Crowdfunding Is Now A Contract Between Company And Backer

Kickstarter is not a store. Indiegogo is not a store. Crowdfunding is not buying something — you’re merely donating some money, and you might get a reward for your pledge. Caveat emptor doesn’t apply, because there is no buyer, and no one can figure out what the correct Latin translation for ‘backer’ is. These are the realities that have kept Indiegogo and Kickstarter in business, have caused much distress in people who think otherwise, and have been the source of so, so many crowdfunding follies.

Now, finally, crowdfunding is being legally recognized as a store. The Register reports a court in England has ruled against Retro Computers Ltd and said it had formed a contract of sale with crowdfunding backer Rob Morton. For one person, at least, for one of their pledges, Indiegogo is a store.

The crowdfunding campaign in question is the Retro Computers’ Sinclair ZX Spectrum Vega Plus, a small device not unlike the Commodore 64 direct to TV joysticks. The Spectrum Vega simply plugs into your TV, reads an SD card, and plays old ‘speccy games. Clive Sinclair, the genius who brought us the Spectrum, strange flat CRTs, and a host of other inventions, was involved in this campaign. In the years since the campaign ended, there have been numerous updates and Retro Computers still says they intend to deliver the device. Morton, apparently fed up with the delays, brought a suit against Retro Computers for the grand sum of £584: £85 for the Spectrum pledge, £5 for shipping, and the remainder for travel expenses and lost wages for the court date.

District Judge Clarke of Luton County Court heard the case and ruled against Retro Computers, finding there was a contract of sale between Morton and Retro Computers Ltd.. Evidence included a number of copies of Morton’s order, a document the judge pointed out as saying ‘this order’ and not ‘this pledge’. Additionally, the judge found the fine print on Indiegogo does not negate a contract of sale; there was still an implied agreement between Morton and Retro Computers, and Retro Computers had breached the contract by not delivering a Spectrum.

It should go without saying that this finding does not apply to every project on Indiegogo, it does not apply to Kickstarter, and nor does it apply to every crowdfunding campaign. This does not even apply to all backers of the Spectrum Vega Plus. Still, there are hundreds of thousands of backers for crowdfunding projects that haven’t received what they paid for, and if nothing else this story gives just a little bit of satisfaction to anyone that’s still waiting on an undelivered product.