This week's Xbox 360 dashboard update wasn't all features and improvements, as the new Terms of Service—which players are required to agree to before they can continue using the system—contains a clause which effectively prevents Microsoft from being sued. Rumor had it there was an option to opt out, but now that hope has been quashed as well. Microsoft released the following statement to Kotaku today:

"Users must agree to the new clause to the Terms of Use in order to continue using Xbox LIVE. Changes to the Terms of Use are designed to ensure that our customers have an easy way to file a dispute without requiring formal legal action. They may now bring a dispute to our attention by filling out a simple Notice of Dispute form found at and mailing in documentation in support of their claim. We will then work to resolve the dispute to their satisfaction within 60 days. Any customer unsatisfied with the outcome of this informal process may easily initiate arbitration with the American Arbitration Association.

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:"

The choice to opt out apparently only applies to future changes to the TOS, though it's still worth it if you ask us. Of course, Microsoft could always provide "an easy way to file a dispute without requiring formal legal action" without limited our legal rights, but hey, they wouldn't be Microsoft if they did.