Spreadex Limited v Colin Cochrane was a decision of the High Court back in May 2012 concerning the online terms and conditions of spread betting company, Spreadex.
The facts of the case were that Colin Cochrane opened an online account with Spreadex. He was given the option to view Spreadex's terms and conditions (which he did not do) but he did click on 'agree' to signify his agreement to them. Clause 10(3) of the terms and conditions provided "…you will be deemed to have authorised all trading on your account." Subsequently, £50,000 in losses was accrued on his account, which Mr Cochrane claimed were due to his girlfriend's child having made trades without his knowledge. Spreadex sought to recover the £50,000 from Mr Cochrane relying on clause 10(3). However, Spreadex's claim failed, the High Court finding in favour of Mr Cochrane. It held that there was no contract between Spreadex and Mr Cochrane as Spreadex had not provided any consideration (giving access to the online platform was not enough as this access could be denied at any time). Accordingly, clause 10(3) was not binding on Mr Cochrane. The court went on to say that even if there had been a contract, Mr Cochrane would not have been bound by clause 10(3) as this was an unfair term under the Unfair Terms in Consumer Contracts Regulations 1999 because of the significant imbalance in the parties' rights and obligations (in the court's view the contract imposed no obligations on Spreadex and gave the customer no rights). In addition, Spreadex would have been 'quite irrational' to have assumed that Mr Cochrane had read clause 10(3) (embedded in a 49 page document full of "closely printed and complex paragraphs") or indeed any of the terms and conditions.
This case has obvious implications for online operators. It demonstrates that website terms and conditions must be fair, explicit, easily accessible and easy to read. It can be difficult to give general guidance on what will pass this test, as terms that meet all of these criteria in one particular set of circumstances may not do so in another. However, as a general rule of thumb, it should be assumed that the terms and conditions will be read by the general public, who are consumers with no legal knowledge and that any significant burdens (such as, for example, verifying the identity of the person accessing an individual account or their age) should be placed on the operator rather than the consumer.
In addition, the case raises the wider, and as yet unresolved, question of whether online terms and conditions are binding at all when they reserve the right for the service provider to withdraw the service at any time.