You can’t always rely upon the small print


By Andrew Shipp

In today’s digital world, children are often techno savvy beyond their years and can undertake certain tasks that surprise their parents.  However, Colin Cochrane received a bigger surprise than most, when he found himself £50,000 in the red after a five year old got into his online spread betting account.

Mr Cochrane had set up an account with Spreadex, an online spread betting bookmaker, which allows the public to bet on rises and falls in the price of stocks and shares.  Soon after setting up his account, Mr Cochrane showed his girlfriend’s young son how it worked.

But the demonstration was something he would regret, as having left his computer switched on, he returned a short while later to find his account was £50,000 in the red.  It turned out that the youngster had racked up the losses by trading in gold, oil and silver whilst he was away.

Although Mr Cochrane immediately rang the bookmaker and explained what had happened, Spreadex were unsympathetic and issued court proceedings against him to recover the £50,000.  They argued that Mr Cochrane had no defence to the action, because clause 10.3 of their consumer contract said ‘you will be deemed to have authorised all trading under your account.’

However, the judge in Spreadex Ltd v Cochrane [2012] ruled that the consumer contract was unfair and unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999, saying that the 49 pages of T&Cs was an “unfair contract”.

First, he found that there was an imbalance between the parties’ rights and obligations, as Spreadex did not assume any obligations, but the consumer assumed considerable risks without gaining any rights.  The judge accepted that Spreadex was entitled to protection against unauthorised use of the account but said that the clause 10.3 was too broad.

Secondly, the judge held that the way in which the clause was presented was unfair.  A customer signing up to the site was invited to click to view the consumer contract and three other documents.  The judge said that most customers would proceed without viewing the document and, even if they did look at the documents, they would be faced with lengthy and complex clauses.  It would be a miracle, said the judge, if Mr Cochrane had read clause 10.3 let alone understood its implications.

Commercial litigation expert Andrew Shipp of Gardner Leader LLP says “Where consumer contracts are presented with no opportunity for the consumer to contest or alter the terms, as happens with online trading, there may be a temptation on the service provider to place all emphasis on the consumer’s duties and requirements and think that protects them.”

“However, the legal position is that all the terms must be fair and reasonable and must make allowances.   In addition, the terms must be clear and the harsher the provisions are, the clearer they must be if companies want the Court to be on their side.  This case should act as a wake-up call for companies who rely on contract terms that are buried in the small print.”

For further information, please contact Andrew Shipp.

You can also find Andrew on Google+

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