Agreeing to T’s & C’s Won’t Cost You Your Soul

The Question

If a company puts, “By signing up, you agree to sell your soul” and buries it in the fine print, is that enforceable? How legally binding are the T’s C’s?

The Answer

Thanks for the question. The only instance I can recall of this happening was on The Simpsons where Bart sold his soul. But that was a contract between two individuals. In seriousness, what the reader wants to know is whether a clause is enforceable simply because it was included in the terms and conditions and because the consumer signed it.

Obviously, the contract for the sale of illegal goods and contracts entered into under fraud or duress are not enforceable. But what about provisions that are inarguably skewed in one party’s favor over another? Are those allowed? The short answer is yes. Freedom of contract provides the ability for individuals and corporations to enter into agreements without government interference. If you want to sell me your Rolls Royce for $1 and I accept, a valid contract exists.

Companies argue that consumers voluntarily agree to the terms and conditions for their products and services, and, resultantly, are bound to the terms. Corporations pretend that consumers have a choice when they enter into an agreement. Telecom companies, for example, argue that consumers could have gone elsewhere if they do not like the terms of service. The reality is that all of the phone companies have the same restrictions making this argument disingenuous. Thus, ‘Be sure to read the fine print’ means next to nothing now. Even if a consumer spots a clause that is disproportionately in favor of the corporation, he or she can do nothing about it.

While the terms of the contract may be legally lopsided, that does not mean that corporations can violate laws that exist outside of the agreement. Many DoC readers are familiar with the frowned upon practice of manufactured spending, the process of spending money without really spending. To curb this pastime, banks shut down the customer’s account and vacate all points that are earned. This draconian measure is provided for in the terms and conditions that state that a bank can shut an account down at any time for any reason. What is not allowed and what many banks continue to violate is the federal law which states that a specific reason must be given for account closure.

Take this boilerplate closure letter as an example:

We regret to inform you that following a recent review, the bank has chosen to close the account(s) referenced above. As stated in the terms and conditions, we reserve the right to close your account(s) at any time. Our decision was made following the results of a review of bank information and records.”

Here, the bank is correct in reserving the right to close the account. That is within the terms and conditions. The fatal flaw of the letter is that they provided no reason as to why they are doing so. Although banks will argue that they cannot reveal this information per the Bank Secrecy Act, omitting this critical portion is a violation of federal law.  As a result, the consumer may have a strong claim against the bank.

It is virtually impossible for consumers to do anything without entering into an agreement that grossly favors corporations over customers. To that end, consumers are selling their souls to gain access to products or services. At the same time, there are protections in place that do not leave consumers completely at the mercy of corporations. The devil is in the details, but this time it may be on the side of the consumer.

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