How to Update Terms of Service: What Courts Require Before a Change Binds Existing Customers

The table lists the opinions we read for this post. Each was opened in the court's own PDF. The first three concern whether new terms became part of the contract at all. The fourth concerns terms that were held unconscionable, partly because of how they could be changed.

One result runs against the usual pattern. In Stover the customer wanted the newer terms to apply, because they exempted some claims from arbitration. The rule the court applied was the same: no notice of the change, no new contract.

Douglas v. U.S. District Court began with the question in its plainest form: whether a service provider may change the terms of its service contract by merely posting a revised contract on its website. A phone company had added new charges, a class action waiver, an arbitration clause and a choice-of-law clause to its posted contract. The customer said he was never notified and kept using the service for four years.

The court said a revised contract is merely an offer and does not bind the parties until it is accepted. An offeree cannot assent to an offer unless he knows it exists. Even if continued use could count as assent, the court said, that assent can only be inferred after the customer received proper notice of the proposed changes.

The opinion also rejected the idea that customers should watch the website. In its words, 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. The court granted the customer's petition and vacated the order sending him to arbitration.

Most terms documents include a clause saying the company may revise the terms and that continued use means acceptance. In Stover the 2014 terms had such a clause. It said the customer would be bound by future versions by continuing to use the company's products, which included accessing its website. The customer visited the website in 2018, after a newer version had been posted.

The court asked whether a mere website visit after the end of a business relationship is enough to bind parties to changed terms under such a clause. It held that it is not. Both parties to the contract must have notice of the change in terms. Notice to the drafting party alone is not enough.

The court explained what the opposite rule would allow. A drafter with a change-of-terms clause could bind people daily, or even hourly, to new terms they had never seen. The clause still has a use, since it tells the customer how changes will be made. It does not replace the notice.

A separate question is whether such a clause makes the contract unfair. In Patrick v. Running Warehouse in 2024 the Ninth Circuit agreed with the district court that the mere presence of a unilateral modification clause did not make a separate arbitration clause substantively unconscionable.

Jackson v. Amazon.com is the most useful opinion on this point because it describes notice that worked in other cases. The court discussed a district court decision in which an email told customers the terms had been updated, provided the content of the new terms, and stated that continued use of the app or services constituted agreement. That communication was found sufficient in that case.

The Ninth Circuit noted that it was not bound by that district court decision. It used it to show what the record before it was missing. The description gives three elements: the fact of a change, the new terms, and the consequence of continuing.

Stover adds the legal frame. The court said notice, whether actual, inquiry or constructive, is the touchstone for assent to a contract and for the enforceability of changed terms. A banner that most customers never see and a footer link dated last month sit at the weak end of that range.

• Send the notice to each customer, by a channel they agreed to keep current
• Say in the notice that the terms have changed
• Include or link the new terms, and identify what changed
• State what action, or what continued use after what date, will count as acceptance
• Give time to review before the change takes effect
• Keep the notice itself, not only a note that one was sent

Amazon's original 2016 terms for its delivery drivers said the company could modify the agreement by providing notice, and that continuing to perform services after the effective date meant agreement. Amazon filed a declaration saying it distributed new terms in 2019 by email to the address each driver had agreed to keep current.

The Ninth Circuit held that the burden was on Amazon, as the party seeking arbitration, to show that it provided notice of the new terms and that there was mutual assent. The district court did not have the email. It had no description of the email either. The court called the declaration a vague statement that a notice was sent.

The court added that Amazon might not be required to produce the verbatim content of the email. What it did provide was insufficient to let a court determine whether drivers were told that continuing to work would bind them. The 2016 terms therefore still governed.

The lesson is about records more than design. The company may well have sent a good email. When the motion was heard it could not show one.

Heckman concerned terms that Ticketmaster amended on its website on 2 July 2021, while an earlier arbitration motion was pending. The new terms required arbitration of any dispute arising from a ticket purchase, whenever that purchase took place, under the rules of a newly created arbitration provider.

The Ninth Circuit affirmed the denial of arbitration, holding the delegation clause and the arbitration agreement unconscionable under California law. In discussing procedural unconscionability it noted that the terms stated they could be changed without notice and that changes applied retroactively. It also noted that a person merely browsing the site was treated as agreeing to the changed terms, and it pointed back to Douglas and Nguyen on that point.

Heckman turned on many features of the new arbitration rules, and the change mechanism was one factor among them. It still shows how a court reads a clause that lets a company rewrite a past deal without telling anyone.

The table sets out a sequence drawn from what the four opinions found missing. It describes steps and the evidence each one leaves. It does not say what any particular business must do; that depends on the contract, the change and the state law that applies, and is a question for counsel.

A recorded acceptance at sign-in is the strongest form, because it supplies assent directly. The opinions on new sign-ups explain why: the Ninth Circuit has said courts routinely enforce agreements where the customer must tick a box stating agreement. Continued use after a clear individual notice is the weaker alternative that Douglas and Jackson leave open.

That was the outcome in both Stover and Jackson. The court did not hold that there was no contract. It held that the earlier terms, the ones the person had actually accepted, still applied.

This has a practical consequence for a company with several versions in circulation. At any time, different customers are bound by different documents. A dispute with one of them starts with the question of which version that person accepted and when.

It also means the old versions have to be kept. If the only copy of the 2021 terms is whatever the website showed before the last edit, the company may be unable to prove the contract it is relying on.