Can You Change Your Contracts Unilaterally?

I am sure you read all the electronic contracts you enter into (yea right). But just in case you had, you may have noticed one sentence in certain contracts that states that one party (always the party that wrote the electronic contract) can change the contract “…at any time, in its discretion….”

Is this right? Well, a recent court decision shows that if this type of language is in a contract, certain terms of the contract may therefore become unenforceable. 

• You probably have heard about this particular case, as Blockbuster was transferring movie rental information through to Facebook accounts, without the express advance permission of the Blockbuster account holder (in essence people had opted in to this program, called “Beacon”). This program was widely reported and Blockbuster was subsequently sued. 

• Blockbuster claimed that the case could not be brought in court as it had to be resolved through arbitration as provided in the Blockbuster ‘Terms and Conditions.’ However, the court ruled that as Blockbuster included language in the contract stating that any contractual term could be changed–at any time, in its discretion–the arbitration clause was therefore not enforceable. 

If you really think about it, a contract is supposed to be a fixed agreement between two parties, and neither party can change it without the permission of the other party.

Why does this matter and why should you care? Well, check your contracts with your end users/customers, as if you reserved the right to change any term without their consent, certain parts (maybe all) of the contractual terms may be ruled by a court as to be unenforceable (not a good thing). 

Just a suggestion for any company seeking a venture capital investment or business venture capital, which of course is relying on its end user/customer contracts to be enforceable.