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In the recent case of Spreadex Ltd -v- Cochrane  EWHC 1290 (Comm), the High Court has held that a term in a Customer Agreement appearing on the website of a spread betting bookmaker was not binding on a consumer.
The case arose after losses of almost £50,000 were accumulated on the Defendant's spread betting account in May 2011. The Defendant maintained, however, that he was not responsible for those losses. He alleged that his girlfriend's young son had, without his knowledge or permission, accessed the account and run up the losses.
Spreadex did not accept the Defendant's explanation. It commenced legal action against the Defendant to recover the monies and applied for summary judgment, a form of expedited Court process. A Court may order summary judgment against a Defendant if it considers they have "no real prospect" of successfully defending the claim, and there is "no other compelling reason" why the case should be disposed of at trial.
Spreadex argued that, even accepting the accuracy of the Defendant's evidence, which for the purpose of the summary judgment hearing the Court was required to do, the Defendant had no arguable defence to the claim. It relied primarily on a clause in its Customer Agreement which it said deemed customers to have authorised all trading under their account. The issues for the Court were: (i) whether the clause formed part of a binding contract between Spreadex and the Defendant; and (ii) whether the clause was "unfair" within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCR").
At the hearing, the Court refused to order summary judgment. It held that the clause did not form part of a binding contract as Spreadex could not show it had given any "consideration" (ie some right or benefit in return) for the clause. In reaching its decision, the Court noted that Spreadex had reserved the right to refuse to accept any bet, remove the online service at any time, or close or suspend the account. The Court also found that the provision of the on-line platform itself did not constitute valid consideration as it was "in effect simply a more modern equivalent of the expressed readiness of a potential contracting party...to enter into contracts by receiving and responding orally to telephone calls".
The Court further found that the clause on which Spreadex relied resulted in a significant imbalance in the parties' rights and obligations, and was unfair within the meaning of the UTCCR. The Court noted that when opening the on-line account, the Defendant had been faced with, amongst other documents, a 49 page Customer Agreement containing closely printed and complex paragraphs. The Court said it would have "come close to a miracle" if the Defendant had read the clause or appreciated its importance, and that it "would have been quite irrational for the claimant to assume that he had".
The Court's decision in this matter turns on the particular facts of the case. However, it serves as a reminder that, when dealing with consumers, on-line businesses need to consider carefully the manner in which they seek to make customers aware of important terms.
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