4.Contract Drafting, Review and Negotiation

Q6 (Amendments of Terms of Use)

We wish to amend the terms of use for our web-based service.  Is it sufficient to provide a notice of the amendment on our site?

The terms of use, if approved by the user, becomes a contract between the user and the company providing the service. In principle, an amendment to the contract requires the consent of both parties, so it is not possible for the company to unilaterally amend the contract by notice on the web site.

However, if the user is aware of the amendment, and there is a process by which the user can be deemed to have substantively consented, then it is possible that the amendment will be validated. For example, one possibility is to send an e-mail to the user’s registered e-mail address with notice of the amendment, which includes (1) the content of the amendment or a URL where it can be confirmed, and (2) a statement that the amendment will be deemed approved if the user does not object to the amendment or terminate the service within a specified period of time. If the user continues to use the service without objecting within the specified period, you may be able to take the position that the user implicitly consented to the amendment.

Of course, there is some risk that a user may challenge the validity of the amendment due to the abruptness of the e-mail. However, by including a provision like the one above which sets forth the procedure for amendments in the terms of use beforehand, you can lower the risk of such a claim.

(Posted: January 27, 2012)