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Drafting B2C contracts: lessons from the Betfred case

Overview

In a dispute over whether a punter was owed £1.7 million of winnings from an online casino-style game, the High Court has ruled that Betfred's consumer terms and conditions did not prevent it being liable to pay out.  What lessons does this hold for other B2C businesses, particularly where the contract is made online?

What happened in the Betfred case?

In January 2018, Andrew Green thought he had won over £1.7 million from playing an online card game called "Frankie Dettori's Magic Seven Blackjack", hosted on Betfred's platform.  However, Betfred disputed the payment, arguing that it resulted from an error in the way that the software had operated. 

AN ERROR IN THE GAME'S SOFTWARE?

According to Betfred, the chances of Mr Green winning the jackpot in this game just once should have been a mere 0.00018361% - but in fact, he had won it three times in the space of less than 5 minutes, with each win resulting in a six figure sum being recorded against his account. Betfred's explanation for this was that the game had failed to reset properly when Mr Green started a new hand of cards, resulting in Mr Green having more "trophy cards" than should ever have been available to him. 

Betfred's arguments

Betfred relied on a number of contractual terms to support its contention that it was not obliged to pay out Mr Green's apparent winnings.  Most of these took the form of exclusions and limitations of liability contained in different parts of the contractual documentation, which included Betfred's general terms and conditions, an End User Software Licence (EULA) and the game rules. Betfred's attempt to rely on these clauses failed for 3 main reasons:

  • Firstly, the court was sceptical that the various clauses had any application to a situation where it was argued that the software for the online game had not operated correctly and given the consumer a higher than expected chance of winning the game. For example, they appeared to be directed more at problems such as interruptions to the consumer's internet access or damage caused by the software to the consumer's device.
  • Secondly, the court found that the clauses relied upon were not adequately drawn to Mr Green's attention. As such, they did not form part of his contract with Betfred.
  • Thirdly, even if the clauses had been incorporated, they did not meet the requirements of transparency and fairness in the Consumer Rights Act 2015. As such, they were not enforceable by Betfred.

MISTAKE

Having failed to persuade the court that it was not liable to pay out to Mr Green under its terms and conditions, Betfred argued that it was entitled to avoid the contract based on the doctrine of common mistake. It maintained that the error in the software had resulted in a situation where a statement in the game rules about trophy cards was false – but both parties had proceeded on the mistaken assumption that it was true. The court did not accept that the statement had in fact become misleading. However, it also pointed out that, for mistake to be applicable here, two further conditions would need to be met. First, the contract would have to be impossible to perform if the statement were untrue; the court's view was that the contract could still be performed, but would just not be as profitable for Betfred. Second, neither party should be at fault for the alleged mistake;  the court's view was that it could not properly be said that, as the provider of the gaming services, Betfred was not at fault for the alleged error in the software. It therefore rejected Betfred's arguments based on mistake. Betfred has said it will not appeal and will pay the £1.7 million to Mr Green. 

Lessons for B2C drafting

There are a number of lessons from this case for drafting business to consumer contracts generally:

  • Make sure your terms address the issues you are most worried about – although Betfred's terms contained numerous exclusions and limitations of liability, none of them was found to have squarely addressed the problem which had arisen in this case.
  • Don't over-use capital letters – Betfred's EULA made extensive use of capital letters in an attempt to draw attention to certain clauses, but the court commented that "prolific use of capitalisation at the start of the EULA [….] rather diminishes its power elsewhere in the document as a signpost of importance."
  • Sign-post "surprising" or important clauses – beyond capitalisation (see above), the court's view was that little attempt had been made to highlight key clauses which might be particularly important or "surprising" to consumers.
  • Minimise complexity – Betfred's contractual terms were spread across three separate documents consisting of fairly dense and somewhat repetitive text, running to well over 30 pages if printed out. Combined with the inadequate signposting (see above), the court concluded that this would have made it difficult for Mr Green to find and take note of the clauses that Betfred sought to rely on. 
  • Take account of consumer behaviour – some of the terms on which Betfred relied were at the end of the game rules, but they were not signposted and the court found that it was unreasonable to expect Mr Green to have scrolled down beyond the section of the rules which explained how to play the game (as, like most consumers, he would be anxious to get on and play the game).

WHAT IF YOU CAN'T AVOID DETAIL?

A difficulty faced by many businesses which contract with consumers online is that even when attempts are made to reduce the length of terms and conditions to the absolute minimum, they still run to many pages, simply because there are numerous issues which need to be addressed. However, the courts do not necessarily expect consumer to have read through all the detailed terms. What they do expect is that consumers will have their attention drawn to terms which are particularly important and/or surprising, such as exclusions of liability. In particular, the court in this case took care to make clear that it "did not make any finding that acceptance of terms by means of a 'click wrap' is inadequate to form a binding contract that contains limitations to or exclusions of liability. Nor, if adequately drafted and signposted, that, even in the context of an online betting facility, liability may be excluded for events such as occurred in this case." 

The upshot of this is that whilst you should try to reduce the length of consumer terms where you can, the key issue to focus on is flagging up the more unusual or onerous terms and making those provisions easy to find within the full set of terms and conditions. There are also ways that technology that can support this – for example, by providing reminders of key terms before a consumer enters into a new transaction.

Liability for software errors

As regards software errors, it will generally be easier to limit or exclude liability where the error in question is likely to be seen as obvious when account is taken of the consumer's knowledge of the contract and its overall context. Indeed, in that type of situation, it may even be possible to rely on the doctrine of common mistake (see above). By contrast, errors such as the one which occurred in this case may be more difficult to protect against. For example, the court noted that, although it was unlikely that Mr Green would win the jackpot three times in quick succession, it was not impossible even if the software had operated properly. In view of that, it is difficult to see how it would be reasonable to have expected Mr Green to have realised that something must have gone wrong with the software (unless, for example, the rules had pointed out that you could only win the jackpot once during any 24 hour period and this had been clearly signposted).  

HOW CAN BUSINESSES LIMIT THEIR EXPOSURE TO SOFTWARE ERRORS?

The terms on which Betfred sought to rely in this case to withhold payment to Mr Green because of the software error were found to have been unfair – so even if they had been adequately brought to his attention, they would not have been enforceable.  An alternative approach (which might stand a better chance of being regarded as "fair") could involve looking at some or all of the following:

  • Additional constraints on the business e.g. a requirement to satisfy an independent expert that a genuine error had occurred before being able to trigger a clause allowing winnings to be withheld; and/or
  • Additional terms which could be said to redress the balance somewhat in favour of the consumer e.g. a commitment to allow punters to retain a proportion of their winnings even where a software error is shown to have occurred.

However, given the difficulties in limiting liability to consumers, it will be important to take particular care when negotiating contracts with software suppliers to ensure that at least some recovery is possible from them if software does not work as specified. 

How we can help

Our specialist team has considerable experience of advising a wide variety of businesses on B2C contracts. In particular, we aim to bridge the gap between abstract legal principles and practical implementation. We are often assisted by input from our award-winning Legal Technology team, giving our lawyers a valuable insight into how legal advice can be translated into pragmatic solutions that will work effectively in an online environment.

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