The Canal Street Blog

Business-focused legal discussion

Amending Online Terms of Service

A New Way for Consumers to Negotiate Favorable Terms of Service
Online service providers typically require users to agree to their terms of service before rendering any services. Every time you sign up for a new online service you have to click “I Agree” to an agreement that can easily exceed 20 pages in length and is usually both legally binding and widely ignored. Most consumers probably believe that they have to agree to those exact terms in order to be able to use the service. But this may not be the case any longer.

A new online bookmarklet may allow consumers of web-based products to amend terms of service agreements. The program TOSAmend, designed by web application builder Kevin Owocki, is a bookmarklet that enables users to edit terms of service agreements and send them back to the online service providers for acceptance.

For more on how TOSAmend works, see the video at the bottom of this post.

Is TOSAmend Legally Effective?
Unfortunately the correct answer is a lawyer answer: it depends. I know, not the answer most people are looking for.  Generally, when a counter proposal is made and there are conflicting terms between the offer and the counter offer, any conflicting terms are “knocked out” of the agreement. Once terms are knocked out, courts will fill in missing terms by looking to non-conflicting terms and default rules. For example, if a terms of service provided that by using the service the user agrees to litigate all proceedings in a certain county, and a user amended the contract to say that the user agrees to litigate all proceedings in a different county, then the two terms would most likely be knocked out of the agreement because they are conflicting. Then a court would look to the default rules governing where cases may be litigated.

In order for TOSAmend to be legally effective, the amended terms of service must be reasonably expected to reach an agent of the service provider that has the authority to bind the service provider in contract. If the amended terms are never sent to an individual with authority to bind the contract, it is unlikely that the amended terms will be effective.

For more on the legal effectiveness of programs like TOSAmend see the article “What if Consumers Could Change the Terms of Online Contracts?” by law school professors Zev J. Eigen and Florencia Marotta-Wurgler.

What Can Companies Do to Protect Against Applications Like TOSAmend?
TOSAmend is a great product for consumers, but it’s a headache for service providers. While standard contracts full of boilerplate language can be frustrating for consumers, they do lower transaction costs for the company and these savings may be passed on to consumers. If a company wants to prevent applications like TOSAmend from altering the legally binding terms of an agreement, there are some clauses that may be inserted into the agreement to improve the likelihood that the amended terms will not be effective. One such clause could provide that none of the service provider’s agents have legal authority to alter the terms of the contract. Another such clause could provide that any amendments to the agreement render the entire agreement ineffective. However, it is possible that a court could find that such a clause is unconscionable in a consumer setting and ignore the clause preventing modification of the contract.