Comments on: Amendable, Illusory, Contracts

By: Hippo

Hippo — Mon, 28 Sep 2009 18:43:27 +0000

I don’t see why the clubs shouldn’t keep the money. After all, the US Circuit Courts of Appeals have repeatedly ruled that similar amendment clauses in employment contracts allow employers to cancel retirees’ health benefits no matter how clear and specific the language promising them, whether or not they were bargained for, and even if they have already been relied upon!

See, e.g.,

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1445583

for a complete summary of this travesty.

By: Alan Rau

Alan Rau — Sun, 27 Sep 2009 23:13:07 +0000

Start small: The natural reading of the “amendability” language is that the Club can amend unilaterally for the future, after a reasonable notice period—but that it can’t retroactively affect vested rights. This is the common reading given to arbitration provisions, where “amendment” can’t affect a dispute which has already arisen, which reading saves such provisions from the charge of being “illusory” or “unilateral.” You don’t have to get into the problem of “materiality,” which may be more difficult to calibrate.

By: Michael Risch

Michael Risch — Sun, 27 Sep 2009 18:42:00 +0000

I haven’t settled on the right normative answer, but this is an ongoing debate in at least a couple other areas:

1. Credit cards
2. Online service providers.

I’m publishing an article on whether the latter complies with the rule of law, at least with respect to virtual worlds: http://papers.ssrn.com/abstract=1463583