DALLAS, TX — A U.S. District Court’s ruling has put all websites on notice: Terms of Service that can be amended on the fly and without notice to users are not enforceable.The U.S. District Court for the Northern District of Texas told that to Blockbuster when it ruled a Texas woman could sue the video-rental giant for violating her right to privacy. Cathryn Harris ignored Blockbuster’s TOS requirement that all disputes by settled by arbitration when she filed a federal lawsuit after Blockbuster passed on her online video-rental history to Facebook, which broadcast the information to all of Harris’ Facebook contacts without her permission.

Blockbuster wanted the suit dismissed because it violated the arbitration-only clause in Blockbuster.com’s TOS, to which Harris had to agree when she signed up for the service.

According the district court, though, another clause in Blockbuster.com’s TOS invalidated the clause upon which Blockbuster relied in its dismissal petition. The judge ruled the modification-of-terms clause created too much uncertainty for customers by asserting the website’s TOS could be modified at any time without notice, and modifications would be effective immediately upon posting. In addition, the TOS placed the onus for awareness on customers, leaving Blockbuster free to abuse customers’ trust at will, the judge indicated.

“You agree to review these Terms and Conditions of Use periodically and your continued use of this Site following such modifications will indicate your acceptance of these modified Terms and Conditions of Use,” the TOS noted. “If you do not agree to any modification of these Terms and Conditions of Use, you must immediately stop using this Site.”

According to Judge Barbara Lynn’s ruling, “The Court concludes that the Blockbuster arbitration provision is illusory. There is nothing in the Terms and Conditions that prevents Blockbuster from unilaterally changing any part of the contract other than providing that such changes will not take effect until posted on the website.

“…[T]here is ‘nothing to suggest that once published the amendment would be inapplicable to disputes arising, or arising out of events occurring, before such publication,’” Lynn noted, quoting an earlier case in which Halliburton was allowed to rely on its TOS because the terms specifically said no modifications would be retroactive. “The Blockbuster contract only states that modifications ‘will be effective immediately upon posting,’ and the natural reading of that clause does not limit application of the modifications to earlier disputes.

“The Court concludes that the arbitration provision of the Blockbuster contract is illusory and unenforceable,” Lynn wrote in her opinion.

Lynn’s ruling was in line with a previous, similar ruling by another district court. In that case, Talk America was reprimanded for changing the terms and conditions of its phone service without notifying customers.

“Even if [the customer] had visited the website, he would have had no reason to look at the contract posted there,” Judges Kozinski, Gould and Callahan wrote in their opinion in the Talk America case. “Parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side. Indeed, a party can’t unilaterally change the terms of a contract; it must obtain the other party’s consent before doing so.”