Excluding and limiting liability: How to play your cards right

15 Jul 2021

After 15 years drafting various types of commercial contracts, I can honestly say the most hotly contested contractual issue is exclusion/limitation of liability: suppliers will want to exclude and/or limit as much of their liability as possible; customers will want the opposite. A recent case - Green v Petfre (Gibraltar) Ltd (t/a Betfred) – provides salutary lessons for all regarding limitation/exclusion clauses.
First shuffle of the deck
In 2018, Mr Green played Blackjack on Betfred’s mobile app, amassing winnings of £1,722,500.24 in just five hours. When he tried to withdraw his money, the app wouldn’t let him. He called Betfred’s service team who at first congratulated him but then, five days later, said that they needed to carry out a check with the game’s developer, Playtech, given the scale of his winnings. Playtech determined there was a glitch in the game; Betfred told Mr Green that he wasn’t entitled to anything.
Mr Green issued a claim for his winnings relying on the T&Cs he accepted when he first started using the Betfred app – there was a clause which said Betfred would pay out where payments were confirmed. Betfred said this clause only related to stake money paid in by punters and its principal line of defence was that various clauses in its T&Cs, the mobile app’s licence agreement and the game’s rules excluded its liability when caused by a software malfunction.
Mr Green countered (i) there was no software malfunction but rather a game malfunction, which was not covered by Betfred’s exclusion clause, (ii) the relevant exclusion clauses were not sufficiently notified to him, and (iii) that they were inaccessible and unclear, meaning they weren’t part of the contract.
Here comes the Judge
There were three key points for the Judge, Mrs Justice Foster, to consider and in April 2021 she found:
  1. The wording of Betfred’s exclusion clauses was not adequate to exclude liability to pay out winnings for the glitch because: (i) the clauses did not deal with the failure to pay out winnings; and (ii) the reference to “malfunction” without further explanation or definition was insufficient to cover the circumstances relating to Mr Green’s win.
  2. Betfred’s exclusion clauses did not form part of the contract because the exclusions were not sufficiently brought to Mr Green’s attention. To be incorporated into the contract, the clauses should have been signposted and Betfred should have highlighted their meaning and intended effect.
  3. Betfred’s exclusion clauses were not transparent or fair and therefore, under the Consumer Rights Act 2015, not enforceable.
Stacking the odds in your favour
Firstly, is your customer a business customer or a consumer? If a consumer, your options around limiting and excluding liability will be somewhat curtailed. Under consumer legislation, you cannot include terms which limit or exclude your liability when you are at fault nor can you reduce or remove a consumer’s legal rights. Any limitation or exclusion clause must be fair. Additionally, you must ensure your consumer contracts are written in plain, intelligible language; if there is any doubt as to meaning, the interpretation most favourable to the consumer would win out.
Of course, the point about plain, intelligible language is a good one to bear in mind regardless of customer type.
Secondly, clearly signpost those terms and conditions which may be onerous or unexpected to customers, including limitation and exclusion clauses: for example, make it clear up front as to where the nasties lie, or highlight them in some way to identify them. You should check the relevant clauses actually form part of the contract; no mean feat if the contract is made up of various sets of terms.
The final point is that any exclusion or limitation wording must be precise, clear and readily understood. The broader the exclusion, the clearer the wording must be for it to be effective. Consider if it is more commercially acceptable to limit liability rather than seek to exclude it completely: a sensible cap on liability is more likely to be upheld than a blanket exclusion. And take care to address and explain key issues: for example, by precisely defining what is meant by a “malfunction”.
Final throw of the dice.
Mrs Justice Foster has recently ruled that Mr Green should be handed a further £600,000 in interest and costs after his lengthy fight: he will receive a total of £2.3 million. Not too shabby when you consider that Betfred initially tried to settle the dispute at an early stage for £60,000 and his silence.
At the time of writing, Betfred’s terms appear to be those from 2019; I suspect its legal team have been tasked with updating these, and Playtech with fixing that glitch.  And fast!

This article first appeared in the July 2021 issue of Platinum Business Magazine

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