Feeds

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

High Court rules the website contract terms were unfair

High performance access to file storage

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.

3 Big data security analytics techniques

More from The Register

next story
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
One year on: diplomatic fail as Chinese APT gangs get back to work
Mandiant says past 12 months shows Beijing won't call off its hackers
Whoever you vote for, Google gets in
Report uncovers giant octopus squid of lobbying influence
Lavabit loses contempt of court appeal over protecting Snowden, customers
Judges rule complaints about government power are too little, too late
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Don't let no-hire pact suit witnesses call Steve Jobs a bullyboy, plead Apple and Google
'Irrelevant' character evidence should be excluded – lawyers
EFF: Feds plan to put 52 MILLION FACES into recognition database
System would identify faces as part of biometrics collection
Putin tells Snowden: Russia conducts no US-style mass surveillance
Gov't is too broke for that, Russian prez says
Ex-Tony Blair adviser is new top boss at UK spy-hive GCHQ
Robert Hannigan to replace Sir Iain Lobban in the autumn
Alphadex fires back at British Gas with overcharging allegation
Brit colo outfit says it paid for 347KVA, has been charged for 1940KVA
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.