Feeds

Web contract changes are just not cricket

US appeals court silences Talk America

Choosing a cloud hosting partner with confidence

A company cannot change its contract with consumers simply by posting revised conditions on its website, a US appeals court has ruled (pdf).

The position is similar in the UK, according to an e-commerce legal expert.

A customer of Talk America has won a court ruling over a consumer contract which was amended online without his knowledge. The ruling clears the way for the customer to take a class action suit against Talk America.

Joe Douglas signed up for a long-distance telephone service with America Online. Talk America acquired the service from AOL and tried to change the terms of the contract by posting a message on its website. The changes introduced new charges, enforced New York law as the relevant law in relation to the contract, inserted an arbitration clause and inserted a class action suit waiver.

Douglas continued using Talk America's service for four years before he became aware of the additional charges. When he found out, he launched a class action lawsuit against Talk America. Talk America tried to compel an arbitration process based on the new contract and a district court ordered that arbitration begin.

Douglas appealed to the US Court of Appeals for the Ninth Circuit. It found that Talk America could not change the contract without telling Douglas.

The court said that a contract was an agreement between two parties, and that one party could not change it without further acceptance by the other.

"Even if Douglas had visited the website, he would have had no reason to look at the contract posted there," said the judgment, from Judges Kozinski, Gould and Callahan. "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."

"This is because a revised contract is merely an offer and does not bind the parties until it is accepted," said the ruling.

The court pointed out that a party could not know when to check a website for possible changes to the contract terms without being notified that the contract has been changed and how. "Douglas would have had to check the contract every day for possible changes," observed the court in a footnote to its judgment. "Without notice, an examination would be fairly cumbersome, as Douglas would have had to compare every word of the posted contract with his existing contract in order to detect whether it had changed."

Talk America had argued that the notice amending the contract was on the same website on which Douglas paid his bills and that he therefore should have seen it. Douglas said, though, that he authorised his bills to be paid by credit card and so had no reason to visit the website.

"Even if Douglas's continued use of Talk America's service could be considered assent," wrote the court, "such assent can only be inferred after he received proper notice of the proposed changes. Douglas claims that no such notice was given."

The Court of Appeals said that the court which granted the arbitration order had made a mistake. "The district court thus erred in holding that Douglas was bound by the terms of the revised contract when he was not notified of the changes," it said. "The error reflects fundamental misapplications of contract law and goes to the heart of petitioner’s claim."

Business security measures using SSL

Next page: The UK position

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.