Feeds

Website terms unenforceable due to unlimited right to amend

Lawsuit Blockbustered

High performance access to file storage

Website terms were unenforceable because a provision on the right to change them in future was unqualified, a US court has ruled. Existing terms were 'illusory' because of the threat that future changes could apply retroactively, the court found.

A woman is suing video rental firm Blockbuster but the company said that its online terms and conditions require all disputes to be settled by arbitration. The woman, Cathryn Harris, went to court and won a ruling which said that the terms and conditions could not apply.

Harris is a customer of Blockbuster’s online rental service who uses social networking site Facebook. Facebook's ill-fated advertising system Beacon broadcast Harris's video rental activity to her Facebook friends. Harris objected and sued Blockbuster for passing on the details, but Blockbuster said that the suit breached the terms and conditions to which she agreed when she joined Blockbuster Online.

Its terms of use say that customers cannot sue it in court but must go to arbitration, and that they cannot take class action suits against it.

The US District Court for the Northern District of Texas has said, though, that Blockbuster cannot rely on any of its terms and conditions because a clause allowing it to alter them creates too much uncertainty for customers.

The terms said that Blockbuster could vary them at any time without giving notice, and that modifications would be effective upon being posted. They added: “You agree to review these Terms and Conditions of Use periodically and your continued use of this Site following such modifications will indicate your acceptance of these modified Terms and Conditions of Use. If you do not agree to any modification of these Terms and Conditions of Use, you must immediately stop using this Site.

The Court looked at a previous case in which Halliburton was allowed to keep its arbitration clauses because they specifically said that terms and conditions amendments could not apply retrospectively to pre-existing disputes.

"The Court concludes that the Blockbuster arbitration provision is illusory," said the judge, Barbara Lynn. "There is nothing in the Terms and Conditions that prevents Blockbuster from unilaterally changing any part of the contract other than providing that such changes will not take effect until posted on the website."

"There are likewise no 'Halliburton type savings clauses', as there is 'nothing to suggest that once published the amendment would be inapplicable to disputes arising, or arising out of events occurring, before such publication'."

"The Blockbuster contract only states that modifications 'will be effective immediately upon posting,' and the natural reading of that clause does not limit application of the modifications to earlier disputes," she wrote.

"The Court concludes that the arbitration provision of the Blockbuster contract is illusory and unenforceable," ruled the Court.

A US court had previously ruled against a company that had changed its contracts online without telling customers. Talk America was told that it could not change the terms and conditions of its phone service's use without expressly notifying customers.

"Even if [the customer] 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.

See: The ruling (6-page pdf)

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

High performance access to file storage

More from The Register

next story
Android engineer: We DIDN'T copy Apple OR follow Samsung's orders
Veep testifies for Samsung during Apple patent trial
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
One year on: diplomatic fail as Chinese APT gangs get back to work
Mandiant says past 12 months shows Beijing won't call off its hackers
German space centre endures cyber attack
Chinese code retrieved but NSA hack not ruled out
EFF: Feds plan to put 52 MILLION FACES into recognition database
System would identify faces as part of biometrics collection
Big Content goes after Kim Dotcom
Six studios sling sueballs at dead download destination
Ex-Tony Blair adviser is new top boss at UK spy-hive GCHQ
Robert Hannigan to replace Sir Iain Lobban in the autumn
Alphadex fires back at British Gas with overcharging allegation
Brit colo outfit says it paid for 347KVA, has been charged for 1940KVA
Jack the RIPA: Blighty cops ignore law, retain innocents' comms data
Prime minister: Nothing to see here, go about your business
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.