Automatic/Unilateral Changes

Table of Contents:

• Automatic Changes

• Unilateral Changes

• Right to Opt-Out

Automatic/Unilateral Changes

Automatic Changes

In many instances where one party (e.g. a seller) has greater bargaining power compared to the other (e.g. a customer), the parties may agree to a contact term that allows the seller to make changes automatically to the contract without having to obtain the written consent of the customer. This one-sided arrangement is often found in click-through agreements that are universally applied to all customers who desire the seller’s products or services.

According to the following exemplar, the parties’ agreement may be modified automatically upon the occurrence of a stipulated event--in this case, a change in the law:

Exemplar C12-1

This Agreement shall without prior notice, be automatically modified to conform with any law or governmental regulation having application to or jurisdiction over the subject matter of the parties hereto.

In the following exemplar, an amendment is applied broadly to all agreements to which such amendment can be applied (e.g., a change in a party’s name or address):

Exemplar C12-2

All agreement(s) by and between the parties shall be amended mutatis mutandis to incorporate the new terms prescribed in this Amendment. Except as specified in this Amendment, all other terms and conditions of the agreement(s) remain in effect.

Unilateral Changes

For obvious reasons, a party may find it necessary to resist a clause that provides the other party a unilateral right to change the contract after it is executed. For a more general discussion about contract amendments, see the section entitled “Amendment Form and Effect”, and for comparison against exemplars where a party defers resolution of an issue by reserving the right to request a modification later, see the section entitled “Modification: Pricing Changes”.

However, where there is a significant disparity in bargaining power between the parties or if the change is implemented automatically, the option for removing such a clause in its entirety may not be available. This circumstance may arise where a large vendor is using a standard contract form that applies to all its customers or licensees. In such a case, the vendor may agree to language stipulating that its right to amend cannot be exclusively targeted at a particular customer, but must be applied to all similarly situated customer parties.

In the following exemplars, any automatic amendment must have general application, and not solely to a particular customer:

Exemplar C12-3

No modification, amendment, or waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom the modification, amendment or waiver is to be asserted; provided, that Contractor has the right to modify the Terms of Use applicable to Users from time to time in its reasonable discretion without the approval of Customer or any User, provided that such modification applies generally to all authorized users of the Services or Software and not only to Customer or its Users.

Exemplar C12-4

During a Subscription Term, Contractor may update the Product Agreement Terms from time-to-time to reflect process improvements or changing practices, provided these changes apply to all customers of the Services and not exclusively to Customer and do not substantially diminish Customer’s rights or create substantial additional Customer obligations during a Subscription Term, and these changes will take effect thirty (30) days from the date of posting.

Right to Opt-Out

The following exemplars, which give a party the right to reject a proposed modification to the contract after a reasonable notice period, reflect relatively balanced bargaining power between the parties. Specifically, the proposed modification will become effective automatically if it is not rejected or objected to within a specified period of time:

Exemplar C12-5

To the maximum extent permitted by applicable law, Seller reserves the right from time to time to (and You acknowledge that Seller may) modify these Terms. Seller will endeavor to notify You of any material modification to the Terms that may have a materially adverse effect on You (“Modification Notice”), and You will then have an opportunity to review such modification. Except as otherwise expressly set forth in these Terms, if any such modification has a material adverse effect on You and You do not agree to the modification, You may reject the modification by notifying Seller of the rejection within 30 days of the Modification Notice.

Exemplar C12-6

The signature below confirms that the Customer has received the amendment and accepts and agrees to its terms and conditions. In the absence of a signature, this amendment will be considered effective if the Company does not object to any of the revised terms and conditions within 60 days following receipt of this amendment.

In the following exemplars, a party has the right to reject a unilateral change made by the other party, however, the consequence of such a rejection is usually termination of the underlying agreement:

Exemplar C12-7

Contractor may amend this Agreement from time to time in its sole discretion, provided that such amendment applies to all licensees of the Software, and not exclusively to you. The amendment comes into effect 30 days after its announcement or on a later date stated in the announcement unless the amendment is required by applicable law in which case the amendment shall become effective immediately. If you do not agree to such amendment, your sole and exclusive remedy is to terminate this Agreement, and to the extent applicable, all purchase orders relating to it within 30 days of such announcement, in which case termination shall become effective on the date the amendment comes into effect and Contractor will return to you the pro-rated fees (if any) paid in advance for the remaining period of your subscription. Notwithstanding, no such termination right shall exist if the amendment is (a) solely for your benefit, (b) you are offered the option to refuse the amendment, (c) the amendment is required by law, or (d) the amendment does not adversely affect your rights or use of the Software.

Exemplar C12-8

After the initial Term of the applicable Transaction Document, Contractor may amend the fees for Services upon thirty days prior notice if such change is generally applicable to its customers, provided that if Contractor increases the fees Customer shall have the right to terminate its purchase of the applicable Service without termination charge by providing written notice to Contractor within thirty days of the effectiveness of the increased fees.

By contrast, in the following example, a party may opt-out of a contract change for the remainder of the then-current contract term, but the change will govern any renewal term of the contract:

Exemplar C12-9

If You reject a modification under these circumstances, (i) Your access to and use of any Offerings affected by the modification will continue to be governed by the terms in effect immediately before the modification (except to the extent the modification was made for security, privacy or legal compliance reasons) until (a) the end of the then-current period for the subscription or other Offering, if applicable, or (b) 180 days after the Modification Notice, whichever is earlier; and (ii) Your rights to such Offerings, including any related subscription Benefits, will then terminate. In the event of such a termination by You, Seller (or an applicable reseller) will refund the prorated portion of any prepaid fees applicable to the remaining term of Your subscription for the affected Offerings after the effective date of termination. Such date will be the end of the term of such Offerings. If the subscription is renewed or extended, it will be under the then-current Terms. Notices by You or Seller will be provided as set forth below, except that You may also provide Your notice of rejection (within the 30-day period described above) to the email address, or in any other manner, specified in the Modification Notice.

Exemplar C12-10

Notwithstanding anything herein or in a statement of work or Order to the contrary, Contractor may make commercially reasonable changes to the Service Terms from time to time. If Contractor makes a material change to the Service Terms, Contractor will inform Customer within ninety (90) days in writing, which may include sending an email or other electronic notification to each affected User on the Service, and to the email address of Customer specified in the applicable Order(s) for notices. If the change is likely to have a materially adverse impact on Customer and Customer does not agree to the change, Customer must notify Contractor via the notice methods provided in this Agreement within thirty (30) days after receiving notice of the change. If Customer notifies Contractor as so required, then Customer will remain governed by the Terms in effect immediately prior to the change until the end of any relevant Order's then-current Service Term for the affected Order for the Service. If the Service Term of the affected Order is renewed, it will be renewed under Contractor’s then-current Service Terms.