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Rajah Lehal

Are Unilateral Changes to Website Terms of Use Agreements Unconscionable?

July 07, 2015

Links from this article: Read the article here.

This article discusses the American case of MacKinnon v. IMVU, Inc., which challenged a website operator’s unilateral amendment of the website terms of use. In this case the customer had purchased audio products on the “instant messaging virtual universe” and had verified that they were full length. Almost a year and a half later, in accordance with the terms of use, the website operator limited all audio products to 20 seconds, with no refunds except for products purchased after a certain date. The court did not deal at length with the formation of contract issue, assuming that the clicks on the “I agree” buttons indicated an intention to form a contract.

The consumer alleged a breach of covenant of good faith and fair dealing, as well as unconscionability under California law. The court held that the issue of the conscionability of the ‘no-refund’ provision, which allowed IMVU to unilaterally alter or remove audio products, was a question of mixed fact and law, and not a question of law alone. This question could not be answered without considering the “commercial setting, purpose, and effect” of the clause.

Given the widespread use of similar types of unilateral amendment provisions in EULA’s, this case is certain to be followed closely. The article notes that this case “suggests that unilateral amendments of website terms that impact users’ previous purchases without adequate compensation, may be suspect.”

Read the article here.Take away:

  • Unilateral amendments to website user agreements may need to meet a conscionability test.
Purpose of Terms of Use
Website Terms of Use
Commercial Activities

Written by Rajah. Rajah Lehal is Founder and CEO of Clausehound.com. Rajah is a legal technologist and technology lawyer who is, together with the Clausehound team, capturing and sharing lawyer expertise, building deal negotiation libraries, teaching negotiation in classrooms, and automating negotiation with software.