Time for consumer law reform in relation to online contracts
The Court of Appeal recently handed down its judgment in Parker-Grennan v Camelot UK Lotteries Ltd [1], dismissing Ms Parker-Grennan’s appeal against the High Court decision which had rejected her claim to a £1 million online gaming prize.
This case was the first time that the Court of Appeal grappled with how standard contract terms are incorporated into consumer contracts concluded online and the judgment has implications for all online contracts where one party seeks to have its terms incorporated by requiring the other party to tick a box.
Background
A fuller explanation of the background to this case is set out in our previous Perspectives here. In summary, Ms Parker-Grennan’s long running legal battle with Camelot started when she played an online “instant win” lottery game on the National Lottery website (which was operated by Camelot).
Upon opening her online account, Ms Parker-Grennan clicked ‘confirm’ to agree to the terms and conditions of the website (which was a link at the bottom of the page that led to the small print, with hyperlinks to other terms) and played the game. As a result of a software error the game’s animations appeared to show she had won £1m, but when she clicked ‘finish’ to complete the game the screen showed she had only won £10. Having taken a screenshot of the result, Ms Parker-Grennan subsequently issued a claim against Camelot for £1m. This was on the basis that some of Camelot’s terms and conditions had either not been incorporated into her contract with them or were unenforceable.
Ms Parker-Grennan’s claim was rejected by the High Court and she then appealed to the Court of Appeal.
Issues
The key issues addressed by the Court of Appeal were whether:
- the website terms were incorporated in the contract (the “Incorporation Issue”);
- if so, were any of those terms rendered unenforceable by the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR) (the “Enforceability Issue”); and
- whether, on a proper construction of the contract, the correct prize was £1m or £10? (the “Construction Issue”).
On all three issues the Court of Appeal agreed with the High Court’s findings and the appeal was dismissed.
The Incorporation Issue
The Court noted that for website operators, there is an ongoing dilemma, which is how to bring terms and conditions sufficiently to the attention of a prospective customer to incorporate them in the contract, without testing the customer’s patience so much that it decides to take their custom elsewhere.
The Court stressed that when considering incorporation, the question is not whether the operator has done “everything in its power” to try to make the other party read the terms, as “one cannot force someone to read the terms and conditions if they cannot be troubled to do so”. Instead, the operator only needs to take reasonable steps to bring the terms to customers’ attention and give them sufficient opportunity to read them. Whether or not such reasonable steps have been taken will be a matter of fact.
In this case, Ms Parker-Grennan had argued that customers should be forced to scroll through the terms before being able to click “accept”. However, the Court found that this was more likely to cause the player to give up or scroll to the end and accept without reading the terms. It was noted that the click-wrap procedure (with the use of hyperlinks and drop-down menus) can be sufficient for consumers to be informed of the relevant contractual terms and be bound by them, but that this will not be true for every online consumer contract.
In this case, Camelot had taken reasonable steps to bring the terms to Ms Parker-Grennan’s attention and had given her sufficient opportunity to read them. Relevant considerations included that the first screen that was displayed on opening her online account showed that there were terms and conditions relating to her gaming account, as well as specific terms relating to the type of game she had played and that there were also ‘Game Procedures’ for each individual game. She was invited to read the changes to the terms and asked to confirm that she accepted the updated terms, which could be easily accessed either by hyperlink or drop-down menu. The website terms had accordingly been incorporated into Ms Parker-Grennan’s contract with Camelot.
The Enforceability Issue
The UTCCR applied in this case (although these have now been superseded by the Consumer Rights Act 2015). On the issue of enforceability, the Court therefore had to consider if, contrary to the requirement of good faith, there was any term which caused “a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer” (Regulation 5(1) of the UTCCR). The Court decided that there were no terms of this nature and that, accordingly, the terms were enforceable.
The Construction Issue
Having concluded that Ms Parker-Grennan was aware of the contractual terms and that the terms themselves did not contain any provisions that were onerous or unusual, the Court had to decide the true meaning of the terms. The Court determined that, on a proper interpretation of all the terms, it was only the amount shown on the final screen display (i.e. the £10 prize) that was conclusive as to the amount won by anyone playing the game. The Court noted that this should have been obvious to a player even without reading the game procedures.
Comment
This is an important decision where the issue of incorporating contractual terms into online consumer contracts has reached the Court of Appeal for the first time. The judgment highlights that cases of this kind will inherently involve the tension between website operators' drive to publish their terms and conditions in a way which maximises profitability and the consumers' need to access and understand them.
In this judgment the Court applied the conventional rules for incorporating contractual terms which were developed in the pre-digital age. However, the Court aptly noted that in an era where overlooking the 'small print' has become a “fact of life”, the law may benefit from greater clarity or reform, suggesting that the Law Commission now revisit this area of law.
We agree that the time is ripe for the Law Commission to step in to ensure that our laws evolve with the digital age, providing adequate protection for consumers. While the outcome of this case may seem fair, the underlying reasoning could pose risks of injustice, particularly considering the power imbalance and the widespread lack of attention to the small print, as acknowledged by the Court.
[1] Ms Parker Grennan v Camelot UK Lotteries Ltd [2024] EWCA Civ 185