Just a ‘box-ticking exercise’? The Court of Appeal clarifies the test for incorporating online traders’ standard terms

• Several years after opening her online National Lottery account, Ms Parker-Grennan played an online National Lottery game and it appeared from the game’s animations that she had matched the numbers necessary to win the top prize of £1 million. In fact, this was the result of a coding problem which had caused an error in the animations, and according to the game’s random numbers generator, Ms Parker-Grennan had only matched the numbers necessary to win a lesser prize of £10.
• When Ms Parker-Grennan attempted to claim the top prize of £1 million from the National Lottery (using a screen shot that she had taken of the graphics that appeared on her screen), Camelot explained that there had been a software error and that, according to the rules of the game set out in the STCs, Ms Parker-Grennan was only in fact entitled to a prize of £10.
• Ms Parker-Grennan commenced legal proceedings against Camelot, claiming that she had done what was necessary to win the £1 million top prize, and disputing that the provisions of the STCs relied upon by Camelot were binding and/or enforceable.
• Ms Parker-Grennan’s claim was unsuccessful at first instance, but she obtained permission to appeal. The issues considered in her appeal included the question of whether Camelot had done what was necessary to incorporate its STCs into its contract with Ms Parker-Grennan.

The Court of Appeal’s decision

• Ms Parker-Grennan argued that Camelot had failed to do enough to draw the STCs to her attention because there was nothing on its website to force an account holder to look at the STCs before clicking the ‘accept’ button confirming that they agreed to the STCs. She suggested that the ‘accept’ button should have been positioned so that a customer was forced to scroll through the STCs before confirming their acceptance.
• In rejecting this argument, the Court of Appeal provided helpful guidance on the test for the incorporation of an online trader’s standard terms. In particular:
  • It confirmed that an online trader is not required to do everything in its power to make a customer read the terms of the contract that they are entering into with the trader.
  • The trader only needs to:
    • take reasonable steps to bring the terms of the contract to the customer’s attention; and
    • give the customer sufficient opportunity to read the terms of the contract, including by making them readily accessible to the customer.
  • Whether an online trader has satisfied these requirements is a question of fact, and so each case must be considered on its facts.
• In concluding that Camelot’s ‘click-wrap’ process satisfied this test and validly incorporated the STCs into its contracts with its customers, the Court of Appeal emphasised the following points:
  • Ms Parker-Grennan would have been aware that if she had not clicked the box stating that she accepted the STCs (both when she opened her account initially and when the STCs were updated), she would not have been able to play games on her account.
  • The STCs were in legible form and written in plain English.
  • The STCs were readily available for a customer to read (if they chose to do so) through drop-down menus and hyperlinks.
  • Important changes to the STCs were highlighted in summaries which would not have taken an unreasonable period of time to read and digest.
• However, the Court of Appeal also emphasised that it should not be assumed that the ‘click-wrap’ process would be sufficient to incorporate an online trader’s standard terms in all cases. For example:
  • An online trader is required to signpost to customers “onerous or unusual” terms. Simply providing a customer with the opportunity to review such terms by clicking on a hyperlink may not be sufficient to meet this requirement.
  • If a particular online transaction must be completed within a limited period of time, it might be said in these circumstances that the customer does not have sufficient time to review and digest the online trader’s standard terms, such that the ‘click-wrap’ process is not sufficient to incorporate these terms into a contract.
  • If a customer is required to click on many different hyperlinks in order to find the relevant terms, it might be that it cannot truly be said that the online trader’s terms are readily accessible.
  • The same may be true if an online trader’s STCs are not in legible form and/or the drafting of the standard terms is opaque and difficult for a customer to understand.
• Ms Parker-Grennan also sought to argue that the STCs were unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) because they were not individually negotiated and contrary to the requirement of good faith, causing a “significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”, including because Ms Parker-Grennan had not had a “real opportunity of becoming acquainted” with the STCs before she concluded her contract with Camelot. While the Court of Appeal accepted that the UTCCRs were applicable to the STCs, it rejected Ms Parker-Grennan’s argument on the facts because, as set out above, it concluded that the STCs were readily accessible, well signposted and clearly drafted.

Comment

• The Court of Appeal’s recent judgment is a welcome clarification of the position in relation to the incorporation of standard terms in online contracts, and demonstrates that the English Courts will take a pragmatic approach to this issue.
• However, the incorporation of standard terms is not just a ‘box-ticking exercise’. An online trader must always bear in mind the overarching principles that:
  • reasonable steps must be taken to bring a set of standard terms to the attention of the customer;
  • the customer must be given sufficient opportunity to review and digest the terms of the contract that they are entering into; and
  • it may be necessary to take additional steps (beyond the ordinary ‘click-wrap’ process) to signpost to customers unusual or especially onerous terms (for example, a broad limitation or exclusion of liability clause).
• If an online trader does not satisfy these requirements, it may well find that its standard terms (or parts of them) are not incorporated into its contracts with its customers, or are not enforceable by virtue of the UTCCRs. This is illustrated by the English High Court’s decision in the earlier case of Green v. Petfre (Gibraltar) Ltd t/a Betfred [2021] EWHC 842 (QB), which also concerned the question of whether the ‘click-wrap’ process was sufficient for an online trader’s standard terms and conditions to be incorporated into its contract with a customer. In that case, the court held that certain limitation of liability provisions had not been validly incorporated because they had been inadequately signposted to the customer. The different outcome in this case illustrates the fact sensitive approach that the courts will take in considering this important issue.
• Given the useful guidance provided by the Court of Appeal, now would be a sensible time for online traders to review and consider their contracting process and what changes might be advisable to reduce the risk of any challenge to incorporation of the standard terms into their contracts.

Client Alert 2024-067