Do you understand your rights when a company changes its Terms of Service? In this section, we will look at how consumer protection and contract law apply in this circumstance.
What you will discover:
Can a company amend its terms of service?
Is it necessary for consumers to consent to modifications in terms and conditions?
Are modifications to terms of service legally binding?
If modifications to terms and conditions are not signed, are they legally binding?
Is there any recourse or right to cancel if a company alters its terms of service?
When you join up for an online service, you are often required to agree to the company’s online Terms and Conditions, generally known as the Terms of Service (TOS). Companies often need new users to select a box to show their consent to the TOS. This is necessary before you can create an account and become a user. But what if you have already joined up for a company’s online services and it seeks to amend its terms of service? What are your legal options? More information on consumer protection and contract laws can be found here.
Table of Contents
Can a company amend its terms of service?
A company’s TOS may be changed, although it normally cannot do so without the users’ permission. To understand how a company’s TOS works, let us first review contract law.
Terms of Service are legal agreements.
The TOS of a website is a contract between the company and its users. A contract must fulfill at least four characteristics in order to be binding on both parties:
One party’s offer.
The other party’s acceptance.
A “meeting of the minds,” in which both parties recognize that they are entering into a legally binding agreement.
Consideration entails each person agreeing to do something, providing something of value, or refraining from doing something.
The company meets the first requirement by allowing the user to read the TOS. The second element is satisfied when the user clicks the button or checks the box confirming their consent. A website’s TOS may also declare that by using the site, a user agrees to the conditions.
The third part may be problematic since most consumers click the button or tick the box without reading the terms and conditions. Courts have concluded that this constitutes as a “meeting of the minds” as long as the TOS is not grossly absurd.
Consideration, the fourth factor, might seem perplexing. It refers to the exchange in which the company gives the user with an online service and the user offers the business with something of value in the case of online TOS agreements. If it is a paid service, the company gets payment from the user. If the service is free, as most social media platforms are, the company may sell advertising and monetize the user’s data.
Changing the terms requires a contract amendment.
When two or more persons, such as a company and a user, form a legitimate, enforceable contract, none of them may unilaterally modify the terms of that contract. They must secure the other party’s assent and fulfill the four legal standards once again. The suggested term modification is a fresh offer that the other side must accept, as well as a “meeting of the minds.” If the new terms significantly alter the previous contract, they may need fresh consideration.
As a result, a company cannot unilaterally amend its TOS and have those changes apply to current users. The Ninth Circuit Court of Appeals reached this result in Douglas v. Talk America, a 2007 ruling. The court ruled that a company must inform users of planned modifications to the TOS and acquire their approval.
Consumer protection legislation
Consumers are protected from a broad variety of misleading, fraudulent, or unfair commercial activities under federal and state law. As previously stated, companies may enforce their terms of service even if their users did not read them completely, but only if the conditions are reasonable and fair. Hiding uncommon phrases in the TOS’s fine language might be deemed dishonest.
In the TOS, you sign away certain rights.
Businesses often seek exceptions to the preceding rule. The terms of service of a company may contain a provision in which the user waives the right to be informed of future modifications. This would enable the company to amend the TOS without informing users.
It is conceivable that this will be enforced. It would depend on whether users truly understood that they were waiving this right when they agreed to the TOS in the first place. Otherwise, it may be deemed illegally misleading. Companies continue to strive to grant themselves unilateral ability to amend their TOS, so be wary.
Is it necessary for consumers to consent to modifications in terms and conditions?
A consumer is not required to consent to a new or modified TOS. If they do not agree, the company may be justified in ceasing to provide services to that consumer.
Anyone who owns a smartphone has most likely seen updates to a provider’s terms of service. It is almost always impossible to continue using an app or the device without consenting to the new conditions.
Are modifications to terms of service legally binding?
Changes to a TOS are legally binding if the user has consented to them or if the contract enables the firm to amend them without the user’s agreement, as noted above.
If modifications to terms and conditions are not signed, are they legally binding?
Any contract change requires the agreement of all parties or proof that one or more parties waived their right to consent to changes. In most circumstances, modifications to a TOS must be agreed upon by a user before they are enforced.
Nowadays, it is uncommon for anyone to agree to a company’s TOS by signing something. A signature is not the sole means to demonstrate agreement to a contract. Accepting a TOS often entails ticking a box or clicking a button on a computer or mobile device. The TOS might also specify that by utilizing the service, a user displays their consent.
Is there any recourse or right to cancel if a company alters its terms of service?
In most circumstances, the principal penalty for a firm that modifies its TOS without obtaining customer approval is that the new TOS terms cannot be enforced. To get compensation, a user must demonstrate that the modifications to the TOS caused them genuine harm. If this is the case, they may be entitled to sue for breach of contract or violation of a consumer protection legislation.
When it comes to canceling services, many TOS agreements stipulate that consumers may do so at any time. If they are paying the company for a service, they may be compelled to provide some advance warning. If the TOS limits how or when a user may cancel, they may be entitled to get out of the contract without paying any costs or penalties by filing a breach of contract lawsuit. It may be feasible to avert a lawsuit by sending a Complaint Letter to the corporation.
