The million pound question: how to draft T&Cs to protect against payouts when things go wrong

Camelot’s robust T&Cs

In Parker-Grennan v Camelot UK Lotteries Limited [2024] EWCA Civ 185, the claimant purchased a ticket to participate in one of the National Lottery’s Instant Win Games (“IWG”), in which the player had to match a number in the ‘YOUR NUMBERS’ section of the screen with a number in the ‘WINNING NUMBERS’ section, with prizes ranging from £5 to £1 million. An animation appeared in the IWG which showed the claimant had won £10, however, as a result of a software error, another animation appeared matching a number which suggested the claimant had also won the grand prize of £1 million (this was despite there being no corresponding message, flashing lights or any type of other signifier to suggest the claimant had won the grand prize). Further, having clicked ‘finish’, the claimant was notified of her £10 win only. 

The claimant claimed the £1m (and the £10). Camelot explained that a coding issue generated an error in the software responsible for the IWG’s on-screen animations and argued that its T&Cs provided that the prize to be awarded was the one already predetermined by its computer system, namely £10. Both the High Court and the Court of Appeal agreed with Camelot. 

Terms clearly drafted and logically set out

The High Court initially considered whether the terms Camelot was relying on were incorporated into the contract between it and the player. The Judge found that Camelot’s terms were suitably incorporated by means of hyperlinks and drop-down terms. It did not matter that the claimant had accepted the terms six years before playing the IWG (when she had opened her online account); she had also accepted periodical updates to the T&Cs and she could at any time have accessed the ‘Game Procedures’ which indicated how prizes were won. The terms were said to be clearly drafted, set out logically and coherently and were neither unusual nor onerous. They made it clear that there might be a difference between what appeared on screen and the result as predetermined by Camelot’s computer system. On a proper interpretation of all the website terms which the claimant had accepted and was bound by, the Court held that only the amount shown on the final screen display and on Camelot’s official winning numbers list was conclusive as to the amount won by whoever played that game: “The Game Procedures make it clear that a win is shown by flashing white matching numbers and a message stating what the win amount is, and that the player must then select FINISH to complete the game… When she pressed the FINISH button, it was confirmed that she had won £10.”

The Court of Appeal noted that “all of this should have been obvious to any reasonable player of the Game even if they did not read the Game Procedures.”

Problems with poor drafting 

The Camelot decision can be contrasted with the decision in Green v Petfre (Gibraltar) Ltd (t/a Betfred) [2021] EWHC 842 (QB), known as ‘the Betfred case’. In this case, the claimant played an online casino game on Betfred’s online gaming platform and ended up with chips to the value of £1.7m. Betfred refused to allow the claimant to withdraw the sums. It argued that there was a software glitch in the game so that the game had vastly increased the odds of the game’s jackpot being won and that the terms of the contract between the parties excluded liability in the event of a payout caused by a software ‘malfunction’ or ‘defect’.

The Judge held that the exclusion clauses relied on by Betfred to deny the payout were not properly incorporated into the agreement between the parties. The clauses were inaccessible (in that the player would have to “click through and scroll online, searching out what appears to be relevant to him”) and were not properly ‘signposted’, as the way in which the T&Cs were drafted failed to highlight their meaning and effect to the player. This failure was compounded by poor presentation as the terms were closely typed, in lower case which resulted in relevant clauses being lost in the lengthy, dense T&Cs. In addition, on interpretation, the Judge held the drafting of the exclusion clauses to be unclear. For example, the Judge found that Betfred’s reliance on terms that allowed it avoid liability in the event of a ‘malfunction’ were misplaced, concluding that “to achieve the meaning sought by Betfred for the exclusion clauses in the Terms and Conditions, the [end user licence agreement] or the Game rules requires a strained and unnatural meaning to be given to the terms”. In essence, greater specificity as to what was meant by ‘malfunction’ or ‘defect’ was required.

Points for Consideration

The decisions in Camelot and Betfred show different sides of the same coin and affect all consumer facing companies, not just those in the gambling sector. The judgments illustrate that businesses with an on-line presence must ensure that their T&Cs are easily accessible, clearly signposted, and easy enough to comprehend. They should draft their clauses in an unambiguous and particular way – down to the font, font size and formatting - so as to ensure key provisions such as exclusion clauses take effect, and must comprehensively define concepts such as system ‘malfunctions’ or ‘glitches’. This chimes with requirements recently introduced for any service caught in the scope of the UK’s Online Safety Act, which emphasises the need for clear and comprehensive T&Cs to ensure users know where they stand when they use the service.

The Court of Appeal noted that cases such as the Camelot matter require “balancing the needs of traders to publicise their terms and conditions with the needs of consumers to access and understand those terms” and suggested that this area of law may require a “review of this area of law” by England’s Law Commission. This hints at the difficulty judges are faced with in such cases, which often require retrospective reconstruction of the ‘user journey’ in an attempt to assess how the T&Cs would have originally been understood.  

With thanks to Naim Kalaji for his contribution to this article.