by Laura Macgregor, Professor of Scots Law, University of Edinburgh
The English Court of Appeal case, Parker-Grennan v Camelot UK Lotteries Ltd,[1] provides a useful and authoritative reminder of the rules on incorporation of terms and conditions into a contract. The approach taken by the court is similar to the approach taken in an English case decided in 2022, at a lower level in the English judicial hierarchy.[2] Both cases now clarify the law. Nevertheless, the Court of Appeal case illustrates rather aptly that law developed for an environment of hard copy contracts can be applied only with difficulty to the online environment.[3] And while the law may be clear, value judgments continue to be required over whether the company has done what is “reasonably sufficient” to bring terms to the attention of the consumer. This need is particularly acute in situations (unlike the facts of this case) where the terms could be described as “unusual or onerous”.
Facts
The dispute arose from an online lottery transaction, Mrs Parker-Grennan arguing that she had won the £1 million jackpot, whilst Camelot argued that she had won only £10. The ubiquity of this type of transaction was underlined by Andrews LJ in the sole judgment in the Court of Appeal: “Whether we like it or not, we are living in a digital era. Online shopping, which was a novelty not so many years ago, has become the norm rather than the exception”.[4] In order to keep this blog entry to a reasonable length, a broad view only of the facts is provided here.
The incident giving rise to the dispute occurred on the first day of the launch by Camelot of a new “Interactive Instant Win Game”. The game displayed Winning Numbers, which had to be matched to the customer’s numbers in order to win a prize. When Mrs Parker-Grennan played the game, she could see that two numbers matched, and, according to the applicable prize tier, she had won a prize of £10. However, she argued that additionally, a further two numbers (number 1s) matched, suggesting a prize of £1 million. Crucially for the legal analysis, she did not click on the “Finish” button to end the game, but rather took a screen shot and sent it to Camelot.
A reading of the evidence summarised in the case report suggests that, on this day one of the new game, a “glitch” existed. Mrs Parker-Grennan was playing on her laptop. She could see the matching number 1s which suggested the top prize. Had she used her phone (which is apparently the most common way to play the lottery) the matching no 1s would not have appeared. This software error affected only 0.24% of the plays during a 36-hour period after the launch of the game. The error was, after this period, detected and removed by Camelot.
When Camelot refused to pay her the top prize, she raised an action. She was unsuccessful in an action for summary judgment before Jay J and appealed to the Court of Appeal. She was, unfortunately for her, also unsuccessful before the Court of Appeal. The case was decided on the basis of construction of the contract terms. Conscious that they had not previously had the opportunity to consider incorporation of terms and conditions in an online environment, the court nevertheless analysed in detail the issue of incorporation. Incorporation is therefore the main focus of this blog, although the court’s statements on this point are, as a result, obiter. Also relevant to the decision is the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR 1999). The relevant provisions of the UTCCR 1999, applying at the time the facts of the dispute arose, are now contained within the Consumer Rights Act 2015.
Incorporation of Terms and Conditions – The Legal Landscape
In the Court of Appeal, William Davis LJ and Green LJ concurred with the judgment delivered by Andrews LJ. Drawing on the leading contract law text Chitty, in the case at both stages, the courts emphasised that there was no need to prove that the conditions in question had actually been read by the person receiving them. Essentially, the test, expressed in Chitty, is a tripartite one:
- If the person receiving the document did not know that there was writing or printing on it they are not bound (although the likelihood that a person will not know of the existence of writing or printing is now probably very low);
- If they knew that the writing or printing contained or referred to conditions, they are bound;
- If the party tendering the document did what was reasonably sufficient to give the other party notice of the conditions, and if the other party knew that there was writing or printing on the document but did not know it contained conditions, then the conditions will become the terms of the contract between them.[5]
These rules were, of course, developed before the beginning of the digital age. They must now be applied in the online environment, where terms and conditions are usually accessed by clicking on links. Before applying this tripartite test to the facts, Andrews LJ identified the inequality of bargaining power which generally exists between the parties. “In practice, irrespective of whether they have read them, they have no choice but to accept those terms and conditions if they wish to continue with the transaction”.[6] As such, “the law has developed over time with the aim of eliminating any unfairness to the weaker party”.[7] She traced the development of these protections, highlighting the requirement that onerous or unusual clauses had to be specifically drawn to the attention of the other contracting party.[8] Under the UTCCR 1999, even if incorporated, unfair terms (as that term is defined in the UTCCR 1999) will not be enforceable against the consumer.
The theme of fairness was continued by Andrews LJ in her judgment. Counsel for Mrs Parker-Grennan had invited the Court to consider a report of the Law Commission and Scottish Law Commission from March 2013, “Unfair Terms in Consumer Contracts: Advice to the Department of Business Innovation and Skills”.[9] Noting how seldom consumers read small print, the Commissions recommended that all small print terms should be assessable for fairness, including those which related to the main subject-matter of the contract or the price.[10] Camelot’s terms and conditions were not, in the Court’s opinion, “unduly complex or controversial” and were written in “plain, comprehensible English”.[11] The Court nevertheless noted that many sets of terms and conditions did not meet this standard and were not designed to be read or understood.[12] Andrews LJ summed up her discussion on this point by saying, rather tellingly, “The advice of the Law Commission could well be very different if tendered today”.[13]
Incorporation of Terms and Conditions – The Mechanics of the Transaction
In common with other cases of this type, the terms and conditions existed in more than one location, having to be read and understood by the consumer collectively. When Mrs Parker-Grennan opened her account, a short paragraph of Terms and Conditions appeared on the screen. She was then offered the choice of clicking on a button marked “Confirm” or clicking on a button marked “Quit”. She clicked “Confirm”. At the bottom of this page was a box with a link to the Account Terms, which extended to many pages of small print, and contained hyperlinks to other terms and conditions. In fact, three different sets of Camelot terms and conditions applied to her transaction. The process for reading the terms and conditions was described by Andrews LJ as follows:
In order to see the full Game Procedures for the Game, the Appellant would have had to click on to a drop-down menu which appeared at the bottom of the Game Display Screen, below the “PLAY” button, and was clearly labelled “Game Procedures including how to play”. The Introduction section to the Game Procedures in turn would have taken her to the hyperlinks to the IWG rules and the Account Terms.[14]
Crucially, the consumer was not required to read the Account Terms – the system allowed her to click “Confirm” and effectively start playing without reading any terms and conditions. It was unknown whether she, in fact, read any of these terms and conditions. Whether she actually read them is, of course, not legally relevant.[15]
As noted above, Mrs Parker-Grennan, perhaps sensing something was wrong, failed to click on the “Finish” button at the end of her game. This failure was not, however, relevant to the question of incorporation of the terms and conditions – it was possible to play the game without reading any of them.
Applying the Law to the Facts – Incorporation
In their discussion of incorporation, the court considered whether Camelot had done what was reasonably sufficient to bring the various terms and conditions to the notice of a player of the Game. Whilst onerous or unusual terms must be specifically highlighted in order to incorporate them into a contract, the court did not consider that these terms fell within that category.[16] Andrews LJ concluded on this point: “the Judge was right to find that there was no requirement for Camelot to specifically signpost any of the relevant terms in order to incorporate them into the contract as a matter of common law”.[17] The terms and conditions were not so onerous or unusual to trigger this obligation.
As already noted, any player could play without reading the terms and conditions. In other words, the terms and conditions did not act as a gateway to be passed through before the ability to play arose. Although counsel for Mrs Parker-Grennan sought to characterise this as a defect of the system (i.e. consumers should be “forced” to read the terms), the court did not agree. “Being forced to scroll through several pages of ‘small print’ before it is possible to click the box or button accepting the terms, is more likely to cause them to become fed up and quit the website”.[18] Significantly, they added “[b]esides, the question is not whether the trader has done everything in its power to try to make the other contracting party read the terms. One cannot force someone to read the terms and conditions if they cannot be troubled to do so”.[19] Summing up by observing that the existence of the terms “could not have come as a surprise to the Appellant”,[20] Andrews LJ concluded by agreeing with the judge at first instance that enough had been done to incorporate the terms and conditions into the contract.[21]
Applying the law to the facts – construction of the contract
As already noted, the court decided the case by construing the contract terms – the case did not turn on incorporation of terms and conditions. Three parts of the Game Procedures played a crucial part in the court’s decision. The Game Procedures stated, inter alia, that:
- Matching numbers would turn white and flash within a green circle to indicate the prize which had been won;
- Once the winning amount appeared, the player was required to click on the “Finish” button;
- The player could only win one Prize Amount per Play.
Clearly, Mrs Parker-Grennan had not followed the three rules set out above. Firstly, the numbers 1s which arguably gave rise to a prize of £1 million did not turn white and flash within a green circle – only the numbers giving rise to a prize of £10 did so. Secondly, perhaps sensing from the two sets of matching numbers that something was wrong, she had not clicked the “Finish” button. Thirdly, she argued that she had won two prizes from one game, when the Game Procedures made it very clear that it was only possible to win one prize from one game. She had, quite simply, not followed the rules.
The court also suggested that counsel for Mrs Parker-Grennan had placed too much reliance on one part of the Game display only. This was the onscreen statement “Match any of the WINNING NUMBERS to any of YOUR NUMBERS to win PRIZE”.[22] It was wrong to focus only on this statement. The totality of the contract terms could only be understood by reading the various iterations of the rules found by clicking on different links together.
Because of constraints of space, little will be said here about the application of the UTCCR 1999 in the case. Essentially, the terms and conditions did not fail the test of good faith, i.e. they did not cause a significant imbalance in the parties’ rights and obligations arising under the contract.[23]
Conclusion
It will be obvious to all of us how gambling and lotteries have become central a part of modern life. This is clear from the proliferation of adverts on TV and online, and through, for example, sponsorship of Premier League football teams. If we bear this fact in mind, perhaps we might agree with the Court of Appeal’s conclusion that the existence of the contract terms could not have come as a surprise to Mrs Parker-Grennan.[24] Having said that, other aspects of this decision might strike the reasonable reader as being slightly unfair. It was absolutely clear that a glitch in the game existed – those players who accessed the game using a laptop during the first 36 hours of the game could see two sets of matching numbers. This was clearly confusing, and it was presumably this factor which led Mrs Parker-Grennan to take a screenshot and send it to Camelot without clicking on the “Finish” button. To see the player bear the brunt of a mistake in the Camelot system may sit uneasily with some readers of the case.
More broadly, the case illustrates that it can be a difficult task for a non-legally trained consumer to make sense, collectively, of game rules contained in more than one online location. If we take anything from this case it must be that, provided different sets of rules are clearly sign-posted, and expressed in clear language, they will not be classed as unusual or onerous.
Few would disagree that the time has come for the law to catch up with the digital environment by developing a set of rules for incorporation more suitable for that environment. Precedents in this area of law, focussing on, for example, the printing of terms and conditions on the back of a printed form, are now unhelpful. The need to update the law to the digital age is the theme on which the judgment closes:
…the issues in this case have 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. Given that a decade has passed since the last report of the Law Commission the time might be ripe for another, evidence based, review of this area of law.[25]
One hopes that this issue is located somewhere near the top of the list of priorities for law reform of the new Government.
[1] Parker-Grennan v Camelot UK Lotteries Ltd [2024] EWCA Civ 185.
[2] Scotbeef Ltd v D & S Storage Ltd (In Liquidation) [2022] EWHC 2434 (TCC)).
[3] Parker-Grennan (n 1).
[4] ibid para 1.
[5] ibid para 3 (citing Chitty on Contracts).
[6] ibid para 4.
[7] ibid para 5.
[8] ibid (relying on Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] 1 QB 433, per Bingham LJ at 443C-D)
[9] ibid para 8.
[10] ibid.
[11] ibid para 9.
[12] ibid.
[13] ibid.
[14] ibid para 30.
[15] ibid para 3 (citing Chitty).
[16] ibid para 32 (the Court of Appeal agreeing with the judge at first instance on this point).
[17] ibid para 41.
[18] ibid para 46.
[19] ibid.
[20] ibid para 50.
[21] ibid para 51.
[22] ibid para 63.
[23] Reg 5(1) UTCCR 1999.
[24] Parker-Grennan (n 1) para 50.
[25] ibid para 68.
