After a software glitch incorrectly showed that a player had won £1 million in an online game, the Court of Appeal has ruled that former National Lottery operator Camelot did not need to make the £1 million payout, based on its "click-wrap" terms and conditions. What lessons does this hold for other B2C businesses, particularly when the contract is made online?
Camelot was operator of the UK National Lottery until February 2024 (when a new operator, Allwyn, took over, following a re-tender exercise). In 2015, Joan Parker-Grennan thought she had won £1 million as part of Camelot's Instant Win Game. This was because certain numbers that were displayed on her screen corresponded to the £1 million jackpot prize (although other parts of the display indicated that she had only won £10). Mrs Parker-Grennan astutely took a screenshot of the page which indicated that she had won £1 million. However, when she clicked the "Finish" button to claim her prize, she was notified that she had only won £10. The numbers that she thought justified the top prize of £1 million also failed to flash, as they should have done (according to the written game procedures).
Camelot maintained that the display issues were caused by a coding error in its software. It argued that it was entitled, based on its terms and conditions, to declare that Mrs Parker-Grennan's win of £1 million was defective – and that its decision was final, provided it was reasonable. Camelot also argued that its game procedures, which formed part of its terms and conditions, made it clear that a person only "won" if they clicked "Finish" to receive confirmation of the prize. It's worth noting at the outset that players needed to agree to the relevant terms and conditions (and any substantive changes to the terms and conditions) by way of a "click-wrap" procedure. This involved ticking a box confirming that they had read and agreed to be bound by the different sets of applicable terms (relating to different services provided by Camelot), which were accessible by either drop down menu or hyperlink.
In reply, Mrs Parker-Grennan argued that:
The test for incorporation is whether Camelot did what was reasonably sufficient to bring the various terms and conditions to the notice of the player. It should be noted that a trader is generally required to signpost "onerous or unusual terms" if it wants to incorporate them.
Mrs Parker-Grennan argued that special attention needed to be drawn to the clauses that Camelot sought to rely on, and that they were effectively "buried" amongst other detailed terms which no consumer could reasonably be expected to digest.
The Court agreed with the trial judge's finding that the relevant terms were not particularly onerous or unusual, and therefore no special attention needed to be drawn to them. As to the length of the terms, the Court took the view that this was not necessarily an issue, provided that consumers had the opportunity to read them before entering into the contract. It concluded that Camelot had taken reasonable steps to make the terms easily accessible via hyperlinks and drop down menus, which were displayed with sufficient prominence, and had given Mrs Parker-Grennan enough time to review them. The Court also expressed some sympathy for businesses, noting that they would be placed in a difficult position if they were effectively expected by consumer law to condense all relevant terms into a short paragraph (on the basis that this is all that most consumers can be bothered to read). It endorsed the click-wrap approach used by Camelot and rejected the argument that Camelot should have forced consumers to scroll through the terms before allowing them to click "I agree" (as it did not think this would prompt many consumers to actually read the terms). The Court did, however, give some useful examples of where click-wrap terms may not be incorporated, such as:
In this case, the Court found that there was no time pressure on players to accept the terms, and Camelot's terms were clearly written and presented.
The second key issue on appeal was whether Camelot's terms were rendered unenforceable by the UTCCR, which prohibits unfair terms in certain standard form consumer contracts. An unfair term is one which:
The Court acknowledged that the term allowing Camelot to declare Mrs Parker-Grennan's alleged win defective did give rise to a significant imbalance, as it heavily favoured Camelot. Even the fact that the clause required Camelot's decision to be reasonable did not wholly remove this imbalance, because demonstrating unreasonableness was a "high hurdle for the consumer to surmount". However, the Court noted that the UTCCRs also required a breach of the requirement of good faith. Given that Camelot had a legitimate interest in ensuring that only genuine winners received prizes and its terms had been presented in a fair and transparent way, it found that there was no lack of "fair and transparent dealing by Camelot" (and hence no breach of the requirement of good faith).
The Court also ruled that even if it had accepted Mrs Parker-Grennan's argument that the applicable clauses of the terms and conditions were unenforceable, the game procedures – which she admitted to having been aware of (even if she hadn't read them all) – made it clear that she would only win if the relevant figures flashed and she clicked "Finish" to confirm her prize. On the true construction of the contract, which included the game procedures, Mrs Parker-Grennan did not actually win £1 million.
Click-wrap terms can work, but you still need to be careful in how you use them. In particular:
For discussion of other steps businesses can take to protect themselves against liability from software glitches of this type, see our earlier briefing on the Betfred case (which also provides a useful reminder that businesses should not assume that the doctrine of mistake will always protect them in these circumstances).
But potential liability to individual consumers is not the only risk that businesses need to consider. The Digital Markets, Competition and Consumer Bill (currently before Parliament) will give the UK Competition and Markets Authority the power to impose fines of up to 10% of turnover for breaches of consumer protection law – including the use of unfair terms. This legislation is likely to raise the level of regulatory risk in the B2C space quite significantly.
The Court ended its judgment with a call for the Law Commission to conduct a fresh, evidence-based review of this area of law. As it pointed out, there is a "complexity [in] balancing the needs of traders to publicise their terms and conditions with the needs of consumers to access and understand those terms." Watch this space.
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.
