Terms and Conditions: It Could NOT Be You

When is a big win not a big win? Recently, the Court of Appeal considered for the first time what needs to be done to incorporate standard terms for goods or services into a contract made online, and its decision cost a lottery player £1 million prize.

Joan Parker-Grennan thought she had won £1,000,000 on an instant win game on the National Lottery website, having matched numbers representing a £10 win, and a £1 million prize. However, the set of numbers which matched the £1 million prize were not highlighted on her screen, so she quickly took a screenshot and rang Camelot but without clicking ‘Finish’. Camelot told her she must click ‘Finish’ to complete the game, and sadly when she did so, the screen showed she had only won £10. The mistake had been due to a coding issue, which generated an error in the Java software.

When Joan tried to claim the £1 million prize money, Camelot refused to pay out, relying on their T&Cs which stated that they could “declare a Play invalid (and will not be obligated to pay any Prize… if the outcome of a play is displayed on the Game Play Window is inconsistent with the result of that Play as predetermined by [the National Lotteries’] computer system“.

Camelot argued that the proper interpretation of the terms featured on their website meant that the animated game-play had no impact on subsequent winnings.

Joan’s first claim at the High Court was unsuccessful, so she appealed arguing that she was entitled to the £1 million win on the basis that the relevant contractual term had been the words stated on the screen: “Match any of the Winning Numbers“. Joan considered this to be the only applicable contractual term and argued that the T&Cs that she had signed when she opened her account with Camelot could not be relied on as they were not incorporated into the contract, and even if they had been they were unfair under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR).

The Court of Appeal held that Joan was not entitled to the £1 million prize. They said Camelot had effectively incorporated their T&Cs into the contract and could rely on these to deny Joan the £1 million prize.

The Court addressed three major issues in this case:

(1) Incorporation of website terms

Camelot’s T&Cs were accessible via a series of hyperlinks and drop-down menus displayed when a player opened an account with Camelot. Whenever Camelot made changes to its T&Cs, players were notified when they accessed their account. The Court held that it was sufficient to have incorporated the terms by link and that it was not necessary for Camelot’s system to require players to scroll through T&Cs before being able to accept them.

It also considered whether greater attention needed to be brought to the term which allowed Camelot to cancel a prize if there was a software error in the game. It is established law that a company must signpost any onerous or unusual terms in a contract to consumers for it to be valid. The Court held that the ability to cancel a prize due to a technical error in the game was not too onerous and that it was reasonable to expect that a company would not pay a prize if there were technical errors. As such, this clause did not need to be specifically highlighted or drawn to Joan’s attention.

(2) Are the terms unfair?

The Court considered whether the ability to cancel a prize was unfair under the UTCCR and therefore, void.

Lady Justice Andrews said it was necessary to consider the nature of the services for which the contract was concluded and the circumstances of the conclusion of the contract, as well as other terms within the contract when considering whether a term was unfair.

The Court found that Camelot was fair and transparent in all its dealings with Joan. For example, Camelot used plain English in the terms and conditions, with helpful sub-headings and clear sections that were discretely devoted to each particular game. It was held that Camelot were entitled to have terms regarding the validation process of whether a prize had been won and as such, the terms were not unfair under the UTCCR.

(3) Construction

Once the Court found that Camelot’s terms and conditions were successfully incorporated and enforceable against consumers, then the ordinary contractual principles of interpretation led to the conclusion that players could only win one prize per play, and that the play number – and not the graphic displayed – determined the prize that Joan had won.

The appeal was therefore dismissed.

This judgment is important in that it addresses some of the issues that are specific to eCommerce, but it very deliberately does not lay down general principles in this area. Lady Justice Andrews suggested that the time is ripe for the Law Commission to undertake an evidence-based review of this area of law to reflect the digital age in which we now live

Conclusion

The case leaves online traders without specific guidance on how to ensure terms and conditions are effective, however, it is clear that businesses should review their websites to ensure that any contractual terms are:

• Written in plain English.
• Succinct.
• Clearly defined and discrete.
• Readily available in an easy-to-read format.
• Required reading before a user can access the website (e.g., a pop-up requiring a click to ‘accept’).

What is now very clear is that spending money to ensure you are using the right terms and conditions and incorporating them into contracts properly is well worth the investment. Failure to do so would have been a very expensive mistake for Camelot.

If you have any questions in relation to the above or in relation to your terms and conditions, please get in touch with Sharon Somerville of our Corporate team.

Disclaimer 
The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers Stewart LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.