To Bet or Not to Bet; the Exclusion Clause is the Question

The courts have recently given some useful clarity in relation to reliance on exclusion and limitation of liability clauses in an online environment. Whilst the case in question was a consumer contract, it is a salutary reminder in all contractual relationships (including B2B) of the need for clear, logical and concise drafting, signposting of onerous clauses (such as exclusion and limitation of liability clauses) and, where standard terms are incorporated into the contract, ensuring that the terms are easily available and updates are flagged to the parties.

Background

In Green v Petfre (Gibraltar) Ltd (t/a Betfred) [2021] EWHC 842 (QB) (7 April 2021) the Claimant, Mr Green, won over £1.7m on a Betfred hosted online casino platform. However, when he tried to withdraw his winning, Betfred blocked his account on the basis that there had been a technical fault with the game (which was unknown to either party) which meant that the game was more likely to pay out disproportionately high winnings.

In refusing to allow Mr Green to withdraw funds, Betfred sought to rely on an exclusion clause in their standard terms and conditions (purportedly excluding liability for software errors/defects in games) which Betfred claimed Mr Green had agreed to (by ticking a box &nash; a process known as ‘click wrap’) over 4 years before playing the game in question and which Betfred had updated without bringing such updates to Mr Green’s attention.

In his claim for his winnings, Mr Green asserted that Betfred’s contractual terms and conditions:

• did not cover the current situation;
• were not incorporated into his contract with Betfred as they had not been sufficiently notified to him; and
• could not be relied upon under the Consumer Rights Act 2015 and common law even if the terms were incorporated into his contract.

Interpretation of Exclusion and Limitation Clauses

It is a well-documented maxim that in order to successfully rely on an exclusion or limitation of liability clause, such clauses must be clear, unambiguous and cover the breach or loss in question.

In opining on Mr Green’s first assertion, the court agreed with Mr Green that the terms Betfred was seeking to rely on to refuse to pay out were “not apt to cover the circumstances of this case”; the exclusion clause dealt with neither failing to pay out winnings nor technical faults undetectable to either party.

Betfred’s terms and conditions came under much criticism for being iterative, repetitive, containing typographical and numbering mistakes; the drafting was “at best unclear”.

Incorporation of Terms into a Contract

For a party to successfully rely on an exclusion clauses in its contract, it must demonstrate that sufficient notice of the clause was given prior to the contract being entered into and that onerous/unusual terms were fairly and reasonably brought to the other party’s attention. This is particularly important where, as is common in many online and other relationships, such clauses are incorporated by reference to one party’s standard terms and conditions which are not specifically signed by the other party.

The court agreed with Mr Green that the terms Betfred were seeking to rely on to refuse to pay-out his winnings were not incorporated into the contract; the exclusion clause was buried in two sets of terms and conditions, Mr Green had click wrapped his acceptance and so the onerous clauses were neither sufficiently brought to his attention and nor were their meaning and effect adequately explained.

Conclusion

The court concluded that Betfred’s terms and conditions did not allow them to refuse to pay out Mr Green’s winnings. However, the court did not rule out that gaming operators may exclude liability in certain circumstances even through click wrapping. The court stated that “the nature of the liability sought to be excluded required clear explanation and “‘signposting’ which would have involved a full and clear description of the possibility of a hidden technical defect, and its potential consequences for the gaming contract”. Further, such exclusion clause would need to be drafted “with great care and particularity”.

The Betfred judgement is a useful reminder that:

• especially when (as is common especially in an online environment) terms and conditions are incorporated into a contract but not signed by the parties (for example, by click wrapping) that any onerous terms (such as exclusion and limitation of liability clauses) are clearly and specifically signposted to the contracting party; and
• terms and conditions need to be clearly, logically, concisely and unambiguously drafted to ensure that not only the contracting parties are able to understand them easily but also they cover the situation in question.

At Garfield Smith – Technology and Data Lawyers we have extensive experience of assisting clients with ensuring that their standard terms and conditions offer them the protection they require. Please contact us if you need assistance in drafting your terms and conditions or feel your terms and conditions would benefit from a refresh.