Facebook Relents

As many of you have heard, Facebook recently changed its terms of use from this:

By accessing or using our web site at www.facebook.com or the mobile version thereof (together the "Site") or by posting a Share Button on your site, you (the "User") signify that you have read, understand and agree to be bound by these Terms of Use ("Terms of Use" or "Agreement"), whether or not you are a registered member of Facebook.

To this:

We reserve the right, at our sole discretion, to change, modify, add, or delete portions of these Terms of Use at any time without further notice. If we do this, we will post the changes to these Terms of Use on this page and will indicate at the top of this page the date these terms were last revised. Your continued use of the Service or the Site after any such changes constitutes your acceptance of the new Terms of Use

Today it seems that the debacle over the Facebook Terms of Use has turned out in favor of users. I'm actually somewhat surprised. It seems to me the average Facebook user isn't exactly familiar with the basic tenants of contract law. And those that are, and who are concerned about the implications would probably continue to use the service (I know I did), so what did Facebook have to lose?

What I was concerned about was the possible implications this would have in contracts of adhesion. Users agree to the terms (typically without reading them) when they first sign up for the service. And even though the users don't read, can't negotiate or might not even understand the contract if they did read it, it is still binding, thanks to the Supreme Court. Carnival Cruise Lines v. Shute, 499 U.S. 585 (1991). What I'm wondering is how Carnival Cruise Lines will affect contract law in the digital age.

As we have seen, Facebook can change its terms of use after users have agreed to it. Is this a binding contract? If we take the Carnival Cruise Lines view where consumers need only purchase a product with terms that follow, she is accordingly bound by those terms. However, much less persuasive precedent does exist. In Specht v. Netscape Communications, 150 F. Supp. 2d 585, affirmed Specht v. Netscape Communications, 2002 WL 31166784 (2002)., a federal district court held that an online license, where the licensee had no notice of the terms, no binding contract was formed. In traditional contract law, this makes sense. But, in this digital age, it's becoming harder for online distributers to hold digital offerees accountable to their obligations.

I'll be curious to see if any more states adopt the Uniform Computer Information Transactions Act.