"A dense thicket": The High Court rules onerous terms must be brought to the attention of customers online

"A dense thicket": The High Court rules onerous terms must be brought to the attention of customers online

Commercial Court considers interplay between new witness statement rules and admissibility of opinion evidence

Earlier this year the High Court granted summary judgment in Green v Petfre Ltd (t/a Betfred), giving a stark reminder that, in consumer cases, particularly onerous clauses in a contract must be adequately brought to the attention of customers in order for the term to be enforceable (see "Online Sellers: Don’t Gamble with the Small Print").

Interestingly, the courts have also recently sided with the customer in a B2B situation. On 30 September 2021, the High Court gave a reminder of the importance of drawing onerous terms contained in standard terms to the attention of a business customer. It considered whether the supplier’s standard business terms were incorporated at all and whether an allegedly onerous clause relating to early cancellation fees was an effective part of them. 

In Blu-Sky Solutions Ltd v Be Caring Ltd the High Court held that although the standard terms were incorporated, the onerous clause was not as not enough had been done to draw the clause to the customer’s attention.

Facts

The claimant (Blu-Sky) is a supplier of mobile phones and telecommunication services. The defendant (Be Caring) is a social care provider. Be Caring signed electronically an “order form” of  Blu-Sky concerning the supply of mobile network service connections for 800 mobile phones for a minimum period of 48 months at a monthly rental of £9,600.

The order form contained the following words:

“by signing this document I agree I have logged on to the [supplier's] website at [weblink], have read agree and fully understand all terms and conditions regarding the contract and the policy protection scheme & free trial (*where applicable) and am bound by the same.” 

Be Caring did not access or read the standard terms and conditions (STCs) prior to signing. The STCs contained a clause which stated in the event of cancellation before connection, Blu-Sky was entitled to what was described as an “administration charge” of £225 per connection (Cancellation Clause). Be Caring cancelled its order and Blu-Sky claimed it was entitled to £180,000 for the cancellation of the 800 connections.

Be Caring denied that the STCs were incorporated into the contract, arguing that as the terms were not contained in the order form signed by Be Caring and were only referred to, they were not sufficiently brought to their attention. It was also argued that it was unclear exactly which set of terms were supposed to apply.  Further, Be Caring asserted that in any event, the Cancellation Clause was not incorporated because it was particularly onerous and had not been sufficiently brought to its attention.

Decision

It was held that the STCs were incorporated. The judge ruled that had Be Caring “accessed and had a reasonably quick look at the STCs [it] would have no reason to think that they were not indeed applicable”. The STCs were headed “mobile” (as opposed to “landline”) and were sufficiently clearly identified as the applicable terms, although the Judge felt this had only just about been established.

However, the judge did not reach the same conclusion in relation to the Cancellation Clause. He held that the Cancellation Clause was not fairly and reasonably brought to Be Caring’s attention. He commented that the clause was particularly onerous because the amount of the “administration charge” did not reflect any actual administration costs Blu-Sky incurred or were likely to incur. The £180,000 Blu-Sky were entitled to claim under the Cancellation Clause was out of proportion to any reasonable estimate of its loss resulting from a cancellation.

Despite the fact that Be Caring had signed the order form electronically, this clause was not fairly and reasonably brought to Be Caring’s attention for a variety of reasons. This included that prior to receiving the order from Blu-Sky, Be Caring was not told and had no reason to expect that it would be exposed to a very substantial contractual liability should they decide to cancel. No attempt was made to highlight the Cancellation Clause even though it imposed a considerable financial obligation on Be Caring. The judge decided that, while the STCs were brought to the attention of Be Caring in the order form, the Cancellation Clause itself “was not and was cunningly concealed in the middle of a dense thicket which none but the most dedicated could have been expected to discover and extricate”.

Comment

Although both the Betfred and Blu-Sky cases are very fact specific, these decisions highlight that onerous clauses contained in standard terms which impose burdensome obligations on a customer must be brought to the customer’s attention, and that this is likely to be the case in both consumer and business relationships even where a signature is required. Be Caring is a social care provider but it cannot be assumed that this decision is confined to businesses of any particular type.

In particular, if terms are incorporated by reference (for example, to terms displayed on a website) the wording that highlights the incorporation of these terms should also draw the customer’s attention to such burdensome obligations. For example, including wording such as “your attention is particularly drawn to clause [x]”.

In this case, lack of evidence as to which version of terms applied at the relevant time, although not fatal was also considered. Suppliers therefore need to ensure they have good records of which terms applied on a website at a particular date. It is also worth considering whether to include the relevant terms on the order form itself, instead of referring out to a website. This ensures certainty as to the terms that are incorporated into the contract. Notwithstanding this, it is still essential to ensure that any particularly onerous clauses are brought to the customer’s attention and that the clauses cannot be said to be “cunningly concealed” in the dense thicket of the standard terms.

Contact our experts for further advice

Search our site