New Case on Unilateral Right to Amend Contract Provisions

Reader Bradley Clark, proprietor of the Texas Law Blog, let me know about the recent Fifth Circuit Court of Appeals’ opinion in Carey v. 24 Hour Fitness, USA. Here’s the gist of it:

The district court held that the binding arbitration provision relied upon by 24 Hour Fitness is illusory because 24 Hour Fitness “retain[ed] the unilateral right to modify or terminate the arbitration provision” at any time. For the reasons stated below, we AFFIRM.

In a 2007 blog post (here) I noted the problem with unilaterally amending the terms of a “virtual attachment” to a contract. That blog post dealt with online terms of service mentioned in a contract. By contrast, Carey concerns an employee handbook that provided for arbitration; the plaintiff employee had signed an “acknowledgment” stating that the company was free to amend the handbook. But the same logic applies.

This issue isn’t central to what I do, and others have devoted much thought and many words to it. They might want to add this case to the mix.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.