Netflix Increases Prices on DVD Plans, Offers Streaming Only Plan

Fine print. Yes it is very small and usually seems to be written in a completely different language, but it is that small-sized font at the bottom of a consumer contract that is usually the most important.

Take, for example, the recent Netflix price increase. The mail order DVD movie company has increased their monthly fees by $1 a month; but has offered a streaming only plan to customers for the original pricing of $7.99 a month.

The Netflix price increase was the result of the need to subsidize the increasingly popular streaming plan and the large amount of money Netflix recently invested in their streaming service partnerships. The power to unilaterally increase the price was something Netflix customers signed up for in their membership agreement. The New York Times reports that Netflix signed a $1 billion deal with Paramont Pictures, Lionsgate, and MGM to add their content to Netflix's services.

Consumer contracts are an area of contract law that allows for unilateral changes to terms and pricing mainly because the consumer voluntarily entered into the contract. Although a lot of consumer contracts are not negotiable -- if you want the product or service then you have to agree to it -- that does not mean that all competitor's contracts will have the same terms.

Although a "staple" in the lives of many, having a Netflix account is a voluntary commitment, one that also encompasses unwanted increases in prices. Luckily for Netflix customers the $1 increase will not make too big of a dent in their experience. In the end, it pays to read the entire contract and failure to do so is not a viable legal defense.

Related Resources:

• Contracts and Consumer Law (FindLaw)
• Are Form Contracts Worth Reading (FindLaw)