The price of inconsistent terms: a High Court ruling on online contracts

Paddy Power Betfair was required to pay out a £1M jackpot to a consumer, despite claiming the displayed result was an error. 

The case highlights key issues surrounding contract interpretation, the enforceability of onerous terms, and the limitations of click-wrap agreements. Businesses, particularly those operating online or using multi-document contracts, should take note of the potential risks posed by conflicting terms and inadequate notice to consumers.

In this article, we provide a background to the Paddy Power Betfair case, including the key issues and the decision, and highlight the key takeaways for businesses when reviewing their contractual terms.

Background

In October 2020, Ms Durber placed a bet on Paddy Power Betfair online game, 'Wild Hatter'. During gameplay, the screen indicated she had won the 'Monster Jackpot' of £1M. However, Paddy Power Betfair later refused to pay, arguing that its internal system had determined she had only won a £20,000 daily jackpot and that the displayed outcome was erroneous.

Paddy Power Betfair relied on its standard terms and conditions, which stated that the random number generator was the sole determinant of results and that errors in displaying outcomes would not be binding. However, the game-specific rules suggested that what appeared on screen was final. This inconsistency led to litigation, with the High Court ultimately ruling in favour of Ms Durber.

Issues

1. Conflicting contractual terms: the case revolved around inconsistencies between Paddy Power Betfair's standard terms and the specific game rules. The latter suggested the displayed result was final, while the former gave priority to the random number generator outcome.
2. Incorporation of terms: the court examined whether Paddy Power Betfair had adequately brought its terms to the consumer's attention, particularly given the onerous nature of the clauses excluding liability for errors.
3. Consumer rights and fairness: the enforceability of Paddy Power Betfair's terms was also assessed under the Consumer Rights Act 2015, which protects consumers from unfair contract terms that create an imbalance of power.
4. Click-wrap limitations: the judgment raised questions about whether standard click-wrap methods, forcing a customer to confirm by ticking a box they agree to terms, are sufficient to properly incorporate onerous terms into consumer contracts.

Decision

The High Court ruled in favour of Ms Durber, holding that she was entitled to the £1M jackpot based on the game-specific rules that suggested 'what you see on screen is what you get.' The court found that, due to inconsistencies between the general terms and the specific game rules, the latter took precedence as per Paddy Power Betfair's own contractual hierarchy clause. To do this the court considered how the reasonable person, with all the background knowledge required, would have understood the terms to exist. 

Additionally, the court commented that the exclusionary clauses relating to random number generator outcomes and system errors were not sufficiently incorporated into the contract and could be deemed unfair under the Consumer Rights Act 2015. Although these comments were obiter, they serve as an important warning for businesses relying on similar clauses.

Lessons

Whilst this particular case involving Paddy Power Betfair and Ms Durber is more of a reminder of the law, rather than breaking new ground, there are certainly some helpful lessons to take away from it.

1. Holistic contract drafting: businesses must ensure that their contractual documents work together cohesively. Inconsistencies between general terms and product-specific terms can lead to costly disputes.
2. Clarity and accessibility: important terms, especially those limiting liability or consumer rights, should be clearly highlighted and explicitly brought to the consumer’s attention.
3. Consumer protections: the decision underscores the need for businesses to review their terms against the Consumer Rights Act 2015, as overly restrictive clauses may be deemed unenforceable.
4. Reevaluating click-wrap agreements: sole reliance on click-wrap agreements may be insufficient, particularly for onerous terms. Businesses may need to consider additional measures such as requiring separate acknowledgment of key provisions.
5. Risk of over-reliance on algorithms: companies using automated decision-making systems must recognise that courts may scrutinise their reliance on such systems, especially where consumer rights are at stake.

This case serves as a stark reminder for businesses operating online to carefully review their contractual terms and ensure transparency in their dealings with consumers. 

If you or your business needs any advice or help reviewing its contractual terms and conditions in light of this case, please contact our commercial team.