What if a bank inserts a binding arbitration clause into current contract and I decline?

UPDATED: Dec 21, 2011

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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