Unilateral Amendment
A unilateral amendment is a provision within a contract that permits one party to modify the terms of the agreement without requiring consent from the other party.
What is a Unilateral Amendment?
A unilateral amendment is a clause in a contract that grants one party the discretion to change a material term of the agreement without the other party's knowledge or consent. These clauses are often found in consumer financial product or service agreements, where a company reserves the right to alter the terms, such as pricing, services, or privacy policies, after the contract has been established.
Unilateral amendment clauses have been widely criticized for being one-sided, inefficient, and unfair, as they can undermine consumer protections and compromise privacy. They allow a company to make significant changes that could be detrimental to the consumer without any negotiation or agreement, shifting power unfairly to the amending party.
What is the difference between a Unilateral Amendment and Bilateral Amendment?
A unilateral amendment grants one party the power to change a contract's material terms without the other party's knowledge or consent, often criticized as unfair and one-sided. In contrast, a bilateral amendment implies that both parties must agree to any changes to the contract terms.
A unilateral amendment allows one party discretion to change material terms without the other party's knowledge or consent.
Unilateral amendments are often found in consumer financial product or service agreements, shifting power unfairly to the amending party.
A bilateral amendment requires the agreement or negotiation of both parties to make changes to the contract.
What are examples of a Unilateral Amendment?
A health insurance company changes its policy on prescription drug coverage, deciding to no longer cover a specific brand-name medication without consulting its policyholders or obtaining their consent. Policyholders are informed of this change via a notice, but have no power to negotiate or reject it.
A hospital's service agreement with a patient includes a clause allowing the hospital to unilaterally modify its billing practices or charges for non-emergency services. If the hospital later decides to increase the fee for a particular procedure, the patient is bound by the new terms without prior agreement.
An employer-sponsored health plan unilaterally changes its privacy policy to allow sharing of de-identified health data with third-party research institutions. Employees are notified of the updated policy, but their continued enrollment in the plan is considered acceptance of the new terms, with no option to opt-out of the data sharing without leaving the plan.
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