What if a bank inserts a binding arbitration clause into current contract and I decline?
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What if a bank inserts a binding arbitration clause into current contract and I decline?
I put money into a 5 year CD at a local bank, which was recently bought out by a large national bank. They just mailed me a change in terms to the “consumer account agreement”, which inserts a binding arbitration clause. If I notify them that I decline the change to the contract, are they obligated to continue paying the interest on the CD at it’s original terms until it matures?
Asked on December 21, 2011 under General Practice, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
As a general matter, one party to a contract--whether one of the original parties, or one who takes over the contract later--may not unilaterally change the terms of the contract. However, if the contract itself provided authority for one party to make changes later, that provision is enforceable, and the party with the right to do so may add, change, etc. terms. Banking agreements, like credit card agreements, frequently include provisions allowing the bank or card issue to add or change terms later; you need to review the original contract to see what rights you and the bank respectively have.
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