relying-party, Re: Enabling Markets (re: "Hijacking")

[Dave Farber <dave () farber net>]

Begin forwarded message:

> From: "Ed Gerck, Ph.D." <egerck () nma com>
> Date: April 12, 2010 3:02:46 PM EDT
> To: Gerry Faulhaber <gerry-faulhaber () mchsi com>, Ip Ip <ip () v2 listbox com 
> >, David Farber <dave () farber net>
> Subject: relying-party, Re: [IP] Enabling Markets (re: "Hijacking")

> [Dave: please use this better formatted version, if possible]
>
> Dear Gerry, Dave, and IP'ers:
>
> Thank you for your posting, which I thought was illuminative, and the
> papers' links. The "information asymmetry" model looks very powerful
> when applied to understand market failure modes, and how to help  
> prevent
> them.
>
> As my example below shows, the "transparency and disclosure"  
> principles
> that you and Dave mention are sometimes not possible, so the
> "information asymmetry" cannot be reduced by these remedies alone. We
> need more.
>
> In addition to "transparency and disclosure", perhaps current,  
> accepted,
> general legal principles could help, and reinforce them as well.
>
> Specifically, the "relying party" provisions of the US uniform  
> commercial
> code could be more broadly applied to help consumers -- and even more
> powerfully when "transparency and disclosure" principles are not  
> used or
> are not even possible.
>
> For example, when, as a consumer, I purchase a new car, I accept the  
> car
> in bona fide that it would be safe to drive according to the  
> dealership
> declarations and the owner's manual instructions. Therefore,  I  
> become a
> relying-party to both the car manufacturer and the dealership, as to
> their representations of the vehicle's safety and operation. My  
> position
> as a relying-party is also due to considerations that they are the
> well-known experts in that cars' technology (eg, a hybrid Toyota  
> Prius)
> and that their representations are either hard or impossible for me to
> verify as a consumer.
>
> As a relying-party, I am called to trust not only that the vehicle  
> would
> work as described in the owner's manual but also that the vehicle  
> design
> was done with care and taking into account faults and operational
> conditions that are known or even just foreseeable for anyone expert  
> in
> the art, such as the car manufacturer and the dealership.
>
> And I  drive the car based on that trust. I cannot apply the
> "transparency and disclosure" principles in this case. The  
> "information
> asymmetry" is so high that I many not even know (even under court  
> order,
> as recent Toyota legal cases show) what went wrong, if it does.
>
> But, on driving, I see that the Toyota Priu's bumpers are simply too  
> low
> on the ground, so they frequently scrape even the already low curbs on
> frontal parking, and normal road depressions in California city  
> streets,
> which will cause me cost to repair. I also see that (in a potential
> emergency) shifting to neutral will take 2 long seconds to actually
> happen, and trying to switch the engine off will take at least 3.2  
> long
> seconds as well, from the moment I press the button to the moment the
> engine is off.  And neither will ever happens if the car's computer
> hangs, as both actions are not directly wired but read and  
> controlled by
> the car's computer. Now, this would all be abnormal situations, that a
> driver would not expect to find in a car designed by experts.
>
> So, when the trust asked for in a relying-party situation is broken, a
> relying-party claim should be possible -- even though I have not seen
> that used yet in the Toyota case. Would it help, with something as
> simple as badly designed bumpers, that make the car look cool and sell
> better ...but is costly for the car's owner to upkeep? Would it help
> with life-threating faults, as not being able to stop a run away car
> engine before 3.2 seconds? How about other cases?
>
> Best regards,
> Ed Gerck
> ed () gerck com (personal opinion)



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