Two contrasting court cases in two weeks show the power of order, structure, signposting, and format, in standard contract terms. In each one, a customer signed up to the terms a business had drawn up to protect itself from disputes. When a dispute came up, guess which clause was more use: the one in the summary of terms, or the one buried in pages of confusing text? (Answer below: The winning clause.)

Nobody reads standard terms, right?

In January 2020, 100 internet users took an online survey to receive one dollar. To do so, they had to read a set of terms and accept or reject them. ProPrivacy, who posted the offer, published the results:

  • 99 out of 100 participants accepted the terms … and signed over to ProPrivacy the right to name their firstborn child.
  • 1 person rejected the terms.

In the survey results, nearly 70 of the 100 claimed to have read the terms. In fact, only 19 had even clicked on the link. (Source: Privacy Complacency: The Hidden Dangers Lurking Beneath Today’s Surface-Level Data Protection, 28 January 2020.)

We can’t say that customers never read online terms. Even in this small study, 19 participants tried to read the terms. They failed to spot the unreasonable clauses, for reasons not given. How did they not see these terms?

What stops us seeing the unreasonable terms?

Anyone who has tried reading a contract knows what makes its message hard to see.

But it’s useful to look at what one judge said in April 2021. That’s not because she knows more about it than other contract users, but because her words will influence other English judges and lawyers, as they assess whether a contract term is accessible enough to be enforced. (In standard terms, an unusually harsh (“onerous”) term does not bind the customer unless it’s been properly brought to their attention.)

This judge looked in detail at the click-to-agree terms a gambler accepted to get access to an online gaming service. Five years later, he played a newly-published game non-stop for 5 hours, until he had won £1.7 million. The company quickly changed the game to stop rewarding continuous play and refused to pay out his winnings, relying on various terms in the click-through agreement. None of these terms did the company any good. They were not really designed to prevent a big payout when nothing had gone wrong with the game and nobody had done anything wrong. And anyway, although the click-through terms as a whole were binding, these exclusions were not, because they had not been properly brought to the gambler’s attention.

Here are the features that, according to the judge, would stop any reasonable customer from seeing and understanding an “unusual and onerous” term, such as those proposed by ProPrivacy or invoked by the company in this case:

  • Poor signposting. These clauses were buried, in text that dealt with other subjects and under uninformative or misleading headings, such as “note” or “to play the game”.
  • Poor structure. The documents were long (over 33 pages when printed out), repetitive, and disorganised, lacking links and with vague cross-references. The reader would have to scroll and click through all the documents, looking for what might be relevant.
  • Format. The judge mentioned long passages of dense text, including a half-page of single-spaced block capitals without one paragraph break. (Block capitals, which I think are an obstacle to understanding, were claimed as a virtue by the business, as highlighting important clauses. They attracted mild criticism from the judge: there were so many capitals that they didn’t work as a signpost of importance and “do little to remedy the obscurity”.)

So far, notice, it’s all about order, structure, signposting and format. Here comes the traditional language of contracts:

  • Language. The terms relied on were “obscure and unclear” and “opaque and difficult”, although other clauses showed the business could exclude a payout clearly when it wanted to.

(The judge did not mention another source of confusion: the long words and sentences in the terms. For more on these, see this academic study of 500 popular online contracts for a wide range of products and services: The Duty to Read the Unreadable, by Uri Benoliel and Shmuel I Becher, 2019.)

The terms did advise the reader to consult an attorney if in any doubt about their meaning. That did no good either. No consumer is going to consult a lawyer before signing up for an online betting service. The judge called this advice “a singularly ineffective attempt to shift the burden of providing clear language and proper warning”.

(Green v Betfred, [2021] EWHC 842 (QB), 7 April 2021)

Yes, but that was a consumer claim

Consumer law in the UK says all consumer contract terms must be transparent (plain and intelligible) and most of them must be fair or at least prominent. Anything that isn’t clear and fair might not be enforceable, as explained in https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/450410/Unfair_Terms_Explained.pdf.

But, even though the gambler was a consumer, everything I’ve mentioned in this post depended on English contract law, not consumer law. Contract law is the same for business and consumers. Context matters, so you might expect any reader to work harder at understanding the terms of a big commitment than they would on an everyday purchase. And, if a business is big enough to employ a lawyer, they are better equipped than some to understand legalese, even though badly-written and disorganised documents are confusing for lawyers too. But a small business that clicked through terms like the gaming company’s could try the same arguments, at least if it wasn’t realistic to expect them to get legal help.

The winning clause

No prizes for guessing that a clause in the summary of terms did more good than the one buried in pages of legalese.

Shortly before the Betfred decision, another customer was trying to convince a different judge that an unusual, onerous term was not brought to his attention. The judge threw out this part of his case without a trial.

The clause charged compound interest on late payments at 3% a month (128% over the period of the claim). The rate might have been unusual or onerous but, if you read the terms, it was “readily apparent” or “plain for all to see”. The judge said it was hard to see how any borrower who wanted to know the interest rate could have got it wrong. In the Loan Particulars, “the Standard Rate of interest of 3% per month would stand out, both because it is mentioned first and because it is called ‘Standard’”. The only borrower who wouldn’t know is one who hadn’t read the terms – and you can’t get out of understandable contract terms just by not reading them.

(Bedford Investments Ltd v Sellman [2021] EWHC 799 (Comm), 31 March 2021, paragraphs 17, 22(d), 62-65, 93-95)

Terms of service? Didn’t read

While we wait for all businesses to become transparent and fair in their terms of service, some like-minded enthusiasts have put together a website, tosdr.org, short for “Terms of Service; Didn’t Read”. They aim to fix “the biggest lie on the web: I have read and agree to the Terms”.

Funded by donations and free to use, ToS;DR grades popular online services and labels their terms with headline summaries, focusing on privacy, content use, and legal rights.

ToS;DR do not claim to be a credible source of legal information. Their own terms and privacy policy are 300 words long and beautifully clear.

From ToS;DR Privacy Policy

We are hosted by Pixelcat Productions (which will change in the future) which does not employ session cookies or tracking technologies. Their privacy policy mostly applies to us as their customer, not you. Pixelcat Productions gives us no access to identifying statistics.

 

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