The following is not meant to be legal advice.
On July 18, 2007, the Ninth Circuit issued its decision in Douglas v. United States District Court for the Central District of California, No. 06-75424. The case issue was on whether a service provider may change the terms of its service contract by posting a revised contract on its website without providing additional notice.
The plaintiff, Joe Douglas, contracted for long distance telephone service with America Online (AOL). Talk America who acquired the business from AOL added four provisions to the service terms of use: (1) service charges; (2) class action waiver; (3) arbitration clause; and (4) choice-of-law provision stating New York law. Talk America posted the revised contract on its website but never notified Douglas that the contract changed. Douglas continued using the services for four years without knowing about the changes.
The court held that posting a revised contract to the website was inadequate notice and the service provider's customers were not bound by the revised terms. A party to a contract cannot unilaterally change the terms of the contract without the other party's consent. The court stated that a party cannot assent to an offer unless it knows of its existence and cannot accept the offer until it is brought to the party’s attention.
Continued use of the service by Douglas could not be considered assent without his receiving notice of the revisions.
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