Feeds

Online bookie can't scoop £50k losses made by 5-year-old

High Court rules the website contract terms were unfair

Choosing a cloud hosting partner with confidence

A man who blamed his girlfriend's five-year-old son for making loss-making trades in expensive natural resources through his online betting account is not bound by a term he agreed to on the bookmaker's website, the High Court has ruled. The term stated that an accountholder is deemed to have authorised all trading made under his or her account number.

Colin Cochrane claimed to have left his computer at his girlfriend's house and that her son had used his Spreadex account to make trades in oil, gold and silver without his permission. Spreadex argued that Cochrane should have to pay the £50,000 losses that had been run up on his account, according to a report by the Metro newspaper.

Spreadex based its claim on a clause in its contract which meant Cochrane would be "deemed to have authorised all trading under [his] account number," a report by legal information service Lawtel said.

However, in rejecting Spreadex's bid for a summary judgment, the High Court said that the clause was not legally binding because it didn't form part of a binding contract and was "unfair". Spreadex was not able to show that Cochrane entered into a separate contract for each trade made via his account and as such the company's general contract applied.

The High Court said the company's contract had not been drafted in accordance with the 'good faith' requirement and caused a significant imbalance that negatively impinged on Cochrane's rights. Because the contract had not been individually negotiated with Cochrane the terms were not legally binding, it said.

The Unfair Terms in Consumer Contracts Regulations (UTCCR) set out rules to which businesses must adhere when drawing up contracts for customers. Under the regulations, "unfair" contract terms are prohibited and refer to terms in a contract which have not been "individually negotiated" that cause "a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer," contrary to the requirement that they be drafted in "good faith". Under the Regulations written contracts must also be drafted in "plain, intelligible language".

The Spreadex contract was unfair because the terms of the contract put no obligations on Spreadex but made Cochrane liable, without limitation, for unauthorised trade made via his account, the High Court ruled. The court also said that Spreadex had not made sufficient effort to inform Cochrane about the clause.

Spreadex could only force Cochrane to pay for the losses if it could show Cochrane had been responsible for the individual trades or had authorised someone else to make them, the High Court said.

"This is an odd case," gambling law expert Susan Biddle of Pinsent Masons, the law firm behind Out-Law.com, said.

"It is hard to see how companies can incorporate general terms into future contracts with consumers – unless this case can be distinguished on the basis that the problem here arose because of the total exclusion of Spreadex’s liability in contrast to the consumer’s unlimited liability. If Spreadex had accepted some liability and/or capped the consumer’s liability the contract may have been deemed binding," she said.

"I would not advise businesses to purse summary judgment applications where contract terms are disputed as unfair and the reasonableness of them is at issue, especially when it involves a consumer," Biddle added.

Copyright © 2012, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.

Business security measures using SSL

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.