Clear Terms & Conditions in online contract meant customer did not win £1 million prize jackpot

What the Retail & Consumer sector can learn from the recent Court of Appeal judgment in Parker-Grennan v Camelot

How can online businesses draw a customer’s attention to their standard online terms and conditions (T&Cs) without testing that customer’s patience to the extent that they decide to take their custom elsewhere? This quandary was considered for the first time by the Court of Appeal in its decision in Parker-Grennan v Camelot [2024] EWCA Civ 185, and although the facts emerged in an online gambling context, the judgment has ramifications for anyone conducting business online in the retail and consumer sector. The decision illustrates what ‘good’ drafting looks like in this context and what businesses trading online should do to ensure that customers are aware of what they are signing up to. 

Background to the dispute

The claimant, Mrs Parker-Grennan, first opened an online National Lottery account in February 2009. The defendant, Camelot, was the licensed operator of the National Lottery at the time. When the claimant opened the account, she read, accepted and agreed to be bound by the defendant’s T&Cs. The facts in dispute occurred in August 2015. The claimant was playing an Instant Win Game (IWG) on the National Lottery website. This particular IWG required that the player match a set of numbers and if successful, win a prize amount that corresponded with a specific number match. The claimant matched the set of numbers that entitled her to a £10 win, and the software’s in-game animations confirmed the numbers matched and the subsequent amount won. However, she noticed another set of matching numbers which she claimed should have granted her, in addition, the grand prize of £1 million – but notably, there was no flashing animation or on-screen confirmation of this prize win. After raising the issue with the defendant, she was informed that a coding issue had generated an error in the animation software and that she had only won £10, which was a pre-determined outcome.

The claimant was unhappy with this conclusion, and she issued proceedings in the High Court and applied for summary judgment. The judge found in favour of the defendant, holding that its standard T&Cs were suitably incorporated into the online contract formed between the parties and furthermore, the terms of play were adequately unambiguous in excluding liability. Accordingly, Camelot was able to avoid a £1 million payout. The claimant appealed. 

Appeal

On appeal Lady Justice Andrews confirmed the decision of the lower court, namely that the terms the defendant relied on adhered to the fairness requirements under the Consumer Rights Act 2015 (a crucial consideration in B2C contracts and the relevant statute in this dispute), that the defendant had successfully incorporated those terms into the contract and that on interpretation of the terms, the claimant was very evidently only entitled to a £10 win.

Incorporation of the online terms

The Court of Appeal considered that the defendant had successfully incorporated the terms in dispute into the general T&Cs. On the facts, the defendant’s T&Cs were accessible through hyperlinks and drop-down menus. Inevitably, in the six-year period between the claimant opening her account and playing the IWG, the T&Cs had been updated. The defendant proactively ensured such updates were brought to a customer’s attention by way of a notification highlighting the changes and a hyperlink providing for acceptance of the new terms. In the absence of any unusual or onerous terms (which would need to be signposted to the user), the court held that the defendant did enough to meet the required standard (under the Consumer Rights Act 2015).

The court noted that a website operator cannot force a customer to read its online T&Cs. Rather, “the trader only needs to take reasonable steps to bring the terms and conditions to their attention”. This requires giving the customer an adequate opportunity to read the T&Cs (which will depend on the facts and circumstances of each case). The defendant’s use of a click-wrap procedure meant that it took those steps. In addition, the defendant had drafted the terms in plain English, which were accompanied by a simple glossary. It also directed the customer to hard copies of the T&Cs. The combination of steps taken to grant a customer enough of a chance to familiarise themselves with the terms before playing meant that the defendant cleared the incorporation hurdle.

Clear drafting meant no win

With respect to construction, the relevant terms comprised procedural rules for games generally, and further rules for the specific IWG. The court held both were clearly drafted, perfectly outlining how the game was to be played and how prize wins were determined. In fact, Andrews LJ asserted that the claimant’s outcome “should have been obvious to any reasonable player of the Game even if they did not read the Game Procedures”. The coding issue was not capable of hindering the true meaning of the defendant’s relied-upon terms and it did not interfere with the outcome of the game, only its animations. As far as the court was concerned, there was no scope to interpret the rules as meaning the claimant could legitimately claim for any other prize other than the £10 win she was entitled to.

Takeaways for online businesses operating in the R&C sector

As mentioned previously, while the facts of the dispute occurred in the gambling sector, it clearly demonstrates best practice in how businesses can successfully incorporate standard T&Cs into other types of online contracts. When drafting online T&Cs, it is important to:

• ensure the drafting is clear, unambiguous, and in plain English (avoid legalese!), 
  
• use definitions where necessary, 
  
• adequately signpost and regularly update terms where necessary, and account for potential glitches and malfunctions that are commonplace in the digital world. 
  
• ensure terms are fair and transparent to ensure they do not fall foul of consumer rights law. 

The High Court judgment in Andrew Green v Petfre (Gibraltar) Ltd (t/a Betfred) [2021] EWHC 842 illustrates the consequences of failing to follow the above. In that case, failure to draft its online terms clearly, without ambiguity and without adequate hyperlinking and signposting resulted in Betfred having to pay their online customer around £1.7 million because the court held that the clauses it sought to rely on to exclude liability were neither properly incorporated into the contract nor could they be interpreted in a way that effectively shielded the gambling operator from a payout. 

Conclusion 

The opening remarks of Andrews LJ’s judgment acknowledges that “whether we like it or not, we are living in a digital era”. The internet has become increasingly pervasive, and so it follows that online shopping “has become the norm rather than the exception”. She also recognised that businesses have a problem in getting customers to read the small print before they click the button that states “I have read the T&C’s”, and that even includes lawyers! Therefore, businesses must work hard to ensure they walk the fine line between successful incorporation of online terms and not making the acceptance of those terms so arduous on the customer that they lose business. The defendant in this case showed that it is possible to do so.  

However, LJ Andrews also recognised that the law in this area is ripe for review as the issues raised highlighted “the complexity of balancing the needs of traders to publicise their terms and conditions with the needs of consumers to access and understand those terms”. In light of this, she recommended in the final paragraph of the judgment that it was an opportune time for the Law Commission to conduct an evidence-based review of this area of the law. It will be interesting to see whether the Law Commission decides to do so.

With thanks to Naim Kalaji for his help in producing this article.