Information Technology Reference
In-Depth Information
In addition to indemnification provisions two other provisions help the service
provider shift legal risk. First, warranties or guarantees regarding the service are
disclaimed. Second, damages are limited or waived altogether. A warranty is a legal
promise. In traditional contracts for the sale of goods the buyer expects the product to
work. Over time courts have responded to this practical expectation with the legal
concept of implied warranty, i.e., the sale of a product implies certain warranties
about the condition of the product. The purchaser-consumer expects the product to
work and this is expressed in the law as a warranty of merchantability or fitness for a
particular purpose. As the contract law developed courts concluded that these buyer
expectations were reasonable and applied the warranties of merchantability and
fitness to sales of goods. An “implied warranty of fitness for a particular purpose is a
warranty implied by law when a seller has reason to know that a buyer wishes goods
for a particular purpose and is relying on the seller's skill and judgment to furnish
those goods” [10]. A general warranty that the product is ready for the marketplace is
an implied warranty of merchantability. A merchantability warranty “means that a
good sold carries with it an inherent soundness which makes that good suitable for the
purpose for which it was designed” [11].
Likewise it might be expected here by a cloud user that the service will work, i.e.,
that the service will be available and that content placed in the cloud is secure and
available for later access and use. Again contract law through the TOS allows the
cloud provider to shift the legal risk of the parties to the transaction, by disclaiming
any promise implied or otherwise that the service will work. Taking a lesson from the
software industry providers of software realized that promises of bug free or error free
software were impractical to make, even if the user expected such promises. As a
result, disclaimers were used to make the consumer aware that the product will not be
error-free and that the software is made available “as is” with errors and all. Cloud
computing services providers have similar concerns and so engage in similar risk-
shifting reallocations of legal responsibility. All four providers make their clouds
available “as is” with faults, errors, etc. An “as is” warranty is a “warranty that [the]
goods are sold with all existing faults” [12]. The “as is” provision indicates to the
cloud user that “you take the service as it is with all quirks, bugs, faults, delays, etc.”
In cloud computing environments this is yet another way in which the cloud service
provider shifts legal risk, disclaiming any responsibility for harm it might cause. Each
of the cloud computing TOS agreements examined contain a warranty disclaimer. The
Amazon Cloud Drive disclaimer however is incorporated by reference to another
agreement, Amazon Web Service Customer Agreement where the actual disclaimer
provision is located in paragraph 10 of that agreement [13]. In some states certain
warranties cannot be waived in consumer contracts and the iCloud, OpenDrive and
Dropbox warranty disclaimers provisions include a statement to this effect.
If in spite of numerous warranty disclaimers a court should find the service
provider responsible for harm a final strategy that all cloud providers employ is to
limit the scope of the damages that can be awarded. Should a court find fault with the
service provider the damages would be so minuscule as to discourage any claim from
ever being brought. It is typical to limit damages to the cost of the subscription fee.
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