Be aware of what you click or tick!

Be aware of what you click or tick! The dangers of hidden terms and conditions

How often do you tick the box when buying things online, acknowledging that you agree to someone’s terms and conditions without actually reading what is there? It isn’t that important to read through the multiple pages of terms and conditions just for a one off single purchase, is it?

Too often people skip through the pages of terms and conditions just to click the box at the bottom acknowledging they agree, with no idea of what the terms actually are.

In Gispac Pty Ltd v Michael Hill Jeweller (Australia) Pty Ltd [2024] NSWSC 18, Michael Hill Jeweller’s were ordered to pay $2.2 million plus interest and legal costs as a result of someone clicking agree to, and not reading, terms and conditions.

THE FACTS

Michael Hill Jeweller (Australia) Pty Ltd (Michael Hill) engaged Gispac Pty Ltd (Gispac) to provide product packaging on an “as needed” basis under a sales agreement. Michael Hill would place, when required, orders with Gispac for product to be delivered through an online portal provided by Gispac.

Contained within the portal, and as part of the relevant sale agreements, the following was included (which was ticked by representatives of Michael Hill):

A condition of Gispac’s terms and conditions was that Michael Hill entered into an ongoing agreement for the purchase of product, relevantly:

a. Michael Hill would purchase an “annual quantity” of product from Gispac;

b. If Michael Hill failed to purchase an amount of product equal to 25% of its “annual quantity”, Gispac would be entitled to issue an invoice to Michael Hill for the difference; and

c. the agreement would continue to 24 months, and automatically renew for a further 24 months, unless 6 months’ termination notice was provided.

The parties fell into dispute about the terms of the sale agreements and whether Michael Hill was liable for failing to make purchases in the amount of at least 25% of the “annual quantity”.

WHAT DID THE COURT SAY?

The Court found that despite Michael Hill’s employee confirming they did not read the terms and conditions, and simply clicked the box, that the business was liable for the damages claimed by Gispac for failing to purchase a minimum of the 25% annual quantity.

The Court rejected Michael Hill’s defences, and remarked as follows:

[227] In the context of a commercial negotiation at arm’s length for the supply of goods to the customer expressly on the supplier’s standard terms and conditions, I am not persuaded that Gispac’s failure to inform Michael Hill about the inclusion of specific provisions… constitutes a substantial departure from that which is generally acceptable commercial behaviour…

Michael Hill were ordered to pay $2,259,971.40, plus interest from June 2019 along with Gispac’s costs of the proceedings.

WHAT DOES THIS MEAN FOR YOU?

Terms and conditions can be hidden behind a link when entering into agreements, whilst there are arguable defences it is important to understand the nature of the contract you are entering into. In today’s society, click wrap agreements such as the example above are becoming more and more common and are part of our everyday life.

If you or your business have would like advice in respect to a dispute, or advice on any contract which may or may not contain hidden terms, please contact the Dispute Resolution Team at Marsdens for assistance.

The content of this publication is for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.