Be sure to alert Customers to Onerous Terms and Conditions

Businesses may well be aware of the requirement to alert consumers to particularly onerous clauses in standard terms and conditions. We have been reminded recently that this is still very much the case when dealing with consumers, but further, a recent High Court decision has held that the same applies for business customers too.

To ensure a burdensome clause is enforceable, companies must adequately bring it to the customer’s attention before entering into a contract with them. Such terms may include those that severely limit a company’s liability or impose hefty cancelation fees.

A recent case involving a B2C relationship between Betfred and an online gambler, made it clear that clauses that have not been sufficiently notified to consumers in advance, may not be effectively incorporated into the contract, and therefore be unenforceable. The judge commented on the importance of “open and fair” agreements that are “easy to access and understand”. In this case, she was of the opinion that Betfred’s exclusion clauses had not been adequately brought to the attention of the customer, both as to their existence and their meaning. As a result, the gambler walked away with his £1.7million in winnings.

The recent B2B case involved a particularly stringent early cancellation charge imposed on a social care company by a telephone provider. The order form was signed online. In this case the judge held that the terms in question were unenforceable as they were entirely disproportionate and unreasonable and were not sufficiently alerted to the customer.

It is clear that efforts should be made to make customers aware of key terms to ensure they are enforceable. In the Betfred, case the judge commented that “burying” onerous or unexpected clauses in numerous paragraphs of capitalised letters was insufficient. The onerous clause was described as being “cunningly concealed” in the contract.

Steps to consider may include the following:
• Highlight/signpost the relevant clauses containing exclusion clauses at the start of the terms and conditions or when a customer clicks to accept terms.
• Consider wording such as “your attention is drawn to clauses [ ]…”.
• Give thought to the font size and formatting of the key clauses.
• Ensure the clause itself is expressed in plain language which is easy to understand.
• Where dealing with an order form, consider also providing a copy of the terms in full at this stage, rather than referencing a website link where the full terms may be found.

Be mindful that, “the more outlandish the clause the greater the notice which the other party… must in all fairness be given”.

If you would like our advice in relation to these matters or in drafting suitable and enforceable terms and conditions for your customers, please get in touch.

Madeleine Rhodes