Sony raised the ire of gamers when it took away the ability to sue the company during a seemingly standard PS3 software update, and some gamers decided to opt out of the deal in order to retain their rights to legal action if wronged by the company. Microsoft is the latest console manufacturer to take this approach, as the new Xbox 360 update asks you to agree on neutral arbitration to solve disputes, and states that if you feel wronged, you can't go after the company in a court of law, nor join a class-action lawsuit.

Here is the relevant section of the new terms of service:

YOU UNDERSTAND AND ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION, YOU ARE GIVING UP THE RIGHT TO LITIGATE (OR PARTICIPATE IN AS A PARTY OR CLASS MEMBER) ALL DISPUTES IN COURT BEFORE A JUDGE OR JURY. INSTEAD, YOU UNDERSTAND AND AGREE THAT ALL DISPUTES WILL BE RESOLVED BEFORE A NEUTRAL ARBITRATOR, WHOSE AWARD (DECISION) WILL BE BINDING AND FINAL, EXCEPT FOR A LIMITED RIGHT OF APPEAL UNDER THE FEDERAL ARBITRATION ACT. ANY COURT WITH JURISDICTION OVER THE PARTIES MAY ENFORCE THE ARBITRATOR'S AWARD.

The fun bit comes after this, where Microsoft says that intellectual property disputes are exempted from the arrangement, so if you do something with Microsoft IP the company disagrees with, you can still be hauled into court and shaken down. Microsoft hasn't exactly had much luck with that approach in the past.

There is also language in the agreement that says you give up the right to participate in any class-action suit, as each dispute will be handled on an individual basis. Take a look:

YOU AND MICROSOFT AGREE THAT ANY PROCEED­INGS TO RESOLVE OR LITIGATE ANY DISPUTE, WHETHER IN ARBITRATION, IN COURT, OR OTHERWISE, WILL BE CONDUCTED SOLELY ON AN INDIVIDUAL BASIS, AND THAT NEITHER YOU NOR MICROSOFT WILL SEEK TO HAVE ANY DISPUTE HEARD AS A CLASS ACTION, A REPRESENTATIVE ACTION, A COLLECTIVE ACTION, A PRIVATE ATTORNEY-GENERAL ACTION, OR IN ANY PROCEEDING IN WHICH YOU OR MICROSOFT ACTS OR PROPOSES TO ACT IN A REPRESENTATIVE CAPACITY. YOU AND MICROSOFT FURTHER AGREE THAT NO ARBITRATION OR PROCEEDING WILL BE JOINED, CONSOLIDATED, OR COMBINED WITH ANOTHER ARBITRATION OR PROCEEDING WITHOUT THE PRIOR WRITTEN CONSENT OF YOU, MICROSOFT, AND ALL PARTIES TO ANY SUCH ARBITRATION OR PROECCEDING.

You can opt out of all this by sending physical mail to Microsoft, at the following address:

Microsoft Corporation, ATTN: LCA ARBITRATION, One Microsoft Way, Redmond, WA 98052-6399

These clauses are only relevant in the United States, and even here some states are beginning to explore whether this sort of thing is legal and enforceable. Illinois has protected the rights of consumers to pursue a legal remedy, and Ohio is exploring the same issue. These agreements are both one-sided and hostile to consumers, so be sure to opt-out after you've updated your system, and be aware of what you're agreeing to whenever you update any of your consoles.