Web Development

A deal's a deal: Ninth Circuit rules Web contracts can't change without notice


Ninth Circuit map Contracts on Web sites now can't change without at least a notice to users who agreed to earlier versions, says the progressive (and therefore oft-overruled) U.S. Court of Appeals for the Ninth Circuit.

The decision only mandates obedience for firms in the two Pacific territories and the nine westernmost states, between Mexico and Canada. Strictly, other states are not yet compelled to obey. But with bellwether cyber-states California, Oregon, and Washington included, the decision will likely face Supreme Court or new Congressional consideration, as corporates seek reversion to the status quo ante of one-sided Internet contract revision.

A customer signed an agreement with AOL; AOL then sold its telephone services, then the new company changed terms without customer consent, or even notice, to hike prices, force arbitration, and bar class actions. The appellate court overturned a lower court decision against the customer, ruling since a contract is an agreement between two parties, one party can't change it unless the other party agrees.

"Even if (customer) had visited (company's) Web site to pay his bills, he would have had no reason to look at the contract posted there," the court said. "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."

So, unless that appellate decision is overruled by the Supreme Court, or made moot by Congressional action, changing a contract requires at least explicit notice, not just a posting somewhere buried on a Web site.

Will your company shift to e-mail, to printed notices of contract change, or require a click-through for changes of contract terms? As a customer, how much did you resent now-you-see-it, now-you-don't 'agreements'?

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8 comments
JohnMcGrew
JohnMcGrew

...that actually respects long-lasting and established contract and common law, instead of just throwing it to the wind in favor of some other "progressive" agenda. Who would have seen that coming? The "change of terms" act within many industries these days (most notably banking and cellular) has gotten to the point to where one wonders why anyone would sign any contract with these providers at all, since they seem willing and able to change the contract at will. And contracts are supposed to be "mutual". There was a time when courts would not respect a contract that was completely one-sided like many seem to be these days. Every so often a company tries to do that with me, and I have to call and remind them that we do, in fact, have a contract. Sometimes I even have to explain to people what a ???contract??? really is. They've been doing this so long now that the latest generation of "customer service" people honestly don't understand the concept anymore.

Deadly Ernest
Deadly Ernest

What a strange idea, having the actual real life contract laws applied to contracts over the Internet. In every other field of contract law, any changes to the contract MUST be agreed to by all the original parties, and it's not possible for any party to arbitrarily sign away their rights in this aspect - yet many ISPs have been writing contracts as if this can be done. You can sign contracts that allow limited changes to some terms within certain restrictions, a common one being the interest rates on loans - but these usually relate to changes made in response to outside factors. A new click through should be provided, BEFORE the new changes come into effect. Thus giving people time to change providers if they wish. I'd love to see this one go all the way up the US legal system and have this ruling upheld. That'll bring one part of the USA legal system in line with the rest of the world. The next bit may be, hopefully, the recognition that most of the Microsoft EULA is unlawful anywhere outside of some USA states.

K7AAY
K7AAY

As a customer, how much do you resent now-you-see-it, now-you-don't 'agreements'? Will your company shift to e-mail, to printed notices of contract change, or require a click-through for changes of contract terms?

hutchisonjohn
hutchisonjohn

What I find concerning is the fact that the lower court initially ruled against the consumer and the decision had to be overturned. IT should be assumed that a purchase or agreement is entered into after a serious deliberation (Price checking, research, etc). To then alter the terms of unilaterally, without clear notice is a big stretch. Imagine if the tables were turned and consumers simply chose to alter the agreement and change their payment period or rate of pay - what would the response be of the company providing the service. Consumers should be given full, obvious, up front notice and the right to opt out of any existing contract once it's terms have been altered. Hopefully this will stand up to further review.

jthamilton6
jthamilton6

I get really bent when I run into now-you-see-it contract changes. If I tried to do that, the company with its huge bank of attorneys would have my neck and whatever money I have managed to squirrel away for the winter. I don't have the resources to fight them. I don't know anyone who does. Furthermore, the burial of all these changes on some obscure corner of the web site corresponds to paper contract companies' burying their bits of nastiness in the fine print after yards of legalese. It's all designed to slide through like enema-lese.

rhomp2002
rhomp2002

Most of the time when the 9th Circuit gets overruled, it is for a good reason. They have some truly stupid rulings coming from that court. However, in this case I think the court was absolutely right and for the reasons noted by the other commenters. When you have made a contract, to change the terms without adequate notice and then expect the users to suck it up and shut up is nonsense. Any change to the contract should mean that the whole basis of the contract should be revisited and all who are interested in the contract should be notified and given an adequate time to respond or accept. I also agree that the lower court really had its head buried in the fundament not to decide this case properly. What good is a contract if you can just change it on the fly and have the courts agree with that.

pav1
pav1

Great word; enema-lese. That about sums up the state of our legal system. I call lawyers file clerks with a license to steal. What they have is the knowledge of what to file when and where. Basically, a lawyer (file clerk) can do anything they want to you because they know that your financial pockets cannot fight back and that includes the fine print in our mortgage papers which now threaten to topple our financial markets!

WL.Lincoln
WL.Lincoln

Did anyone stop to think about why this happens? What makes their agreements any diffrent than a lease on a car or a cell phone plan. All other industries have to provide prompt and clear notice of a change and a chance to opt out or they violate clearly stated laws. They should be subject to the same standards as everyone else.

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