Offer and acceptance, and the doctrine of mistake – Longley v PPB Entertainment

The recent English High Court case of Longley v PBB Entertainment¹ provides an interesting analysis of the principles of offer and acceptance and the doctrine of mistake. The Court also held that a term in a business’s standard terms and conditions, which sought to entitle the business to exclude liability by reason of human error of its employees, was fair within the context of the Consumer Rights Act 2015.

Background

Mr Longley, a Paddy Power (PP) customer, telephoned PP on 21 September 2019, looking to place a bet of GBP1,300 each way on the 19.20 at Wolverhampton, on the horse Redemptive. If Redemptive won the race, Mr Longley stood to win GBP28,600.

Due to the size of the stake, the PP telephone operator sought approval of the bet from a trader. However, the telephone operator informed the trader that Mr Longley sought to place a bet of GBP13,000 each way, a ten-fold increase in stake. A bet of GBP13,000 each way at odds of 16/1 was approved.

Redemptive won and Mr Longley’s account was settled with winnings of GBP286,000. This led to internal communications at PP from the trader to others in the business in which the trader indicated he had “massively overlayed a horse”. This led to PP reviewing the circumstances in which the bet had been struck, including listening back to the recorded telephone call in which Mr Langley had sought to place his bet. The error of the operator in miscommunicating the level of stake was identified, and PP resettled the bet based at Mr Longley’s originally requested stake of GBP1,300 each way: Mr Longley’s bet still won, but his returns were reduced to GBP28,600. Mr Longley contested the resettlement and subsequently commenced legal proceedings for breach of contract against PP, seeking to recover the GBP257,500 difference.

Legal Action

Mr Longley’s breach of contract argument was a relatively simple one – he had sought to place a bet (an offer), that had been accepted, and a contract formed. When the bet won, this entitled him to payment, and PP had breached that contract in failing to pay out the full sum due.

PP resisted the claim on the basis that:

1. no contract had been formed, based on an objective construction of the conversation between Mr Longley and the telephone operator.
2. in the alternative, that there was a contract for a bet of GBP1,300 each way by reason of PP’s unilateral mistake, or no contract at all by reason of the parties’ mutual mistake.
3. in the further alternative, that if there was a contract for a bet of GBP13,000 each way, PP was entitled to void the bet pursuant to clause 16 of its standard terms and conditions, in circumstances where a human error or mistake had occurred in the placing of the bet.

Offer and Acceptance

The Court had to consider whether the proper construction of the words communicated between the parties led to the formation of a contract. This entailed consideration of whether the miscommunication between the PP employees, subsequently relayed to Mr Longley when confirming his bet, constituted a counter-offer which had been accepted by Mr Longley when the higher level of stake bet was confirmed by him. The words were to be objectively assessed.

In considering the words, the Court accepted PP’s submission that the telephone operator’s communication “…so that’s going to be 26,000 coming from Jameslongley1, is that correct?” could not sensibly be cons1d, objectively and in context, as a counter-offer of a bet of that sum. The Court’s reasoning was three-fold:

1. the telephone operator’s words “followed the immediately prior confirmation that Mr Longley’s requested bet had been cleared by a trader”.
2. the language used made clear that the sum to be deducted from Mr Longley’s account would be deducted in consequence of that bet; and
3. the language of the operator had not been structured as a counter-offer.

The Court held that the telephone operator’s words merely “constituted confirmation of the amount which would be debited from Mr Longley’s account”.

The Court held PP had not made a counter-offer nor had any such offer (if made) been accepted. There was therefore no contract between PP and Mr Longley at a stake of GBP13,000 each way.

Doctrine of Mistake

Under the doctrine of mistake, a contract can be voided by the Court. PP contended that it could rely on either the doctrine of unilateral mistake, or mutual mistake. Its position was either:

1. there had been a contract for a bet of GBP1,300 each way, by reason of PP’s unilateral mistake, which is where one party is mistaken and the other knows or ought to have known of the mistake; or
2. there had been no contract, by reason by the parties’ mutual mistake, which is where the parties are at cross-purpose with one another.

The Court held that PP had no intention of accepting a bet at a higher stake than GBP1,300, which is what Mr Longley had originally requested, and that Mr Longley was aware of this. The Court held that if the alleged counter-offer was indeed to be cons1d as such, Mr Longley knew it contained a mistake as to the relevant term and that it did not reflect PP’s real intention, but, nevertheless, he “snapped it up”.

On this basis, it was held that a contract for a bet of GBP13,000 each way did not exist between the parties. Additionally, the Court held that even if such a contract existed, Mr Longley was unable to enforce that contract because of his actual knowledge. PP did not intend to offer nor accept a bet other than his initial request, which was a bet of GBP1,300 each way. The defence of unilateral mistake was made out². Had the defence of unilateral mistake not been established, however, the defence of mutual mistake failed, as the parties were not at cross-purposes as to subject matter of the contract.

Exclusion clause

The Court went on to consider that whether, if a contract for a bet of GBP13,000 each way had come into being, PP was entitled to rely on clause 16 of its standard terms and conditions. Clause 16 provided that if a customer is “incorrectly awarded any winnings as a result of (a) human error… then Paddy Power will not be liable to pay you any such winnings and you agree to refund any such winnings that may have been paid to you as a result of such error or mistake”.

Mr Longley had challenged PP’s ability to rely on this, contending that (i) clause 16 should have been signposted appropriately, instead of forming part of a lengthy document which adopted misleading or confusing language and (ii) clause 16 was an unfair term which was not binding upon him pursuant to s 62(1) of the Consumer Rights Act 2015 (CRA 2015). 

The Court held that clause 16 was fair pursuant to the CRA 2015 as it had a clear meaning and did not lack transparency nor contain concealed pitfalls. In considering the requirement of good faith (as required by s 62 CRA 2015), the Court held that clause 16 did not give rise to any significant imbalance in the parties’ rights, to the detriment of Mr Longley. The contention that clause 16 was unfair was accordingly rejected, as the Court further held that clause 16 afforded Mr Longley an open dealing such that a reasonable consumer (including someone in Mr Longley’s position) would have agreed to the term.

Comment

Langley is the third recent decision concerning gambling operators to reach the Courts in recent months, with Goodram v Camelot (written about here), and Green v Betfred (written about here) each raising similar issues regarding incorporation of terms and the ability of businesses to rely on exclusion clauses. The cases provide a useful reminder to all businesses to regularly review their terms and conditions and ensure that appropriate consideration is given to the wording of, and attention given to, terms which may be considered onerous, from a customer facing perspective.

1 Longley v PPB Entertainment Ltd and others [2022] EWHC 977 (QB)
² Whilst, in a different case, the question might then arise as to whether the apparent contract was void ab initio, or whether there was a contract on the terms intended by the mistaken party, in this case, it did not — Paddy Power paid out on an each way bet of GBP1,300, and did not seek to recover the moneys paid out.