Catch 22 and updating your Terms of Use

Catch 22 and updating your Terms of Use

March 6, 2023

While we may not be aware of it, we all, almost on daily basis, go through the experience of Yossarian, the hero of Joseph Heller's “Catch 22” novel of 1961, who is in constant despair because every time he reaches the number of flights which, under the rules, is supposed to allow him to return home, the colonel retroactively raises the number of required flights to keep him on active duty.

Almost every one of us enters websites and receives services through the internet and in doing so we routinely confirm "Terms of Use", doing so inadvertently and without a second thought (and in most cases - without even reading such). However, what if, after we approved those terms, the site updates or changes them in a manner that has a material effect on us and the service we receive? Perhaps we also clicked a button giving our pre-consent to any future change of the terms? Are these "Terms of Use" deemed binding contracts in the first place? Are we still bound by such even after they were updated? Do we have grounds to claim against the site if the aforementioned change affects the service we receive or our use of the site?
This issue recently arose in a case of an Israeli company against Facebook. The company, which sells lottery tickets, found itself, following a change in Facebook's "Terms of Use", which resulted in the Company being blocked from advertising on the social network platform due to a change in the definition of the term "gambling" in the new "Terms of Use".

The Terms of Use of a website or a digital service are a binding contract for all intents and purposes provided that they meet a number of preliminary conditions: the terms must be a clear offer on the part of the owner of the website or service, the terms must be clearly accepted by the user either by active approval or by a clause in the terms stating that the use of the website constitutes consent to the terms (offer and acceptance), the terms must be standard so that it can be assumed that they will be agreed upon by a reasonable person and they must include an exchange of services against some consideration on the part of the user. But what happens when, after the user has already agreed to the "Terms of Use" and made an initial acceptance of the offer - the website decides to update its terms?
In principle, the Courts in Israel and around the world have long recognized the ability and right of any business owner who provides a service or operates under "Terms of Use" that are signed or agreed upon digitally, to periodically update such without impairing their validity or applicability to existing customers, and this, inter alia, to allow them to maintain compliance with changing legislation or technological updates. However, this continued validity and applicability is not absolute, nor is it self-evident.

Thus, the "Terms of Use" should include in advance clauses allowing the website owners to make the changes and their applicability in the aforementioned case. Clauses stating that the website owners can update such at any time and that it is the user's responsibility to keep up to date with such changes may assist in case of a question as to the validity of the update, but here too the Courts will probably apply reasonableness rules. Requiring the user to reconfirm the terms of use (e.g. via a pop-up requiring the user to indicate consent) may certainly assist against future claims.

It is also important to remember that such an update will not apply or be considered valid if it is extreme or unusual in a manner that substantially harms or changes the nature of the service to which the user joined or the user's rights. For example, in cases which litigated in the USA, a change that included an unusual addition or change in the price of the service, or the addition of clauses in which the user expresses a waiver of the ability to sue the service provider, which were made unilaterally, were seen as unreasonable and invalid because the service provider never informed the user of the aforementioned changes. It is therefore important to use professionals in the field, both in order to formulate the "Terms of Use" correctly in advance, granting the business owner the ability to make the changes legally, and in order to make any future changes or updates to the such at a time and in a manner that will allow its applicability to all users.