Many of us have seen service agreements that specify that the terms could be changed at any time without notifying the user. Well, a recent court decision could change all that. Service providers should not be able to change their terms of service arbitrarily without notifying their registered users, according to the judges in the US Court of Appeals for the Ninth Circuit. The decision on the case of Douglas v. Talk America (PDF) could affect how web site operators handle changes made to user agreements, regardless of what the user originally agreed to.

The case involved an AOL voice customer named Joe Douglas whose account was transferred to Talk America when Talk America purchased that segment of AOL's business. Talk America changed the terms of Douglas' contract, which he did not notice for a number of years because his service and billing continued on as expected. Upon discovering the change, however, Douglas filed a class action lawsuit against Talk America, but the company moved to compel arbitration—as per a change to the terms of service. Talk America argued that the updated terms of service was freely accessible via the company's website and that Douglas could have checked it at any time. The District Court handling in the case ruled in favor of Talk America, but Douglas appealed the decision.

The Ninth Circuit disagreed heavily with the original ruling, saying that it was not reasonable to expect Douglas to check the company's web site every day just to see if the terms of service had changed. "Parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side," wrote the judges. "Indeed, a party can't unilaterally change the terms of a contract; it must obtain the other party's consent before doing so... This is because a revised contract is merely an offer and does not bind the parties until accepted."

But what if the original user agreement involved signing away rights to be notified of subsequent changes? There is some question as to whether this ruling would also affect that type of agreement, but as Eric Goldman of the Technology & Marketing Law Blog says, it's relatively safe to assume that the decision applies to this situation, "despite contract provisions putatively permitting unilaterally posted website amendments which put the onus on users to check back frequently for updates."

As TechDirt points out, many lawyers are still pushing this type of unilateral change stipulation as part of new terms of service agreements. It's clear from the Ninth Circuit's decision that the judges feel that users need to be notified whenever a change is made to an agreement, and there are some sites that already do this by e-mail or via a notice on the web site. Some site operators even go so far as to require users to agree all over again every time a change is made by forcing them to read the new agreement when they log in.