A Lottery Lesson: Incorporation of Contract Terms
Court rulings following lottery wins (or near misses) tend to be interesting, by their very nature, and a recent case1 gives a useful slant on the issue of incorporation of contract terms. A term is often implied or incorporated into a contract, in addition to its express terms as set out in the contract.
What’s the background?
The claimants bought a number of scratch cards with someone else’s card, but claimed that the cardholder had allowed them to do so. The cardholder denied authorising payment and said the transaction was fraudulent.
One of the cards was a £4m prize winner. Lottery operator Camelot refused to pay out given its suspicions that the cards were bought using unauthorised means. (In criminal proceedings, the claimants were convicted and jailed for fraud).
The claimants brought a breach of contract claim against Camelot. The issues included around the terms of the contract between the parties and the incorporating of terms into contracts with consumers. The High Court awarded summary judgment to Camelot.
Incorporation of terms
Camelot relied on the well-established legal principle that contractual terms can be incorporated by notice – in this case, that the claimants had agreed to the game rules on the ticket purchase. The claimants said they hadn’t been incorporated into the contract as they were not clearly brought to their attention, eg there was no reference on the front of the scratch card to the rules or terms and conditions.
The court ruled against the claimants. Senior Master Fontane said the claimants clearly knew there was writing or printing on the lottery ticket and they would have read it if they had wanted to. Reference to the game rules was clearly legible and in bold.
They had also tried to convince the court that there was an express or implied contract term to the effect that if the purchaser becomes a prize winner, Camelot will pay the relevant sum out to the prize winner.
However, this was not included in either the rules or the Scratchcards Promotion Licence; nor was there any basis for implying such a term – otherwise Camelot would be required to pay out even if, for example, the scratch card was bought using a stolen card.
Crucially, to imply such a term would offend the cardinal rule established in leading case law: no term can be implied into a contract if it contradicts an express term. Here, it would make a nonsense of the express terms.
What does this mean?
The facts are fairly novel, but the ruling illustrates fundamental and necessary contractual principles:
A contract term can be incorporated by notice, so long as reasonable steps are taken to give notice of them to the other party before the contract is concluded.
A term cannot be implied into a contract if it contradicts express terms in the contract.
Businesses often rely on small print and by reference to other documentation when finalising their contracts. So long as sufficiently clear notice is given drawing the other party’s attention to those terms, the risk of a dispute should be minimal. But as always, if in doubt seek specialist advice from expert commercial solicitors.
1Goodram v Camelot [2020] EWHC 2499 (QB)
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