Microsoft updates user agreement to require binding arbitration, limit its liability to no more than the cost of one month of service, about $5.
Finally, Xbox Live users must also agree to limit Microsoft's liability in any dispute to about $5 for Xbox Live Gold members or absolutely nothing for Xbox Live Silver users.
According to the agreement, "You can recover from us for all successful claims only direct damages up to a total amount equal to your Service fee for one month. You cannot recover any other damages, including consequential, special, indirect, incidental, or punitive damages and lost profits."
If purchased as an annual subscription, the Xbox Live Gold service fee for one month would be $5. Xbox Live Silver is a free service and has no fee. While the agreement specifically states that liability limit applies to the service, loss of data, viruses, breach of contract, misrepresentation, omission, and negligence, it later states that, "Nothing in these terms will exclude or restrict liability for death or personal injury arising from our negligence, fraud, gross negligence, or willful intent."
[UPDATE]: Microsoft responded to GameSpot's request for comment as follows:
Customers may also choose to bring their claims in their local small claims court if they meet the normal jurisdictional requirements.
For detailed information, please visit: http://www.xbox.com/en-US/Legal/LiveTOU.