Software agreements, there’s nothing quite like them.

Although most of us are used to agreeing to terms in order to use a specific piece of software, some companies are compelled to update their agreements to strip users of their legal options should their service not be up to its usual level. Today, Microsoft has done just that.

Despite a minor delay, Microsoft has begun propagating its latest media-centric Xbox 360 update to millions of consoles worldwide, delivering new voice-activated features, third-party entertainment apps from Netflix and LOVEFiLM (and many others) and in time a new Xbox Companion app for Windows Phone.

However, when the majority of Xbox 360 owners next turn on their consoles, they will be asked to sign a new Terms of Use agreement, in which specific parts will ask you to waive your right to litigate all disputes in U.S courts and becoming part of a class action lawsuit.

Kotaku dug up the specific parts of the agreement:

18.1.4. If you live in the United States, you and microsoft agree that if you and Microsoft do not resolve any dispute by informal negotiation under Section 18.1.2 above, any effort to resolve the dispute will be conducted exclusively by binding arbitration in accordance with the arbitration procedures in Section 18.1.7 below. You understand and acknowledge that by agreeing to binding arbitration, you are giving up the right to litigate (or participate in as a party or class member) all disputes in court before a judge or jury. Instead, you understand and agree that all disputes will be resolved before a neutral arbitrator, whose award (decision) will be binding and final, except for a limited right of appeal under the federal arbitration act. Any court with jurisdiction over the parties may enforce the arbitrator’s award.

Following up with notice that users will waive their right to Microsoft in a class action lawsuit:

18.1.6. Class action waiver. You and microsoft agree that any proceed­ings to resolve or litigate any dispute, whether in arbitration, in court, or otherwise, will be conducted solely on an individual basis, and that neither you nor Microsoft will seek to have any dispute heard as a class action, a representative action, a collective action, a private attorney-general action, or in any proceeding in which you or Microsoft acts or proposes to act in a representative capacity. You and microsoft further agree that no arbitration or proceeding will be joined, consolidated, or combined with another arbitration or proceeding without the prior written consent of you, microsoft, and all parties to any such arbitration or proceeding.

Microsoft’s move follows console-making rivals Sony, which amended its terms after a spate of hackings to its PlayStation Network and associated websites. By forcing users to take action via an arbitration panel, console owners will not have their case seen by a judge but by a private panel that will not allow any form of appeal.

It must be reiterated that this only affects Xbox 360 owners in the U.S – users in other countries can still pursue alternative means.

For those in the U.S that want to opt out of the new agreement, Microsoft has offered them a way to do so – as long as they do it within 30 days of signing the new terms. However, they will need to contact Microsoft in writing via the following mailing address:

Microsoft Corporation, ATTN: LCA ARBITRATION, One Microsoft Way, Redmond, WA 98052-6399

For most, this will not pose a problem; Microsoft has seen a number of lawsuits levied against it in the past year and has moved to put an end to potentially damaging legal action. There are still methods to follow up a complaint but the majority of those in the U.S that want to pursue legal action will be out of luck.