We recently acted for a client who had entered into an annual membership contract. The factual setting below has been changed to preserve confidentiality, but the legal issues and outcome are based on a matter handled by Lisa’s Law.
Written by Paul Cheuk, Solicitor
Our client was unsure whether to renew his membership for another year because he might be relocating overseas. He explained this concern to the company’s sales representative before signing. The representative reassured him that if the relocation went ahead, he would be able to cancel. That reassurance was important to our client, and he relied on it when deciding to renew.
Several months later, the relocation was confirmed. Within a few hours, our client contacted the same sales representative through WhatsApp and said that he needed to cancel. The representative received and acknowledged the message, and our client reasonably believed that he had done what was required.
The company later took a different position. It demanded payment for the remainder of the annual contract and relied on its online terms. Those terms said that cancellation had to be made within 48 hours of the relevant event and, importantly, had to be sent to a particular email address. The company therefore argued that the WhatsApp message to the salesperson did not amount to a valid cancellation. That was where the real dispute began.
The 48 Hour Rule Had Never Been Mentioned
The company’s position was that our client had entered into the contract and was therefore bound by its standard terms, including the 48 hour cancellation requirement. However, our client had specifically discussed cancellation with the salesperson before entering into the agreement. He had explained the exact uncertainty which was preventing him from committing, and the salesperson had answered that concern by telling him that he would be able to cancel if the relocation went ahead.
There had been no mention during that conversation of a 48 hour deadline. There had also been no explanation that cancellation would only be accepted if notice was sent to one particular email address. These were significant restrictions because failure to comply with them could leave the customer liable for the whole annual contract.
This was therefore not simply a case of a customer saying that he had failed to read the terms. Our client had raised the very issue before signing and the business had chosen to answer him. Our position was that the effect of that answer had to be considered alongside the written terms which the company later sought to enforce.
Can the Website Terms Still Apply?
A business is entitled to use online terms and conditions, and a term does not become invalid merely because it appears through a website or hyperlink. However, whether a particular term has properly become part of the contract can still be an important legal question.
English contract law has long recognised that greater steps may be required to draw particularly unusual or onerous terms to the other party’s attention. The well known decision in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd illustrates this principle. The court considered whether sufficient notice had been given of an unusually burdensome term before the contract was made.
Our argument was not that every 48 hour cancellation period must therefore be invalid. The issue was the particular way in which this restriction operated in our client’s case. The term determined whether he remained liable for an entire year of payments, yet when he expressly raised the question of cancellation before entering the agreement, the restriction was not mentioned at all.
The same difficulty arose with the requirement to use a particular email address. If a business intends to insist upon a very specific method of cancellation, particularly where failure to follow it can result in substantial liability, the way in which that requirement was presented to the consumer may become highly relevant.
Our Client Had Acted Within the 48 Hours Anyway
There was also a further problem with the company’s position on the cancellation clause. Our client had not delayed. He contacted the sales representative within hours of receiving confirmation that the relocation would take place.
He used WhatsApp because this was the same communication channel which the company itself had used during the sales process. His cancellation was in writing, it reached the company’s own representative, and receipt of the message was acknowledged. The company nevertheless argued that this did not count because its standard terms required notice to be sent to a specific email address.
The question was therefore not simply whether the word “email” appeared somewhere in the standard terms. We challenged whether the company could fairly rely on that technical distinction when the requirement had not been explained during the discussion about cancellation and the company had in fact received clear written notification within the stated 48 hour period.
The Consumer Rights Act Also Matters
Because this was a consumer contract, the Consumer Rights Act 2015 also had to be considered. Under section 62, an unfair term in a consumer contract is not binding on the consumer. The court may consider whether the term causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer and whether it is contrary to the requirement of good faith.
Importantly, this assessment is not necessarily carried out by looking at one clause in isolation. The circumstances in which the contract was entered into may also matter. In our case, that meant considering the sales conversation, why our client had been hesitant to enter into the agreement, what reassurance he had been given, how the 48 hour restriction was presented, and what he actually did when the circumstances for cancellation arose.
Consumer protection guidance also warns businesses against relying on small print in a way which undermines what consumers have been told during the sales process. Again, this does not mean that every strict cancellation clause is unfair. It does mean that the way the clause was presented and the surrounding sales representations can be important.
Why the WhatsApp Messages Mattered
The written messages were central to the case. They allowed us to demonstrate what our client had asked before entering into the contract, what the representative had told him, and how the company itself had chosen to communicate during the sales process.
The later messages were equally important. They showed that our client had acted within hours once the reason for cancellation arose. They also showed that his cancellation had actually reached the salesperson. This meant that we were able to challenge the company’s case from several directions.
This is why we regularly advise clients to preserve the full history of their communications once a dispute develops. A short WhatsApp conversation which seemed unimportant at the time may later become some of the strongest evidence in the case.
The Company Eventually Changed Its Position
We wrote to the company setting out the chronology and the legal basis of our client’s position. We did not simply argue that the outcome was unfair. We addressed what had been said before the agreement, the status of the online terms, the 48 hour requirement, the specified method of notice, and the fact that our client had in fact notified the company through WhatsApp within the relevant period.
The company eventually reconsidered its position regarding the cancellation clause. It agreed to release our client from the contract and no longer sought to rely on the strict cancellation provisions. The substantial payment demanded from him was therefore no longer pursued.
At Lisa’s Law, we look at that complete picture. Sometimes the messages exchanged before and after a contract was signed can be just as important as the small print itself.
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