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  1. #1
    Join Date
    Jul 2003
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    rowland hts, california
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    How liable am I?

    My server went down a while ago due to hardware issues for an entire weekend.

    So I offered my clients a free month.

    This one client, my biggest reseller I might add, was already telling me he was looking at other hosts.

    He was already a month delinquient since hes an international customer and wires the money to me and sometimes wires them a few at a time.

    He told me he would not be pursuing further business with me. So since his account was delinquient already, even with the free month, I decided to suspend all his accounts. I authroized transfer of a domain he requested to be transferred out, but it took a long time, you know how transfers are. He told me that his clients would be pursuing legal action against him if their sites are not restored by last Friday. Last Friday to make things easier on him(and hopefully me too) I restored the accounts to prevent legal actions against him.

    Now hes teling me I've caused losses in business of over $10,000 and wants me to pay some compensation to his clients.

    How liable am I? I do have a clause in my TOS that says should anything occur, I'm not liable for losses.
    josh

  2. #2
    Join Date
    Mar 2003
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    Duluth MN
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    3,864
    It doesnt matter if you are liable, he can still sue you. This is why you have business liability insurance. You do have business liability insurance right?

  3. #3
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    No. I'm one of those hosts who make sure my servers are up and do it in my spare time. My service is reliable(excluding the hardware issue) and as long as it was working I left it there.
    josh

  4. #4
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    Its my experience that people who threaten to sue never do...not once in 8 years.

    --Tina
    ||| 99.999% Uptime SLA!!!
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  5. #5
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    He says he wants a settlement, otherwise a lawsuit?
    josh

  6. #6
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    Aug 2001
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    Originally posted by AH-Tina
    Its my experience that people who threaten to sue never do...not once in 8 years.
    Took the words right out of my mouth.

    -B

  7. #7
    Join Date
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    Originally posted by joshiee
    He says he wants a settlement, otherwise a lawsuit?
    Your client can sue you (heck anyone can sue for anything), but does not mean he would win or not. Though I would contact him and say to have his lawyer send information to your lawyer (you have a lawyer right?). Most of the time when you say that they do not even do it.

    Or you can state to have his lawyer contact you with the legal information. As well most of the time they wont even do it.

    As Tina said even after all this time they are just blowing hot air. Just make sure you handle it in a professional way .

  8. #8
    Join Date
    Aug 2004
    Location
    Delhi, India
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    213

    Re: How liable am I?

    Originally posted by joshiee
    I do have a clause in my TOS that says should anything occur, I'm not liable for losses.
    Show your Terms to the client. Im not a lawyer but as far as I know, even if he sues you, most probably, you'll win the case since you have this clause in your TOS.

  9. #9
    Join Date
    Feb 2002
    Posts
    771
    They lost exactly $10,000 even, wow.. that is unusual rather than an odd number of sales.. maybe 10,000 $1 sales? hmmm seems like they are hoping to scare you into begging to pay less.

    Ask for proof of the loss of income. Have them end you actual proof that they make this $10,000 in the time the sites were down each and every month. I would tell them that you need this directly from their customer on company letterhead so you can turn it over to your legal council for review. You probably will never hear from them again as more than likely they will not be able to prove the loss at all.

    As stated before anyone can bring on a lawsuit against you but they have to prove the loss, they cannot just make up an amount and demand you pay and be able to collect it.

    Good luck and post back if this goes any further.



    Robert
    Light travels faster than sound, which is why some people appear bright until you hear them speak.

  10. #10
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    No, don't ask for actual proof. Don't communicate with him at all until you consult an attorney.

    --Tina
    ||| 99.999% Uptime SLA!!!
    Plenty of space and bandwidth to fit your needs!
    www.AEIandYou.com - - (WP Friendly - Premium Reseller Hosting and Cheap Dedicated Servers)

  11. #11
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    Feb 2002
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    I'm one of those hosts who make sure my servers are up and do it in my spare time.
    I am guessing there will not be a lawyer on hand for this one.


    Robert
    Light travels faster than sound, which is why some people appear bright until you hear them speak.

  12. #12
    Join Date
    Nov 2001
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    Philadelphia, Pa
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    ***NOTE* **this is not legal advice. Consult your lawyer before doing anything***

    What I would do is show him the terms in your TOS. Explain to him why he doesn't have legal grounds to stand on. Remind him that should he sue you and you incur legal expenses that you may decide to counter sue to cover costs and damage done to the reputation of your company.

    My bet is he backs off.

  13. #13
    Join Date
    Dec 2002
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    Prince Edward Island
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    Originally posted by GWDGuy
    I am guessing there will not be a lawyer on hand for this one.


    Robert
    Agreed.

  14. #14
    Join Date
    Apr 2005
    Location
    Chatsworth, CA
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    105

    Legal Action

    I am a lawyer. I also have a few side business's as well. My new hosting company will be up within a week.

    Real quickly; so long as you have evidence that your customer agreed to your tos (needs to be in the signup process) to indemnify you from any losses that they incure as a result of downtime, and that you would not be responsible for any losses that occur as a result of outages, and that you would be liable only for the amount of money paid by the customer on a pro rata basis with respect to the actual downtime, based upon what they paid during the contract period, i.e., they are down for a weekend, they pay per month, their pro rata share would be 30 days divided what they paid for the month, multiplied by 2 days they were down. That's it.

    Your TOS and Service Level Agreement are the most critical things you can have as well as evidence that they have read and agreed to the terms during the signup process.

    Obviously having insurance and a good lawyer helps, because any can sue anybody for anything. Whether they win or not is a different story, however, It may cost you thousands of dollars to retain an attorney to defend any lawsuit.

    In my TOS agreement, it states that if litigation results as a result of our relationship, a losing party shall pay all attoney fees and cost to the prevailing party.

    I also have a binding arbitration clause in the TOS, which forces all litigation to go to private binding arbitration rather than through the Court system. I also limit the jurisdiction of any disputes to Court's in California, that way in case there is any lawsuit, they will be forced to litigate in my home State!! These are all things to think about.


    <<< Self-promotion removed. >>>
    Last edited by SoftWareRevue; 05-11-2005 at 01:38 PM.
    Norm
    www.iHostKing.com/
    Internet Hosting & Design

  15. #15
    I agree to a degree with AH-Tina.

    If I were in the situation I would continue a diplomatic relation with the individual making sure all the accounts are transferred correctly or until he decides to pay the hosting fee and have his hosting accounts reactivated. I would continue to follow our TOS and keep a professional attire to the situation.

    On the note of the legal issues I would inform him that he is free to consider a legal action and that I am not prepared to discuss the legal issues further, if he wish to continue down that course of action he is free to provide details to our legal team and they will continue the discussion.

    I would of course consult our legal team and inform them of the situation. It will do you little good, in my opinion to continue discussing the legal situation with him as it will only result in a heated discussion which could further jeopradise your situation.

    If you do not have a lawyer you should at the very least attempt to get free advice from a legal helpline.

    I agree people who tend to sue do not give you prior warning. My experience is slightly different as we operate in the UK and the contract would automatically have become void when the client did not pay for the service on time (as the basis of contract law in the uk requires consideration on both parts and the exchange of something for something).

  16. #16
    Join Date
    Aug 2004
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    >Show your Terms to the client. Im not a lawyer but as far as I
    >know, even if he sues you, most probably, you'll win the case
    >since you have this clause in your TOS.

    I wouldn't be too sure about that. In some countries/areas this policy would be invalid. However, in order to sue you he must be able to prove the damages and that will be as good as impossible for him so just sit back and wait for him to sue you... That would be my advice.

  17. #17
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    Also, with online hosting purchases - its not that easy to prove that your client agreed to your ToS when he ordered. A good lawyer can shoot down almost any "proof" you might present about the agreement.

    --Tina
    ||| 99.999% Uptime SLA!!!
    Plenty of space and bandwidth to fit your needs!
    www.AEIandYou.com - - (WP Friendly - Premium Reseller Hosting and Cheap Dedicated Servers)

  18. #18
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    Jan 2004
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    Originally posted by AH-Tina
    Also, with online hosting purchases - its not that easy to prove that your client agreed to your ToS when he ordered. A good lawyer can shoot down almost any "proof" you might present about the agreement.

    --Tina

    What if you have local clients and they sign the TOS (as well you sign the TOS)? Would that be enough proof that they read it, and understand it, and will follow the TOS?

  19. #19
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    A hard-copy ToS with an inkpen signature would be your best bet.

    --Tina
    ||| 99.999% Uptime SLA!!!
    Plenty of space and bandwidth to fit your needs!
    www.AEIandYou.com - - (WP Friendly - Premium Reseller Hosting and Cheap Dedicated Servers)

  20. #20
    Join Date
    May 2003
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    London
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    You are not liable for your clients business loss in any case unless you provided the guarantee in your TOS. For web services you don't need to get signed contract . You have to make sure your TOS is easy to access and there is a noticible link on every page to your TOS. They can only sue you if you did not act per you TOS or per signed agreement.
    Trust me i ve been there done that and worn the tshirt. So don't worry just let him move out in certain period. If he doesn't do in the provided period delete the accounts. And do not respond to any treats. Just act per your TOS.

  21. #21
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    Originally posted by quicklyweb
    You are not liable for your clients business loss in any case unless you provided the guarantee in your TOS. For web services you don't need to get signed contract . You have to make sure your TOS is easy to access and there is a noticible link on every page to your TOS.

    A perfect example of why not to take legal advice from WHT.

    Please check with an attorney on all of this.

    --Tina
    ||| 99.999% Uptime SLA!!!
    Plenty of space and bandwidth to fit your needs!
    www.AEIandYou.com - - (WP Friendly - Premium Reseller Hosting and Cheap Dedicated Servers)

  22. #22
    He told me he would not be pursuing further business with me. So since his account was delinquient already, even with the free month,
    I'm not even sure you have a problem. The question is - exactly how and in what words did he tell you he would not be doing anymore business with you. Your post indicates you offered a free month but that he was deliquent over a month. Therefore depending on how he worded it he effectively notified you that he was cancelling service with you.

    Upon proper notification your contractual obligation is over and done with, So the important question is - what words did he use?

  23. #23
    Join Date
    Dec 2004
    Location
    Wisconsin
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    Originally posted by AH-Tina
    A perfect example of why not to take legal advice from WHT.

    Please check with an attorney on all of this.

    --Tina
    haha well im very sure that if you show your TOS and have a "i agree ect.." button and stuff during your registration period you should be set for it to be binding and accepted by the client. I know at my school they were explaining to us that there TOS flashes each time you logon, basically clears them of malicious doings on your part.

    What my idea was getting from what you posted, unless you are stating that your like 99% uptime, you shouldn't be responcible for anything things go down yes we all know this problems happen, if you didn't claim a 99% or whatever uptime you were being nice by extending to your customers the free additional month of service. As soon as his account was past due by all means you have every right to withhold services until his accounts are in good standing. Also you should have held his transfer until his due was paid for the accounts. Since you offered clients a free month this can be taken dependant on how you worded your free month he was still overdue and owing of charges, so you could still charge him for the months he owed, and offer him a free additional after his accounts were paid to the current month, since customers for you probably pay monthly, there accounts are prepaid till there due date which then the next month would be free unless you refunded that months payments to your clients. So if he still hasn't paid I would go after him for the full amount.

    Basically tho odds are he will sit on his *** and take it since hes not only an international client he wouldn't sue. If hes really serious he would have filed a BBB complaint and you should be hearing from them soon.

  24. #24
    Join Date
    Aug 2004
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    >unless you are stating that your like 99% uptime, you shouldn't
    >be responcible for anything things go down

    In my country it is like this: If you do not limit your liability to 99% or 98% or something in your TOS you have agreed a 100% uptime guarantee and have to pay for ANY DAMAGES CAUSED by outages even if these damages are much higher than what the customer is paying you.

    So my advice would be to contact a lawyer because if your state/country has similar laws you'd better limit your liability in your TOS.

  25. #25
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    Aug 2004
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    And actually in my country they are laughing about the US laws regarding liability because there is much more liability in the USA in general so I really wouldn`t be surprised if it was the same in the USA. Also I found that people here always think that you can have anything in your TOS and it is valid... In Germany you can not "**** with the customer" in your TOS or it won`t be valid... And I would be surprised if that was different in the USA.

  26. #26
    This makes me think. Is a statement on the checkout page something to the effect of....

    "by clicking continue you agree to our terms of service"

    good enough or not?
    Hendrick Networks - Technical, Security and Connectivity Solutions Built on T.R.U.S.T

  27. #27
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    Feb 2004
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    Australia (Crikey)
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    I remember reading that having a checkbox next to "I agree with your terms and conditions etc." and them having to click a tick in it is the virtual equivilient to a signature.

  28. #28
    Join Date
    Feb 2001
    Location
    West Michigan, USA
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    Here's what 2 different attornies told me awhile ago.

    1. You have no proof that you didn't add or change the ToS after the person signed up...regardless of what is on your website right now.

    2. You have no proof that the person's name on the order is the person that actually clicked the 'I agree" button.

    3. You have no proof that the order actually came through your order form or that you didn't just set the order up manually.

    Every online method of "proof" you can show, can be easily shot down as being forged...unlike a signed hard copy of a contract. The only good news, according to the attornies I talked to, is that most of your customers don't know this and most of your customers will follow your Terms of Service.

    --Tina
    ||| 99.999% Uptime SLA!!!
    Plenty of space and bandwidth to fit your needs!
    www.AEIandYou.com - - (WP Friendly - Premium Reseller Hosting and Cheap Dedicated Servers)

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