Court of Appeal Considers Incorporation of Terms Into Online Contracts

In Parker-Grennan v. Camelot UK Lotteries Limited¹, the Court of Appeal considered, for the first time, what needs to be done to incorporate standard terms for goods or services into a contract which is made online.

The dispute

The dispute – which was the subject of a May 2023 On the Record blog – arose from a software error in an online gambling game, which caused the claimant to believe she had won 1 million pounds. The defendant operator’s standard terms and the rules of the game stipulated that the prize was predetermined by the defendant’s computer system, which was shown on screen when the player pressed ‘Finish’. The prize in this case was in fact 10 pounds. Joan Parker-Grennan brought proceedings against Camelot for the prize of 1 million pounds.

The judge at first instance dismissed Parker-Grennan’s claim. He determined that Camelot’s terms were sufficiently drawn to Parker-Grennan’s attention and were therefore successfully incorporated. They were not unfair and were therefore enforceable, and they provided that the prize of 10 pounds determined by the computer system was the prize to which Parker-Grennan was entitled.

Parker-Grennan appealed.

The Court of Appeal’s decision

The Court of Appeal dismissed the appeal, finding that even on the terms that Parker-Grennan herself accepted as being incorporated and binding on her, she was only entitled to the prize of 10 pounds.

While it was unnecessary to do so given that finding, the court went on to consider the question of whether all the terms and rules of the game had been successfully incorporated. As the court noted, this does not require a trader to do everything in its power to try to make the other contracting party read the terms – one cannot force someone to read the small print. A trader only needs to take ‘reasonable steps’ to bring its standard terms and conditions to the attention of its consumers and provide consumers with a ‘sufficient opportunity’ to read them.

The court was at pains to underline the point that there is no one-size-fits-all methodology. The court specifically rejected the submission that it is necessary to make a consumer click on a link to terms and conditions and place an acceptance button below those terms, thereby forcing consumers to scroll through the terms before being able to confirm their acceptance. In the court’s view, such an exercise would not make it any more likely that consumers would read the small print – and, in fact, is more likely to cause them to become fed up and quit the website altogether. It suggested that, depending on the facts and circumstances of any particular case, it may well be sufficient to provide a hyperlink to the terms or a drop-down menu which the consumer can click on (or not) as they choose. The fact that an online business could have done things differently or taken even further steps does not – in and of itself – mean that the steps that were taken were insufficient or unreasonable.

The court found that all of Camelot’s terms and conditions had been successfully incorporated, noting the following in particular:

• It would have been evident to Parker-Grennan from the first screen when she opened her online account that there were overarching terms and conditions relating to the account, as well as specific terms relating to each of the games.
• Camelot did not simply rely on the original click-wrap procedure which signified acceptance of the terms and conditions when Parker-Grennan first opened her account in 2009.
• After an update to the terms and conditions, when Parker-Grennan next accessed her online account, she was invited to read the changes and confirm her acceptance of the updated terms.
• All of those terms were readily accessible via a hyperlink or a drop-down menu.
• All of the terms were written in plain English, and there was a simple glossary of the terms used in the rules of the games.
• Important changes were highlighted in summaries, which would not have taken Parker-Grennan an unreasonable period of time to read and digest.

Takeaway

As the court noted, the rules derived from leading authorities concerning the incorporation of standard terms into a contract pre-date the digital era. This judgment is therefore welcome in that it addresses some of the issues that are specific to ecommerce. But it very deliberately does not lay down principles of general application. Accordingly, online traders, who must balance the need to publicise their terms and conditions with the needs of consumers to access and understand those terms, are left without much legal guidance. With that in mind, we would wholly endorse Lady Justice Andrew’s suggestion that the time is ripe for the Law Commission to undertake another evidence-based review of this area of law.

1. [2024] EWCA Civ 185. ↩︎