Signing a contract is serious business. Every word is important and a contract should not be signed without reading and understanding it. Contract clauses can bite!
If the contract presented to you contains a ridiculous clause and you sign it, you will be bound to it (no matter how ridiculous the clause is)!
We thought we’d share some examples of ridiculous clauses from actual contracts, hoping you’ll be careful about what you sign!
Weapons of mass destruction
In Apple’s EULA agreement (end user license agreement) there is a provision ‘you agree that you will not use the product (iTunes) to create missiles and biological, chemical, or nuclear weapons.’
That clause is generally irrelevant for those who have no intention to make an Apple bomb; however the next clause has ‘teeth’.
Hello, we’ve come to inspect your property
Microchip’s MPLAB X used to contain the following line in its EULA:
Microchip’s authorized representatives will have the right to reasonably inspect, announced or unannounced and in its sole and absolute discretion, Licensee’s premises and to audit Licensee’s records and inventory of Licensee’s use of the Software, whether located on Licensee’s premises or elsewhere, at any time, in order to ensure Licensee’s adherence to the terms of this Agreement.
If you accept that EULA, as is, you would, in effect, have given Microchip permission to pay a visit to your house at 2 a.m., whenever they chose.
Your profits are their profits
Included in the purchase agreement of a condominium recently erected in New York is a clause that states that if the owner sells his condo for a profit within a year of purchase, the condo owner must give the developer half of his windfall.
That clause, if not ‘dealt with’ could cost the condo owner hundreds of thousands of Dollars.
You can’t be employed again
Overreaching non-compete clauses are a big problem too. A non-compete agreement is signed by an employee who agrees not to compete with the employer for a specific period of time. If the non-compete agreement is overly-broad, the consequences on the signer could be dire.
Amazon had their seasonal workers sign a contract that included this following non-compete clause:
The employee may not “engage in or support the development, manufacture, marketing, or sale of any product or service that competes or is intended to compete with any product or service sold, offered, or otherwise provided by Amazon (or intended to be sold, offered, or otherwise provided by Amazon in the future) that employee worked on or supported, or about which employee obtained or received confidential information”.
A consequence of this clause is that the single-Mom who is working for Amazon over the holidays so she can afford presents for her children will not be allowed to return (for 18 months) to her regular job; an assembly-line worker for a widget manufacturer. Notice that the clause also prohibits the seasonal worker from working for an outfit that sells a product that Amazon doesn’t currently sell but may sell in the future!!!
Method in the madness
In rare instance, a seemingly ridiculous clause may not be so ridiculous after all.
By way of example, Van Halen’s contract required concert venues to provide the band with a bowl of M&Ms but no brown ones. This provision was quite ingenious. Van Halen’s show was a huge production that used 850 par lamp lights and at the time most venues weren’t used to them. If the band arrived and there were brown M&Ms in the bowl, it showed that the venue may not have read the contract carefully enough and they would do an additional check to make sure everything for the show was put up properly.
