The GigReporter

The hardware retail giant Lowe’s recently lost a motion to compel arbitration when the trial court found the contract at issue was illusory. This case should serve as a stark warning to any business not to include language purporting to allow it to change the terms of an agreement without notice.

Lovinfosse v. Lowe’s Home Centers, LLP, No. 1:23-cv-574 (E.D. Va. August 8, 2024) is a class action based on allegedly fraudulent practices in the Lowe’s online store. The plaintiff alleged that when certain items on the website are added to an online shopping cart extra items were added automatically and then labeled “necessary”, even though they were not necessary. Purchasing through the Lowe’s website required assenting to a Terms and Conditions agreement that included a mandatory arbitration provision and a class action waiver, and Lowe’s moved to compel arbitration of the action after it was filed.

The court dismissed the plaintiff’s argument that she had not been given sufficient notice of the arbitration clause, finding that the layout of the Lowe’s website made it clear she was agreeing to the Terms and Conditions and included a hyperlink to view them. However, the court agreed with her that the contract was illusory because it included the following language:

You agree that [Defendant] may change, terminate, modify, add, end or delete any of these the terms and conditions (including, without limitation, the Terms) under which the Site is offered at any time and without notice to you.

[Defendant], in its sole and absolute discretion, reserves the right to update, change, terminate, suspend, modify, add, end or delete any of these Terms, . .. in whole or in part, at any time with or without notice.

The court found that this language, if enforced with the rest of the Terms and Conditions, would make the plaintiff bound by the whole agreement while giving Lowe’s the option to revoke any term it wanted whenever it wanted, without telling the plaintiff. The court’s opinion drew contrasts with other unilateral modification terms that had not rendered contracts illusory because they included multi-day notice periods. The Lowe’s Terms and Conditions, by contrast, could be changed without the plaintiff ever knowing; customers would have to constantly check the website to see if terms had changed, even if they had conducted only a single transaction. As s such the entire contract, including the mandatory arbitration provision, was illusory, and the court denied the motion to compel.

The lesson here is clear: Don’t draft contracts granting yourself the power to unilaterally alter their terms without notice to other parties. If you feel you must include the ability to change terms, require a notice period. We recommend at least ten days.