Unilaterally Amending “Virtual Attachments”

In this post I discussed language to use when incorporating into a contract terms stated in an ancillary document—including a web page—that isn’t attached to the contract. I subsequently invented the term “virtual attachment” to describe any such ancillary document. (If you can think of a better term, I’d be delighted to hear it.)

One issue I didn’t discuss in my previous post is on what basis a contract party could unilaterally amend the terms of any virtual attachment. Whether one can unilaterally amend an online contract is an issue that Eric Goldman discusses in this post about Douglas v. U.S. District Court ex rel. Talk America, No. 06-75424 (9th Cir. July 18, 2007).

The plaintiff in this case, Douglas, initially used AOL’s telephone services. After AOL sold its telephony business to Talk America, Talk America posted revised terms (including additional charges and a new arbitration clause) to its website but apparently didn’t notify its customers. After becoming aware of the additional charges, Douglas filed a class-action lawsuit against Talk America.

The court held that Talk America could not enforce the arbitration clause. For our purposes, what’s relevant is that the court noted that (1) a party can’t unilaterally change the terms of a contract and (2) 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 opinion doesn’t indicate whether the terms specified that they could be amended without the customer’s consent. Eric assumes that they did.

Like Eric, I’m not a fan of provisions that give a party the right to unilaterally amend the terms of a virtual attachment. Unfortunately, the alternatives aren’t ideal, as Eric points out.

But I can imagine circumstances where unilateral amendment would be benign—for example, if the virtual attachment contains only factual information, such as contact information.

UPDATE 1: The Consumer Law & Policy Blog has posted an item about this case. It notes that many companies try to get around any problems relating to lack of notice of changes by not only having customers consent in advance to any changes but also requiring them to agree that they will periodically review the company’s website for changes to the contract. It cites as an example of such a contract Network Solutions’ service agreement.

UPDATE 2: Compare the Douglas case with the Canadian case Kanitz v. Rogers Cable Inc., [2002] O.J. No. 665, in which the court held that a posting on a corporate website constitutes sufficient notice to bind customers to changes in their user agreements. The user agreement at issue in that case gave Rogers the right to unilaterally amend the user agreement and provided for customers to be notified by (among other mechanisms) having changes posted on Rogers’ website.

UPDATE 3: I suggest that when considering the issue of unilateral amendment you should also consider whether the consumer may terminate the agreement at any time without adverse consequences. If that’s the case, then the issue isn’t really unilateral amendment but rather whether the company is required to notify the consumer of any unilateral change.

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.