Web Contracts Can't Be Changed Without Notice

RZG writes "The U.S. Court of Appeals for the Ninth Circuit ruled on July 18th that contracts posted online cannot be updated without notifying users (PDF of ruling). 'Parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side,' the court wrote. This ruling has consequences for many online businesses, which took for granted their right to do this (see for example item 19 in Google's Terms of Service)."

Comments

Booh

[Anonymous Coward]

What about the mega-corporation's rights to mercilessly screw their customers? This ruling ain't fair, you know.

Re:Booh

[pokerdad]

If Bill Gates punctured a tyre, do you think many Linux users would feel sympathy for him?

Nope. They would just wonder who that guy is getting out of the limo and into the helicopter.

And of Course

[OverlordQ]

Isn't this only applicable in the 9th Circus^Hit's jurisdiction?

Re:And of Course

[Wuhao]

No, the 9th Circuit is a federal court, and so this decision has consequences nation-wide.

Re:And of Course

[cpt kangarooski]

Well, that's true, but it's not binding precedent except for the district courts under the 9th Circuit. For everyone else, it is merely influential.

Re:And of Course

[cpt kangarooski]

No, that reputation is undeserved. The 9th Circuit is huge, and so it sends many more cases to the Supreme Court than any of the other circuits do. However, in percentage terms, it's actually pretty average IIRC. It really needs to be split, but unfortunately, there doesn't seem to be a good way of doing that.

Not a big issue

[MysteriousPreacher]

Well, it's not a big issue for sites that require a login. All they have to do is flash up the new terms for the users next time they log-in. World of Warcraft does this during patching if the licence has changed. WoW isn't a web site but the principle is the same.

Any site that would change its terms without some kind of notice to users has been operating in cowboy land anyway.

Re:Not a big issue

[ushering05401]

The main point, IMHO, is that the courts appear to be catching up with the tech world.

This is not an isolated incident, there have been numerous clarifications coming out that will help the internet become a more legally defined avenue through which to conduct business.

To see another example of courts starting to actually understand what they are ruling on you need look no further than today's /. front page... Check out the "Judge Permits eBay's "Buy It Now" Feature" story.

I have been following both court rulings and political decisions related to the internet for some time now, and I am finally starting to see some glimmer of hope that the most empowering utility of our time will not go down the crapper due to the ignorance of those empowered to regulate it.

Of course, there is still the net neutrality issue... but at least there is some movement toward understanding.

Regards.

Re:Not a big issue

[Esion Modnar]

Any site that would change its terms without some kind of notice to users has been operating in cowboy land anyway.

Brokeback Mountain land, that is.

Re:Not a big issue

[freedom_india]

Apple does it all the time with its various updates.
Without accepting the new license, itunes does NOT open.

Re:Not a big issue

[mr_matticus]

The simple solution in that case would be not to install the new version. The license text is available when it asks you if you want to update. It's available on their website at any time. It is, in fact, presented to you before the update downloads and then AGAIN after.

If you managed to be so lazy as to not take any of those opportunities to know what you're getting into, then you deserve what you get. Even at that point, though, you could also use any number of resources to get the older installer with the older user agreement that you agreed to, while continuing to use your purchases.

It's not duress, plain and simple, because you're not being forced to do anything with your existing purchases. There's no leverage on money spent by you and no one threatening to make worthless your investment. The songs you already purchased won't stop working if you don't update. You just won't be able to make NEW purchases if they make changes to the store.

Re:Not a big issue

[Anonymous Coward]

The program that plays the files you licensed does not open, thereby depriving you of their use.

The program that plays the files you licensed DOES open, so that you can continue to play those files, as long as you don't install the upgrade. Click "decline" on the EULA.

Kind of sad

[CastrTroy]

It's kind of sad that something like this has to be decided in court, and isn't actually just common sense. I can't have someone sign a paper contract, and then go and change everything around, and them make them bound to said contract. I don't know why anybody would think an online contract would be any different. The whole idea of changing a contract after someone has already agreed it is ludicrous.

Re:Kind of sad

[Penguinisto]

Actually, no. Any clause that has the potential or actuality of violating your rights as granted by law is automatically null and void. It's pretty obvious that "we can change the terms at any time" has a huge potential of doing just that.

The reason they still get written in is because most people haven't the clue or desire to assert that aspect of contract law.

/P

Re:Kind of sad

[CastrTroy]

The point is, is that these companies are not being fair about the renegotiations. There are actually no negotiations going on at all. They just change the contract, tell you if you don't like it, you can leave, and you may not even have any idea that we've changed the contract until it's too late. You're landlord can't just come to you 6 months after you've signed the lease, and take away your stove, fridge, and dishwashers, and say, sorry, we changed the terms of this contract, and you're not entitled to that stuff anymore. If you don't like it, you can leave. Oh, but you now have to give us 4 months warning before moving out, or you'll be held accountable for the extra rent.

Good!

[iknownuttin]

It always pisses me off that some web services say in their very long agreement that they have the right to change the terms at any time. I refuse to do business with those people.

Talk America....their telemarketers used to always bother me everyday (before the Do Not Call List) and they always gave me the creeps.

The appeals court also said the district court was wrong to grant Talk America's request for arbitration.
Arbitration panels are usually loaded with industry folks and you, the consumer, will rarely get a fair shake.

...as well as how they use their personal information after mergers or acquisitions is one that privacy experts and others have been grappling with since the emergence of e-commerce in the 1990s.
When I took a class on buying businesses, one of the ways to finance the deal was to sell off the customer list of the company you're acquiring - regardless of any privacy statement they may have stated to their customers. It's not just eCommerce sites. It's also the Mom and Pop bakery.

I'm all for capitalism and business and everything, but, sometimes, some of the things that are done makes my stomach churn. It does give me some empathy and understanding for the anti-corp folks here, though.

Furthermore...

[keraneuology]

It should be illegal to impose unilateral changes to a contract without clearly highlighting and specifying the specific changes. In other words, simply providing a new copy of the contract should be considered to be a clear and unquestionable violation of basic contract law.

• Consumers aren't lawyers. They can not be expected to read and understand all terms. Furthermore, the odds of a customer spotting a minor change (yet one that significantly alters the relationship) are slim to none. With no awareness (and full knowledge of that lack of awareness) there is no meaningful offer and therefore no meaningful acceptance. In other words there is no meeting of the minds.

• Most of these unilateral changes are of the exclusive benefit to the provider - nothing of value is offered to the user of the service. In other words, the alteration of the contract (which brings about a new contract) is utterly and completely devoid of consideration, which should likewise be enough to render the contract null and void. The contracts are entirely too one-sided.

• Many (if not most) of these changes fall well within the realm of being unconscionable. Again, enough to declare the contracts null and void. (If they would only revoke the license of any lawyer who signs off on any contract that violates these simple tenets it would take only a few days before fairness would reign).

Big corporations heaving a big sigh of relief.

[140Mandak262Jamuna]

The ruling affects only the contracts posted on line. The right of credit card companies, banks, brokerages, phone, electric and water utilities etc to include a piece of paper printed in unreadable font using ununderstandable language with their monthly bills and claim that their customers have been notified about the change in contracts will continue without any change.

The online companies just have to include "Contract terms have changed Click here to read, click here to ignore it and go to the site" flash screen to comply with the new ruling.

So it is all fine and wonderful and dandy in the corporate world, and peace and serenity will continue to reign in Ye Olde Country Club.

Update To My Credit Card Policies

[nick_davison]

Imagine if consumers could pull the same crap with changing contracts, updating terms and expecting the businesses to check online for any updates that businesses pull on consumers.

Henceforth, the customer [Me] doesn't have to make any payments and will face no consequences for doing so. Further, the lender [You] agrees to assume existing and future debts whilst continuing an open line of credit. This was posted somewhere on the net so it's the lender's [your] obligation to check for it.

Re:Does this kill GPLv2 "or later"?

[Jeffrey Baker]

That doesn't make any fucking sense at all. How can it be restrictive to say you can have these terms, or any future terms, whichever you find more advantageous? The worst case is that all future GPLs are disadvantageous, so you stick with the current one. I fail to see how that could be considered restrictive.

An agreement to agree is not an agreement

[Animats]

This is a sound decision. There's a classic principle of English common law that says "an agreement to agree is not an agreement at all". A contract to agree to terms not yet defined is not an enforceable contract. This is standard contract law.

The actual decision says:

Parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side. Indeed, a party can't unilaterally change the terms of a contract; it must obtain the other party's consent before doing so. Union Pac. R.R. v. Chi., Milwaukee, St. Paul & Pac. R.R., 549 F.2d 114, 118 (9th Cir. 1976). This is because a revised contract is merely an offer and does not bind the parties until it is accepted. Matanuska Valley Farmers Cooperating Ass'n v. Monaghan, 188 F.2d 906, 909 (9th Cir. 1951). And generally "an offeree cannot actually assent to an offer unless he knows of its existence." Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts 4:13, at 365 (4th ed. 1990); see also Trimble v. N.Y. Life Ins. Co., 255 N.Y.S. 292, 297 (App. Div. 1932) ("An offer may not be accepted until it is made and brought to the attention of the one accepting."). Even if Douglas's continued use of Talk America's service could be considered assent, such assent can only be inferred after he received proper notice of the proposed changes.

Companies have been trying to get away with something that has no basis in law. Finally, someone sued on that issue, and won.

The Register points out that this is consistent with UK law. That's not surprising. This goes back to ancient common-law traditions. The Register also points out that the issue of whether terms can be changed when the consumer has an ongoing obligation to the seller (like a cell phone service agreement) has been argued in Britain and decided in favor of consumers.

Re:Clickwrap/shrinkwrap usually binding contracts

[Courageous]

In the U.S. I believe it is called an adhesion contract and they are generally valid as long as the terms are reasonable, reasonable to a judge not slashdot readers. :-) To be unreasonable, or more accurately legally unconscionable, oppression or surprise is usually involved.


Or something that wouldn't have been agreed to, had any reasonable person actually read the contract. Another way of looking at it is that if the offerror of the contract had reason to believe it wouldn't have been agreed to had the terms been known, the terms are definitionally "unconcionable."

C//

Re:And of Course--An Excellent Reason...

[anagama]

What full damage? This sounds like a very reasonable opinion. All it says is that if one party decides to change the terms of a contract, it has to tell the other party (and I would assume without RTFO -- if the other party doesn't like the new terms, the other party can say no). Without this, you could "sign" a contract in July that says "we will keep your info private" and then in October, without notice to you, it could be changed to "you owe us one million dollars". I guess you think that would be fair? Give me your address, I have a harmless little contract I want to send you.