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Want to Add an Arbitration Clause to Your Terms? Notify Your Customers

Merely adding new terms to your online consumer agreement is not going to cut it. Many online Terms and Conditions state that they can “amend this Agreement at any time by posting the amended terms on our site”, just like eBay did.

Not so fast, said a D.C. district court in Daniel v. eBay, Inc., No. 15-1294 (D.D.C. July 26, 2018). Court ruled that an eBay user did not agree to a later-added arbitration clause to the user agreement by virtue of a provision that stated eBay could amend the agreement at any time, as the user may not have received sufficient notice of the amendment.

According to the court, a party may consent to a later-added arbitration clause if the party: (1) is notified about the arbitration clause (“Therefore, while a party need not necessarily sign a contract with a later-added arbitration clause in order to assent, the party cannot agree to a newly-added arbitration clause without personal notice of that provision.”); and (2) assents via continued use of the product or service. Essentially, the court examined whether the agreement to arbitrate was a “remedy freely bargained for by the parties,” and reviewed the evidence regarding notice given to the plaintiff. (“This is not to say that eBay must prove that Mr. Daniel actually received notice. However, eBay must show and the record must reflect that it undertook specific efforts to send notice of the new arbitration provisions to Mr. Daniel on a certain date.”)

Have your outside general counsel to look at your notification practices to make sure you receive all the benefits from your amended agreement.



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