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Sunday, October 17, 2010

The Reverse "Bill Stuffer"

My favorite lawyer is currently Larry D. Thompson of Houston, Texas.  Here's why.  If you have a credit card, cable television, or a telephone, you've probably received a "bill stuffer" from your lender or service provider: a notice in your monthly statement that purports to change the terms of your ongoing contractual relationship with the company.  Shameless self-serving plug: I've written about the use of these unilateral modifications in the context of arbitration clauses here and here.  For several reasons--including the fact that these changes lack consideration and treat silence as acceptance--I've argued that they should not be binding under traditional contract principles.   

Back to Mr. Thompson: he transferred a large balance to a certain credit card company that had offered a "teaser" rate of 0% for six months.  After that period elapsed, the company raised his interest rate to 22.9%.  But Mr. Thompson volleyed this serve: he sent his own bill stuffer to the company, adding new terms that saddled the lender with hefty fees and interest rates if it did not immediately refund any amounts that he overpaid.  And he informed the company that it had ten days to reject these changes.   

First, I want to raise a glass to Mr. Thompson.  That takes chutzpah.  Second, it's worth noting that a Texas district court refused to enforce the reverse bill-stuffer, reasoning that "modifications to an agreement can occur only with the consent of both parties and consideration."  Thompson v. Chase Bank USA, No. H-07-1642, 2009 WL 290186, at *2 (S.D. Tex., Feb. 5, 2009).  I guess that kinda proves my point: these unilateral modifications are "contractual" in name only.      

Posted by David Horton on October 17, 2010 at 06:44 PM | Permalink


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