Intellectual Property Law

?Sign This Contract. By the Way, We Can Modify It At Any Time.? Is This Enforceable?

By Lee.Gesmer

Here’s an interesting case out of the U.S. District Court, Northern District of Texas.  In Harris v. Blockbuster the court refused to enforce an arbitration provision in Blockbuster’s online click-wrap agreement. The reason was that Blockbuster’s click-wrap contract was unilaterally modifiable by Blockbuster.  Here is the key paragraph, which is still on the Blockbuster Online site as of today:

These Online Rental Terms and Conditions are subject to change by Blockbuster at any time, in its sole discretion, with or without advance notice. The most current version of the Online Rental Terms and Conditions, which will supersede all earlier versions, can be accessed through the hyperlink at the bottom of the blockbuster.com site. You should review the Online Rental Terms and Conditions regularly, to determine if there have been changes. Continued use of your BLOCKBUSTER Online membership constitutes acceptance of the most recent version of the Online Rental Terms and Conditions.

Yep, I’m sure many Blockbuster subscribers check Blockbuster’s online T&Cs regularly to see if they’ve changed.  Shame on you if you don’t!

The court wrote:

The Court concludes that the Blockbuster arbitration provision is illusory . . . .  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. The Court concludes that the Blockbuster arbitration provision is illusory . . . .

There are a lot of online contracts like this, and if the N.D. Tx decision is good law (which is questionable), their enforceability it in question.

Full post as published by Mass Law Blog on April 21, 2009 (boomark / email).