lot more subjective than English law, so this is likely wrong in the US).
Do you have in UK these scammers that invite bunch of old people to some sort of meeting where they give them cake, some crappy gift and convince them that some other crappy thing, like a wool blanket is worth few thousands dollars and they sign agreements with them so they can pay for the said blanket in installments?
The rule you described is really nice but is it used in practice to fight such scammy business practices?
I've never heard of it, but I wouldn't be surprised if we did.
But: It's not clear to me that the rule is at all relevant to that scam. As you describe it, it's not that the victims reasonably appeared to be agreeing to do one thing when what they signed said something different. They were persuaded to buy a blanket for x thousand dollars, and did.
The most obvious tool contract law has to undermine that is misrepresentation. If the scammer told a lie to get the victim to sign, then the contract's voidable by the victim. (This is true even if the misrep is innocent. If it's fraudulent, then you get a better measure of damages - and, of course, the scammers might've committed the criminal offence of fraud).
There's also a doctrine of 'undue influence', which if proved can also make the contract voidable.
Finally, even if the contract is valid, since R v Hinks [2000] UKHL 53, it's not impossible that the scammers could be convicted of theft of the money. So, validly transferred per civil law, theft per criminal law! Which is... surprising. (IMHO it's bloody stupid, but that's another debate).
In reverse I would expect that the bank would prevail.
What I would expect would happen and what I believe to be the correct ruling and how the world should work in ideal circumstances are all different things, sadly.
So just because I think the bank will prevail doesn't mean I think it's the correct ruling or morally right or the kind of world I want to live in. It just means that I don't think a judge would slow banking to a crawl for the sake of rendering the correct judgement on this case.
Look I'm on the side of "the banks are assholes and they deserve to get slammed on this" 100%. But I also know that judges are a part of a big institution (government) and the banks are also big institutions. And historically we've seen that they're in cahoots outright or something close to it.
But just because I want them to get slammed, or because they deserve to get slammed, or even that it is legally correct that they get slammed, none of those things means that they actually WILL get slammed.
Trust me I want them to get hurt on this one and for it to reform the fine print bullshit and all of that. It would be so awesome if it did happen. But I'm definitely not optimistic that it will happen.
Well also, a government has a responsibility to act in the best interests of its people. While shafting the banks with a gigantic legal dick would be kind of funny, it could hurt or inconvenience a lot of people.
If this works, people all over Russia will likely try stuff like this. Banks will have to check every contract with every customer ridiculously carefully until they can roll out a global solution. While fine print is sub-optimal and irritating, forced mass reform has serious short-term repercussions.
This is why many professionally drafted contracts will have somewhere in the integration clause[1] language that says that the agreement can only be modified in writing, and only by a person with a specific title at the company.
I'm not sure that such a clause would work here. The example legal clause in your link:
"This Contract contains the entire agreement of the parties with respect to the subject matter of the Contract. The contract supersedes any prior agreements, understandings, or negotiations, whether written or oral. This Contract can only be amended through a written document formally executed by all parties."
While that clause could apply once the agreement is signed to any future changes, before that, isn't it just negotiation between the parties? (Whether it can be considered "good faith" or not is another matter, of course.)
IANAL - but it seems to me that in the link's scenario, you're not amending that contract. You're ignoring or rejecting the initial proposed contract (including this amendment clause) and instead proposing another (different) contract. Since you never agreed to that original amendment clause in the original contract, how would it have any force in the first place? Naturally, if you were to attempt to modify the contract _after_ both parties signed, you would need such a written document executed by all parties.
This is why I often include a "redlining representation" in contracts I draft or review/edit. [1] Of course, that only works if you check to be sure the redlining representation is still in the copy of the contract you're actually being asked to sign.
I LoL'd so much at this... I love it!
That his bank failed to read the fine print, as so many of us do, yet signed the agreement anyway, is a hilarious case of poetic justice.
This reminds me of the story here awhile back regarding someone signing credit card receipts with increasingly absurd signatures, including a drawn picture in lieu of his legal signature.
I asked for an automatic debit for a student loan, and got a form to fill out. Among other terms it specified that the lender could change the amount taken from my account, unilaterally!!!
So I crossed out this part, specified literally the current amount in dollars and cents, and said that any change would require separate written consent from me.
And sent it back with a signature. As others pointed out above, if they failed to notice the change, it is their own fault and their own problem, just as they would argue that it was my fault and my problem if I signed without reading all their self-serving, tiny-font, lawyer-crafted language.
And they started debiting the account - which has no legal justification other than that piece of paper, therefore they have agreed to the terms. It has not come to a court case, but if they ever withdraw more than the specified amount I'll sue.
Would I win? Maybe not, but if not it wouldn't be because of any flaw in my approach. Rather it would be because of the defacto two-tier legal system, where corporations have rights in proportion to their wealth and individuals can't afford to enforce any theoretical rights they supposedly have. I wish I could find the well-written rant on this topic (historical separate court systems for aristocrats and peasants) - Falkvinge maybe.
It would a fraudelant contract in the US. When you alter the text of contract in the US you must clearly highligh the alteration in the riginal text or as an admendment.
And the contract change is not considered valid unless it was overtly accepted by an employee with appropriate authority. A random low wage employee processing these kinds of forms would be presumed to not have that authority with the business.
So you are saying that bank actually doesn't agree to anything when it signs a contract with you if it doesn't delegate for that properly esteemed clerk?
Regardless of David vs Goliath sentiment, realistically one can't allow such a thing in a modern society.
e.g. I sent 3 documents out today requesting signatures from directors - signatures which by local laws bind the company they represent +- irrevocably. If you allow the scenario presented then clause #138 could easily have read "pay Mr Havoc a million a day".
It's pretty much up to you to check what you're signing. Inconvenience isn't a get out of jail free card! Apply some technology to it or at the very least, get some of those acetate sheets for use with the old school overhead projectors, print your official contract onto that and use it as a poor man's diff!
I would be surprised if it did not work out well in the USA, to be perfectly honest. There is nothing illegal in the extra terms he added to the contract, and the bank is not in any position to claim that it failed to read the contract. More likely, however, is that the news of this case has led every bank on the planet to institute a "check all paperwork" policy to prevent this from happening.
I can't see a bank in the US accepting (and signing) an altered contract. It would have to happen by an accident.
They would then find it worthwhile to spend $7 million in legal fees to avoid the $700K cost, just to have precedent for the next person that tried it.
That's actually is easily fixable. He changed the link to bank's website where copy of the contract's text located. So all "bank people" need to do is to check the link isn't altered. Or ad some other form of text sealing like "The text of this contract includes 2132 words, 4543 letters 'a' ..." and check for that seal only.
That says that Russian laws are fair - there's no difference between big companies and regular people. No one is protected. If a bank's client can sign a contract presented by the bank and be responsible to follow the rules in the contract the same should apply the other way around. Bank signed a contract without reading its contents and is required to follow what is written in the contract.
Contract is an agreement between two or more parties. You agree to the terms presented in the contract with your signature. Any law written in a way which protects companies is wrong. There should be no difference between a contract written by John Doe and a contract written by any company.
This is just a man against just a bank, why do you expect rule of law to be the issue here?
The nature of corruption in Russia is not about that rich easily buy justice to win over poor, or that big companies are preferred over individuals, though that issues exist too, it's about those closer to Putin living by different law than regular people, but I don't see anyone like that involved.
I should feel embarrassed that somebody alters contracts on his behalf, but this time I really feel happy for this guy. He exploited a Bank by playing out his own rules on them.
Just today I was thinking about Google and other big companies founded by Russians and then I see this little man hacking himself into success. I feel deep respect for persons who start from nothing, but with big success! Despite the prejudices people may have with Russian, some of them are really damn smart and this man proves it..
I've no idea about Russia, but this WOULD NOT WORK in the Anglo-Saxon legal system.
Legally, the signed contract is simply the physical manifestation of something deeper: the consensus ad idem or both sides agreeing to the same thing. Tricking a busy clerk into signing an altered document does not constitute acceptance of the contract.
The court generally chooses not to reward such dishonesty, and therefore allows the honest party to choose which version of the contract should hold.
How would that work? I don't remember ever getting back a copy of a credit card agreement after I sent one back. I'm not even sure I've sent something back. Isn't that all on line now?
This is a good reminder, especially to contractors and freelancers, that when you receive a contract, it's just the beginning of a negotiation, not a sign-and-send situation.
Haha now that's funny. The man did nothing wrong that's how negotiations are done between lawyers all the time. He presented new terms, the bank agreed so now they have to honor the contract they agreed to.
I only know a small amount about the current Russian regime but I would assume that this man isn't just anyone but someone with connections to the state and the mafya.
Firstly, he is a legend. Having the guts to pull off a move like that is admirable and unique.
I think it's a shame that regardless of if he wins or loses, many people believe that "fine print" is a tool that only big institutions like banks or insurance companies are allowed to use in their favor.
I've seen some credit card and bank card forms that include language which make the agreement void if its terms are altered in any way, but if it doesn't have that, there's nothing really stopping you from doing the same.
That said, legal teams for credit card companies and banks are notorious for finding ways to beat you with technicalities and/or drag their feet through the court system so your own bills rack up. They can claim bad faith, and/or fraud (which is a hot button) and add to the mix a DA willing to create a name for him/herself by putting away a scumbag white-collar "criminal" (I.E. Joe, the Photoshop user) and you've got a lot of risk behind it.