Monday, March 31, 2008

When legal contracts change

On my profile page at is a section titled "Legal Agreements."

For every loan, there's the Lender Promissory note. For every funds transfer to/from Prosper, there's the "authorization to debit/credit account." There are "Lender registration agreements," "Credit profile agreements" and whatnot. In total, as you can see from the screenshot above, there are a total of 257 agreements currently.

In my Prosper Lenders' Agreement, I agree that the contract is subject to change and that Prosper can notify me of changes via email. What isn't clear is what happens if I don't agree to the changes.

When my credit card company changes their legal agreement, they send me a notice and tell me that I signify acceptance of the new terms by using the card past a specified cut-off date. Prosper makes no mention of my ability to be bound by the new legal contract. One can only presume that they assume that once a lender has entered a contract with them, then regardless of how they change the contract terms, the lender is still bound by those terms.

Between May of 2006, when I started lending on Prosper and November of 2007, I have no records indicating that Prosper informed me of any changes to their legal contracts. Yet I know they did make some changes. There's the clause that got added when xraider contacted one of the collections agencies to inquire about the status of collections of her loan, for instance.

On November 8, 2007; January 7, 2008; and March 10th 2008; I did receive notices from Prosper that they changed the Lenders Agreement. They were even kind enough to provide links to redlined versions of the contracts (the November 8th is a doozy, btw.).

So, Since I've stopped lending on or about November 27th, 2007 (I'm not exactly sure when the date was that my last bid was placed, but that was the date my last loan originated), I'm not too sure what contract is applicable between Prosper and me.

Is it important? Maybe, and maybe not. Stay tuned.

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