Well, this is quite timely. Remember this past Monday (it seems so recent) where I discussed Clickwrap Agreements?
Well, several video game websites (and I am using Kotaku’s post because I read theirs first) are reporting that Microsoft has updated their Xbox LIVE Terms of Use to include a Binding Arbitration clause. Binding Arbitration clauses are used to have the parties waive their rights to litigate matters under the contract in a court of law. Thus, a lot of companies prefer to arbitrate with their consumers (as it is less costly, and tendency is for arbitration to favor companies for any number of reasons) rather than litigate.

In terms of how this relates to Electronic Agreements is that when you update your video game console’s software it will tell you that the Terms of Service have been updated and to continue to use the service you have to “Agree”. Once you Agree, you are locked in to those terms, and thus for gamers, you see how a Clickwrap Agreement works today!

That being said, and I am glad Kotaku brings it up toward the end of their post (in italics), as it highlights a point I have made in past posts. Contract drafters can put any number of provisions in an agreement, but if any of those are illegal, go against public policy, or are unconscionable a court of law will not enforce it. Thus in states where you cannot waive your right to go to court a binding arbitration clause will not be enforced.

Rock on gamers know your rights and read your agreements! For companies, know that if you put a binding arbitration clause in your agreement it tends to be seen as a consumer protection issue and in several states it is unlikely to be enforced if challenged.

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*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post

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