You have to feel pretty sorry for the New South Wales couple who thought that they had a winning scratchie ticket. The rules of the ticket were that if the word and the picture matched, the person got the stipulated sum of money:
Bale Kuzmanovski felt an ”explosion of elation” when the instant scratchie his wife bought for his birthday revealed a picture of a swimmer next to the word ”bathe” – which they thought was a match worth $100,000.
But NSW Lotteries disagreed. The machine at his local newsagent came up with a negative result. The word ”bathe”, NSW Lotteries argued, did not match the image of a swimmer, but a bathtub.
Adamant this was not in keeping with the rules written on the ticket, Mr Kuzmanovski and his wife, Elizabeth, took NSW Lotteries to the Federal Court and won – receiving the $100,000 prize plus interest, and a $20,000 damages payout for ”deceptive and misleading conduct”.
The couple put most of the winnings into their mortgage, but NSW Lotteries was not done.
The agency took the rail worker and his wife to the Federal Court of Appeal, arguing the previous judge had misinterpreted the nature of the contract the Kuzmanovskis entered into when they bought the ticket.
It said this contract did not just include the rules of the game printed on the ticket but large sections of the Public Lotteries Act and its subsidiary legislation.
Had the Kuzmanovskis delved into the statute books, they would have found the ”final arbiter” in determining a winning ticket is not the scratchable windows on the ticket, but the small verification code in the bottom corner.
Sometimes, it’s amazingly difficult to work out what the terms of a contract are. In this case, the Kuzmanovskis were arguing that the terms of the ticket were simply that if the picture and the word matched, the person was entitled to the sum next to them. The terms written on the ticket were as follows:
“PLAY INSTRUCTIONS
- Scratch Category A, Game 1 to Game 3 to reveal a word, a picture and a PRIZE in each Game.
- If the word shown in any one Game matches the picture shown in the same Game, you win the prize shown for that Game.
- Repeat this process for Categories B, C, D and E. …”
…
THIS TICKET IS GOVERNED BY THE PUBLIC LOTTERIES ACT 1996, THE REGULATIONS AND THE RULES.1. Prizes (maximum $1,000 are payable at any NSW Lotteries Agent. 2. Other prizes are claimable at any NSW Lotteries Agent or NSW Lotteries, 2 Figree Drive, Homebush Bay, NSW 2127 by completing the details below (in pen in one name only). 3. Further details as to the conduct of Instant Lotteries and Promotional Instant Lotteries may be obtained by reading the Instant Lotteries Rules available at any NSW Lotteries Agent or www.nswlotteries.com.au. 4. The serial number on the front of this ticket is not part of the game. 5. You could win up to five (5) times on this ticket. Not all tickets are winning tickets. 6. The maximum prize of $100,000 may be available once on this ticket.”
Thus the Kuzmanovskis argued that they satisfied the criteria for receiving a prize in the play instructions. ‘Bathe’ is clearly a word which can be argued to match the picture of a person swimming. They also argued that these were the terms of the contract of which they had been given notice, and that they had not been given notice of any requirement for electronic verification of the winning ticket.
NSW Lotteries argued that there were additional terms not written on the ticket, but referred to, namely the terms of the Public Lotteries Act 1996 (NSW) and the Regulations associated with it. Specifically, NSW Lotteries sought to argue that s 50 of the Act meant that it did not have to pay a prize in respect of the ticket because the relevant process for determining the award of a prize involved a verification code. Section 50 states as follows:
(1) A licensee may record on a ticket in an instant lottery a verification code by which the licensee can determine after the sale of the ticket whether it is a valid ticket and also whether it has won a prize.
(2) A licensee may implement other tests in respect of instant lotteries for determining whether a ticket is a valid ticket and also whether it has won a prize.
(3) Those verification codes or other tests have the following purposes:
(a) to prevent forgery or fraudulent alteration of tickets,
(b) to provide a conclusive means of determining prizewinning tickets in accordance with the total amount allocated for prizes in that lottery.
(4) A prize is not payable in respect of a ticket in an instant lottery if the ticket does not satisfy any such verification code or other test.
(5) This section has effect even though the ticket may indicate that a prize has been won.
(6) The regulations may make additional provisions for or with respect to the payment of prizes in instant lotteries.
The trial judge held that NSW Lotteries did not give adequate notice of the terms contained in the legislation (and that essentially that they were not incorporated into the contract) and that the play instructions gave the only specified means of a holder determining whether the ticket had won. He further held that the purpose of the verification code or test was said to be directed to the security or integrity of the instant lottery and did not operate as a ‘publicly unknown, additional criterion that changed the nature of a contractually valid prizewinning ticket into a worthless piece of paper.’
However, the Full Federal Court has overruled this in New South Wales Lotteries Corporation v Kuzmanovski [2011] FCAFC 106, saying that the provisions of the Lotteries Act were unambiguously incorporated into the contract. Further, the trial judge overlooked s 49 of the Act, which provided that the Division of the Act dealing with instant lotteries had ‘effect despite any other Act or law or any agreement‘. Importantly, in addition to s 50 of the Act, there had also been Rules made pursuant to the Lotteries Act which were published in a Government Gazette. Rule 16 provides: ‘A Prize in an Instant Lottery is payable only on presentation of a Ticket in that Instant Lottery indicating that the Prize has been won and after the Licensee has determined that the Ticket is valid and has won the Prize.’ Consequently, NSW Lotteries was not obliged to pay a prize despite the terms on the back of the ticket, because the terms of the Act and the Rules were incorporated into the contract and were paramount to the terms on the back of the ticket, and pursuant to s 50 and Rule 16, it had lawfully determined that the ticket was not valid and had not won the prize.
Interestingly, the Full Federal Court upheld the trial judge’s award of damages for misleading and deceptive practice pursuant to ss 52 and 53 of the Trade Practices Act (Cth) (as it then was – it has now been replaced by the Australian Consumer Law which is in substantially similar terms). The trial judge had found that NSW Lotteries engaged in misleading and deceptive practice by representing that the governing of the ticket by the Public Lotteries Act and Rules was consistent with effect being given to the play instructions. He also found that it falsely represented that the scratchie ticket had a particular standard, quality and value, whereas the standard of the goods was not determined by the terms of the Game, the quality of the goods was not of a game of chance and the value of $100,000 had no reference to the Game but rather whether it was a winning ticket.
NSW Lotteries argued on appeal that the rules of the Game (specifically ‘If the word shown in any one Game matches the picture shown in the same Game, you win the prize shown for that Game’) should be interpreted in the context of the broader contractual provisions, including the Lotteries Act and Rules. It contended that the Kuzmanovskis purchased a ticket that stated in plain terms that the Game was governed by the Lotteries Act and the Rules, but simply did not know what the Lotteries Act and the Rules said, and they chose not to find out.
The Full Federal Court said at [104] that ‘[w]hether a representation is misleading or deceptive is to be determined by reference to the meaning the representation conveyed to the ordinary and reasonable member of the class of consumers to which the representation was addressed.’ They then concluded at in [111], that ‘the bland reference on the ticket to the Lotteries Act and the Rules was not sufficient to apprise the consumer of the qualification to the representation in the second play instruction, and, therefore, to the true circumstances in which the prize would be paid. In addition, the broader context of the contractual provisions did not render the representation accurate. At [114], the Court concluded ‘[by] making no reference to the fact that the effect of the Lotteries Act and the Rules was to falsify the second play instruction, Lotteries created the impression in the mind of an ordinary and reasonable consumer of reading the ticket that there was nothing in the Lotteries Act or the Rules which would nullify the truth and integrity of the second play instruction.’
Thus, we have the interesting situation where the Act and the Rules were incorporated into the contract, and thus there was no breach of contract, but the fact that an ordinary consumer would not realise that these provisions qualified the terms on the ticket to the extent that they did rendered the terms on the ticket misleading.
The Kuzmanovskis were awarded $20,000 on the basis of disappointment and distress. Apparently Mr Kuzmanovski had planned to visit Macedonia to visit his ailing grandmother, among other things. The Court found it was open to the trial judge to award damages on that basis. It said at [122] – [123]:
The primary judge found that Lotteries’ conduct had caused an initial soaring of the Kuzmanovskis’ hopes and dreams and then, when those hopes and dreams were dashed, prolonged feelings of disappointment, anger and frustration arising from a sense of feeling cheated. The primary judge went on to find that that initial feeling of elation by the Kuzmanovskis was the very kind of human emotion played on by the sales pitch of Lotteries.
In our view, Lotteries has not demonstrated that the primary judge erred in principle in the manner in which he approached the question of damages. The assessment of damages for disappointment and injury to feelings is not a precise science. In our view, the primary judge did not err in taking into account the fact that the ‘sales pitch’ of Lotteries was directed to inducing consumers to believe that with a stroke of luck, they could experience the very elation which the Kuzmanovskis felt when, by reason of the Lotteries’ contravening conduct, they believed that their ticket was a winning ticket. Nor, in our view, did the primary judge err in concluding that the deep and lingering sense of disappointment, anger and frustration felt by Mr Kuzmanovski and, to a lesser extent Mrs Kuzmanovski, was a natural human emotional response to Lotteries’ contravening conduct. It was, in our view, open to the primary judge to award damages in the sum which he did.
So at least the Kuzmanovskis get something for their natural feeling of disappointment.
Update:
I had a lightbulb moment this morning when I woke up. I think the Full Federal Court did not apply the law of the ticket cases correctly. Basically, there are two general ways in which people will be bound by the terms of a ticket. The first way is by purchasing the ticket and being bound by the terms upon it (as Nick points out below, it doesn’t matter whether the person reads the terms or not: see L’Estrange v Graucob [1934] 2 KB 394 and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165).
However, the other way in which purveyors of tickets attempt to bind consumers with terms not on the face of the ticket is by giving notice that these additional terms apply. This is essentially what NSW Lotteries did in this case when they stipulated that ‘THIS TICKET IS GOVERNED BY THE PUBLIC LOTTERIES ACT 1996, THE REGULATIONS AND THE RULES.’
Cases such as Oceanic Sun Line Special Shipping Company Inc v Fay (1998) 165 CLR 197 and Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 establish the principles which determine when a person will be bound by additional terms sought to be incorporated into a ticket by notice. Whether or not the other party will be bound by such terms depends upon whether:
- Notice of terms was given before the contract was formed; and
- Reasonable steps were taken to bring the terms to the notice of the party to be bound.
The issue here is, I think, similar to both Oceanic Sun Line and Thornton v Shoe Lane Parking where there was no opportunity for the consumers to obtain notice of the terms before the contract was concluded. Once they had purchased the ticket, it was too late already to decide that they did not want to accept those terms and conditions. This is a difficulty with standard form tickets with which courts have been grappling since the 19th century with the explosion of railway transport and the like.
Thornton v Shoe Lane Parking is such a well written case (especially Lord Denning MR’s judgment, which is superb). What occurred in that case was the following: Mr Thornton, the plaintiff, parked his car at a multi-storey carpark owned by Shoe Lane Parking. There was a notice on the outside which set out the terms of entry and set out the parking charges. At the bottom it said, ‘All Cars Parked at Owner’s Risk’. The ticket also stated ‘this ticket is subject to the conditions of issue as displayed on the premises’. There was a traffic light at the entrance which showed red. As Mr Thornton drove in and approached the ticket machine, the traffic light turned green and a ticket was pushed out of the machine. However, the additional terms displayed on a notice inside the carpark stated that Shoe Lane Parking was not liable for injury to property or persons on the premises. Mr Thornton took the ticket and drove his car into the garage, where he left it. Later, when he returned to collect his car, there was an accident and Mr Thornton was severely injured. The company sought to rely on the incorporation of the terms in the notice to say that it was not liable for his personal injuries.
Lord Denning MR notes the falsity of a traditional contract analysis in the context of purchase of a ticket:
In those cases, the issue of the ticket was regarded as an offer by the company. If the customer took it and retained it without objection, his act was regarded as an acceptance of the offer. These cases were based on the theory that the customer, on being handed the ticket, could refuse it and decline to enter into a contract on those terms. He could ask for his money back. That theory was, of course, a fiction. No customer in a thousand ever read the conditions. If he had stopped to do so, he would have missed the train or the boat.
My favourite passage is not directly applicable to the scratchie ticket case, as it involves automatic ticket macines. However, I’m going to reproduce it because I love it so much:
None of these [old fashioned ticket] cases has any application to a ticket which is issued by an automatic machine. The customer pays his money and gets a ticket. He cannot refuse it. He cannot get his money back. He may protest to the machine, even swear at it. But it will remain unmoved. He is committed beyond recall. He was committed at the very moment when he put his money into the machine. The contract was concluded at that time. …
To me, this evokes the hilarious notion of an eccentric English judge having a “Basil Fawlty moment” with an automatic ticket machine.
The important passage for present purposes is:
…The terms of the offer are contained in the notice placed on or near the machine stating what is offered for the money. The customer is bound by those terms as long as they are sufficiently brought to his notice beforehand, but not otherwise. He is not bound by the terms printed on the ticket if they differ from the notice, because the ticket comes too late.
I also note that there is Federal Court authority applying similar principles in eBay International AG v Creative Festival Entertainment Pty Ltd [2006] FCA 1768. Perhaps unsurprisingly, the judge in that case was Rares J, the trial judge in this case.
So I think the Full Federal Court overlooked the matter of timing, and that in the event, Rares J was right to say that reasonable steps were not taken to alert consumers of the terms of the ticket.
Update 2:
On a further and closer reading, the reason why the Full Federal Court did not apply the ticket cases was because apparently there is authority to suggest that gambling contracts are fundamentally different:
The Full Court notes that a contract made between a participant in a lottery and the lottery provider is a special kind of contract, regulated by an act of parliament and the rules thereunder. They cite Brown & Anor v Petranker (1991) 22 NSWLR 717, in which Clarke JA said:
The Court is not dealing with a contract freely negotiated between two parties. On the contrary, while it can be accepted for present purposes that upon the facts alleged by the respondent the appellants came under a duty which may be described as contractual to send the validated coupon to the Lotto offices, the relationship between the parties was governed by an Act of Parliament and rules passed thereunder which imposed the terms and conditions under which the duty arose. The question which arises is not the same as the one which arises in the construction of a written private agreement. In that instance the Court is concerned to ascertain the presumed intention of the parties from the written words. In the present case the Court is concerned with the proper interpretation of a rule passed pursuant to a rule making power contained in an Act of Parliament. Accordingly, the line of cases dealing with the effectiveness of exclusion clauses in contracts to exclude liability for negligence exemplified in Canada Steamship and discussed in Bright v Sampson and Duncan Enterprises Pty Ltd (1985) 1 NSWLR 346, especially at 359, 362-368, has no application.
Nonetheless, even if it is a special contract, I’m still not convinced that the particular terms in question should be incorporated.
107 Comments
I seriously wonder whether there’s some kind of statuatory response required to address the problems of these ‘I Agree’ contracts the terms of which almost no-one reads. I bought a new Mac and the iTunes had terms and conditions which were outrageous.
Good comment Adrien, to which I can only respond “I Agree”. Without any qualification, modification, subtext, or ulterior motive.
Oh Adrien, I wish you were in my contracts class! We read a most interesting article on standard form contracts the other day. I should do a separate post on the topic, as it is a real problem for contract scholars who see the basis of contract as being consent, but it cannot really be argued that there is true consent when all the parties to such agreements know that no one reads them and even if they do, they don’t understand them.
I would note that the new Australian Consumer law has provisions which specifically deal with unfair standard contracts – courts can declare unfair terms to be void (or even the whole contract).
“Informed” consent LE? But how to ensure/enforce the informing? I’d very much like to read your thoughts on this.
If I had the spare time I’d be in that same contracts class. There is a whole can of inconsistent worms opened up with comment #3.
Supplementary Question: LE, was it you (or am I on the wrong blogsite?) who wrote a piece a few months ago about first year law students & how “once they learn to think like a lawyer” they reverse their views on liability/guilt, in the example say of driver liability for a car passenger doing something stupid & hurting themself? (I have gone near round the bend looking for that post, wherever it was)
Or worse than the terms & conditions, there’s the possibility online of encountering the End User License Agreement!
LE@ 3: we’re getting back into the ‘cat trod on the keyboard and pressed agree’ territory, aren’t we?
Never mind EULAs. Why can’t you reduce a law to one piece of paper (like, was it, Ike liked?) for the 98% of contract conditions, then restrict all actions from that version, to those clauses? For the nerdy nerds, let them read all the EULAs if they wish, and be bound by that.
And Bill Clinton’s meaning of “is” is strictly banned.
Glib answer: rare corner cases are surprisingly common.
As are glib ripostes. ‘Surprisingly common’ applies to disputes, not to real life.
Sure. But we don’t worry about the law on the 98% because those issues never reach court. When I go to the shop, walk to the shelf, pick and item, take it to counter, pay for it and walk out, I’ve gone through the stages of a contract.
Offer to treat — offer — acceptance — consideration — execution.
Law is simple in the happy case I just described. It could in fact be boiled down to a paragraph or two. But the happy case is not why courts exist.
Which was my (badly put) point.
Steve, I’m darned if I can find that post. I know exactly the one you’re talking about. I’ll keep searching.
LE I remember what Steve remembers too. Maybe was it the post about sentencing by plebiscite? Don’t hold me to it, but I remember thinking at the time what a strange comment you had made, but then read the post.
So it would be in the public interest not to invest in that particular Scratchie category in view of the lilelyhood of one being mislead by a hidden clause.
At the moment I could write a counterpoint, or reciprocal post on the same theme.
Am embroiled in heavy duty dispute with my (almost certainly former) law firm. There is nothing quite so entertaining as a lawyer bringing a legal argument to a commerical discussion.
True Adrien and it is yet another reason why strong form libertarianism is dog shit served up on a plastic platter.
It would be truly depressing if one was truly at the mercy of the terms and conditions of all the “contracts” that one enters into during the course of modern life.
Mel, have you read the libertarian contract theorist, Randy Barnett, who has attempted to come up with a consent contract theory which makes sense from his perspective but ensures that people are not bound by crazy clauses.
He argues that we should look at enforcement of form contracts not as a promise, but about manifesting consent to be legally bound. When person clicks “I agree”, he says that a person knows what she is doing. There is no doubt that person is objectively manifesting one’s assent to the terms in the box, whether or not one has read them. However, this must be tempered by what he calls a “your-favourite-pet” qualification. So if there was a specification that upon breach one must transfer custody of one’s beloved cat or dog, it could be contended by the promisor, “while I did agree to be bound by terms I did not read, I did not agree to that.”
I still don’t find the rationalisations totally convincing (being more of a person who emphasises the promissory nature of contracts). But I understand that he’s saying that when we assent to standard form contracts, we’re choosing to taking a risk by assenting to be legally bound to something which most of us don’t read.
Actually, after reading a few articles on standard form contracts, I went through a stage of going through those online licence agreements carefully, but ultimately one just doesn’t have the energy to do it all the time.
Steve, I think I found it – was it this post about my experiences as a school girl at the magistrates’ court?? Or was it this more recent one, on the Art of Law?
Actually, through searching for the relevant post, I have discovered that I have written an amazingly large number of posts about thinking like a lawyer. The cognitive biases one develops fascinate me.
Lawyers remind me of career coppers – there is only one cognitive bias and that’s everyone is guilty of something!
Yeah, being a lawyer makes some of us horribly cynical. (I am such a person).
In one of my previous jobs, I used to draft EULAs.
/runs away.
I should bloody well hope so! Far.
I should point out (in response to the discussion on FB) that the heading of this post is actually misleading and deceptive (oh the irony). The point upon which the Full Federal Court overturned the trial judge’s decision was based not upon the fact that Bathe doesn’t mean Swim, but that the terms of the legislation were incorporated into the contract and overrode terms on the rear of the ticket.
There seems to be a certain “wisdom of crowds” element in such contracts. “No, I haven’t read it, but I presume if it was seriously wonky the courts/commercial evolution would have dealt with it”.
s49 of the Act is also exercising my mind, too. It’s straying dangerously close to ‘ouster clause’ territory. I mean, if you exclude any other agreement, then don’t you simultaneously exclude the court’s capacity to rule on that agreement?
[Edited to add: then again, I suppose parliament can legislate to oust the courts' jurisdiction, although you and I couldn't make an agreement to do so. Interesting logical conundrum, a bit like the 'manner and form' constraints that are supposed to operate in Westminster-style parliaments].
Indeed, SL!
Lotteries elsewhere have got into big trouble when combining “it’s the ticket number that counts” policies with poor use of pseudorandom number generators.
I was wondering about the same thing, Movius. The first thing I’d look for is patterns suggestive of epoch-seeded PRNGs, and then perhaps I’d look for some pisspoor homegrown encryption.
There are a few cases in the High Court which make it clear that the person who signs a contract without reading or understanding it consents and takes the risk. Toll v Alphapharm is the one which most readily comes to mind.
LE, you may be interested in a case which one of my colleagues in chambers encountered a little while ago (although only his junior ended up appearing).
Movius@27 and Jacques@28: check out this Texan woman, a maths professor who has won US$20 million on scratchie tickets. She has won four times. Essentially, the suspicion is that she have gamed the system by figuring out the algorithm that determines where a winner is placed in each run of tickets. Once she figured out the algorithm, she could potentially determine where the tickets would be shipped, as the shipping schedule is apparently fixed, and there were a few sources she could have found it out from.
For contract nerds, I have updated the end of the post with an explanation of why I think the Full Federal Court was wrong to incorporate the terms purportedly given by notice (regardless of the fact that they were statutory).
Who paid the costs of those two cases? From my limited experience they would have been far in excess of the $20,000 granted and probably more than the $100,000 they were contesting.
Sadly, Smithkid, I think the Kuzmanovskis would have been liable for the costs of the appeal, and yes, the costs added to their own legal bill would have been substantially more than $20,000.
That’s quite a call LE. I wondered if you felt that prior history (of purchasing tickets, or parking cars) would influence? You are saying that all bets are off, every time a ticket is purchased?
What you agree to when you purchase a ticket depends upon whether adequate notice has been given. It’s not fair to bind people to terms which they have no easy way of finding out what they’ve agreed to, and I think that’s what happened in those cases.
And no, all bets aren’t off – whoever drafts the clauses of the ticket just has to be CAREFUL to include the pivotal terms on the ticket, not to rely on notice to incorporate nasty stuff. That’s fairer to the consumer too – they can look at the ticket prior to purchase and decide whether they really want to purchase it.
This does leave aside the problem of whether most people read tickets or even realise they are contracts. I didn’t realise tickets were contracts when I started law; my husband didn’t know until yesterday, when I explained it. He’d just never thought about it like that before.
So the bottom line is: NSW Lotteries should have included a term on the back which said, “A prize is not payable in respect of a ticket in this instant lottery if the ticket does not satisfy a verification code test. This has effect even though the Play Instructions contained on the ticket may appear to indicate that a prize has been won.”
If they had done that, I’m willing to bet that the Kuzmanovskis would not have felt so cheated. They would have thought “Oh, fair enough, this is actually governed by verification processes, not just the Play Instructions, so we don’t get a prize unless the newsagency machine tells us that the verification code checks out.” That’s giving them fair notice of what the deal is when they purchase the ticket.
Understood and accepted LE; you don’t think that past history enters into it at all. The other comment I’d make (again with the ignorance of a layman) is that I didn’t like Lord Dennings “The contract was concluded at that time”. To me, a contract is concluded by satisfactory performance of all undertakings of both/all parties – which can be well after the agreement is entered into, and certainly in the case of a parking ticket. But it’s probably just words – different for you legal bods than us serfs.
KVD, don’t put yourself down like that! As it happens, you’re certainly not alone – Megaw LJ did not like that aspect of Lord Denning’s judgment, and decided not to adopt it. Instead, he held that the incorporation of the term was not reasonably brought to the attention of Mr Thornton. He also has a great quote…*pause to squirrel away and find it*…:
And by “concluded”, I think Denning means that at that point, all the relevant terms which could be included had been, not that the contract was over. The contract is only over when mutual performance occurs, or when there is some kind of terminating event… So you are correct.
So, much as I hate to criticise the great Lord Denning’s expression, rather than “concluded at that time” he should have said “fully formed at that time, and the terms were settled”.
Ha! I’m picturing myself in the second car waiting to get into the High Court carpark, behind a car containing LE, Denning and Megaw.
With blood streaming from my ears
ROFL.
I should also mention that past history may affect a contract. You might be able to imply a term in by conduct. For example, if you can show a settled practice that every time a scratchie ticket is presented to a newsagency, the newsagency must scan it, perhaps you could argue that the procedure is implied into the contract.
But the difficulty is that it may have been the first time the Kuzmanovskis bought a ticket, and they may not have been aware of the practice. Basically, you’re more likely to imply a term in by conduct where all the parties make repeated contracts and are “repeat players” in bargaining. But with consumer contracts, some people who enter into them may be “one-shot players” who have rarely or never entered into such a contract and are not aware of the practices surrounding them.
Wow, Nick@29, that’s an amazing case. Imagine buying a lottery ticket which turns out to be a winning ticket, and dying the day after the draw? How unlucky is that…he didn’t even get to enjoy it…the kids fought over the spoils instead.
KVD, they’re using the word “concluded” in the sense of a legal conclusion. A contract is a legal construct arising from a set of facts, so it’s concluded when those facts arise. It’s a fine example of legalese departing from ordinary language. Another good one is “constructive trust”.
The Kuzmanovskis may have been all right on costs. They may have had an offer in. NSW Lotteries must be crapping themselves over the thought that they are liable in damages for disappointing punters. Compliance costs in the gambling industry will shoot up (no bad thing).
The people who ran the litigation against McDonalds for those out of date prize tickets will be kicking themselves they didn’t think to run that point.
when I see the word “constructive” I reach for my gun… (figuratively speaking, of course)
KVD@41 So funny!!!!
LE It seems unreasonable to insist that a punter should step out of their car and check the conditions on the sign at point of ticket issue, but is it not reasonable that if the conditions are adequately displayed at each level, the punter could return to their car if the conditions are onerous and leave? This would be the same as entering and driving to the top and leaving again. I’m not aware if that incurs a fee or not. I would imagine not as you could hardly be charged if you couldnt find a suitable park.
Frank
Actually I may be wrong in my argument that the ticket cases should apply. The Full Court notes that a contract made between a participant in a lottery and the lottery provider is a special kind of contract, regulated by an act of parliament and the rules thereunder. They cite Brown & Anor v Petranker (1991) 22 NSWLR 717, in which Clarke JA said:
If so, however, I am not convinced that this is the correct interpretation to take of the contract in this context.
Update 2 now included in post. Yes, I do use blog posts of this kind as a way of thinking out aloud about a case.
Henry/Frank – the thing is that you would have to pay a fee if you’d entered the carpark. So you’re kind of stuck with at least paying something for the privilege of entering the carpark.
My take on these questions is that:
(a) the key issue is whether the parties have reached a consensus;
(b) usually this will be demonstrated simply by offer and acceptance, but not always;
(c) it follows that offer and acceptance are not constituents of the formation of a contract but rather a demonstration of what is a constituent: consensus ad idem.
I think the cases support this view.
When one accepts a ticket from a machine in a carpark, it is difficult to see why that should demonstrate a consensus. Put more traditionally, there is no acceptance which corresponds in precise terms with an offer.
The Toll v Alphapharm point is really irrelevant. Where someone signs a document without reading it, he gives up the opportunity to consider the terms before accepting. Where someone pays for a ticket which has terms printed on the back, he has not given up an opportunity previously provided to consider the terms of an offer.
I think the answer probably is that the consensus is reached when the buyer fails, within a reasonable time, to attend on someone to object to the terms and demand a refund.
Of course there are practical difficulties which arise. Plenty of carparks provide no opportunity to object. There is no-one on site. You get a card when you enter, and pay a machine when you leave.
Nick@44 thank you. I do not understand the above, but as I have resolved never to use a carpark again, I hoping the damage should be minimal.
KVD: nothing like learning about the law to make you totally neurotic…
Nick, sadly, from the linked article from the Age, I’m guessing the Kuzmanovskis will have to pay costs…
And now I’ve read your 50, I am selling my car. I shall walk everywhere, and carry my own chair
Someone at NSW Lotteries needs their bum kicked for putting a picture of a swimmer & the word “bathe” on the same ticket.
That said, I know very well the validation code is the determiner of a winning ticket.
I have a cognitive bias of my own, & see gambling wins very much through eyes that see the relevant act as the determiner.
Thankyou LE. Those posts you linked at #18 were the ones I was looking for. (Turned out what I remembered was accross both posts)
Thank you for the comment at my place. You put your finger on the answer. Naturally there is more to the story, excised for reasons of brevity & net-readability. The “junior lawyer” was in her 30′s, it was her supervisor who (in my eyes) was in the frame for unethical conduct.
Steve ol mate.
If you are going to continue to take her for lunch she will continue to charge you for it!! Just think about who’s getting the free lunch here!
Steve, yeah supervisors shouldn’t be following their juniors (if that’s what he was doing…). I would have given my supervisor a death glare. But then maybe that’s why I’m no longer in practice…
Whoa! SP = Senior Partner. He wasn’t her supervisor, he’s not even in the same division of the firm. It was pure coincidence he lunched at the same restaurant.
Her supervisor was somebody else. The unethical conduct relates not to where they ate lunch, but to the billing practice. Had the supervisor been a partner (i.e. someone with a commercial brain) the dispute would never have arisen.
The problem arose because the supervisor was only able to think like a lawyer. A partner, aware of commercial considerations (i.e. don’t get clients offside) would never have created the situation. Never mind engaged in unethical conduct.
I’m a $100,000 a year client (some years more) of several years standing.
OH! Sorry. My bad, Steve!
Steve @ 59 – I have to say that I originally read it as you explained it there, but then I got confused…
Hehe LE, I must have been besotted with that particular lawyer, or had hydrophobia, or something. I’ve written more than 45 blog posts about her.
Henry: You reckon I was being billed for time spent at lunch? Gosh. If I ever thought that was happening I’d have ditched the firm in half a second flat. I’m happy to show appreciation, but doing that would turn me from appreciative into vengeful.
All I’ve got to wield is my business, which seems to be enough to have partners of law firms phoning me to court me. This could give me a swelled head if I let it. Instead I use it as a tool to suppress their exuberance.
I would never have billed a client for lunch!
The thing that is annoying about law firms is when they bill you for a five minute phone call (I hated doing it).
LE@30: That’s one of the cases I was thinking of. There’s also a case from Canada where someone mailed the relevant agency 2 piles of unscratched scratch-lotto tickets marked “winners” and “losers” after they ignored his original claims.
I know lots of cases of clients being billed for lunch, and dinner, in amongst a few hundred thousand dollars all up who can tell?
As long as they think the amount is right they don’t care either.
Patrick’s right. Particularly when you are searching for answers or alternatives in complex issues. I’ve learnt more over lunch than in any conference, and happily paid both for the lunch, and the advice. Like most professionals, lawyers don’t check their brains at the door with their coats – and I admire that.
I guess you’ve just got to know what’s right for your client. It wouldn’t have been appropriate for us to do that to our main client, who was already anxious about billing.
If they are anxious about billing, and they aren’t going bankrupt, LE, something’s wrong and you should find out what – maybe they are over-budget, in which case you should check when they have budget discussions and talk to them then, maybe this is not their cost pool, in which case find out whose it is, etc.
I hope to god you are a lawyer Patrick, please tell me you are.
Coz (paraphrased) “If the client is concerned about cost, then something is wrong” is going into my “Yes, they really said THAT file”
If you’re not, then I’ve lost a potentional screamer of a line.
An expectation that “money is no object” being the default scenario for everybody is one helluva good example of cognitive bias.
I’ve got some corkers of one-liners from lawyers (out of the mouths of babes, etc)
But it is not just lawyers, I occassionally get some great lines from corporate types, who really, really should stop & think sometimes before they open their mouth.
Steve@69 I thought Patrick was making a perfectly reasonable observation about the practical management of client expectations. It is quite a leap from that to “money is no object”, I think.
I’ll grant that kvd, but it still makes a great line. It should perhaps be phrased better.
i.e. by making it clear that if the client is anxious they may not be receiving “value for money”, rather than, concerned at billing.
After all, lawyering is an industry that exists because words have meanings.
Clients being billed for lunch. A potential sore point for me right now.
If it is a working lunch, then it should be billed.
If it is a lunch of business colleagues, where (informal) advice is sought, & opinions given, it should be billed.
If it is a “if you’ve time today pop out & I’ll buy you lunch” then it most definitely should not be billed.
If it is a “if you’ve time today pop out & I’ll buy you lunch somewhere”, and the lawyer steers the conversation to historical gossip on past work done for the client, so that it can then be termed a “business” lunch, & thus be billed for, the the lawyer should be fired.
The lawyer should lose their ticket to practise. And the client must seriously consider an immediate move to another firm, as the mere existence of a culture that allowed a junior to think that way is symptomatic that the firm is more focused on billing than on achieving a good outcome for the client.
Patrick @ 68 – in this case it was immense pressure from a new management team on the rank and file of the particular organisation to keep legal costs down, without any recognition of the complexities that sometimes emerge out of the most straightforward of files. I can totally understand wanting to keep legal costs down, and of course it is reasonable to want value for money (Steve’s point) – but if you want your disputes to be properly resolved, then at times someone has to put time and effort into it, particularly when a file “blows up”.
Also sometimes there’s a tendency to blame the lawyer when a case went to court and the judge didn’t take a favourable view of the client’s evidence and you end up losing (which is something we can’t control, except by expectation management before the trial –> ie. “We have a good chance of success, but please be aware that this is only in the event that the judge accepts our evidence which has some problems.” But if the client won’t actually listen, and wants to be very aggressive, what can you do?)
Steve@72, while we’re in the land of sweeping generalisations, I’d like to add some:
- most lawyers have a wife/husband, and 2.5 kids, or are single, underpaid, and recognise the way up is through efficient use of what they’ve been taught.
- most lawyers understand that gypping one client for $1000 over disputed costs leads inevitably to that client dissing the only real asset they have – their reputation. They multiply that by 10, every year forever, and are quick to work out it ain’t worth it.
- most clients (above the level of wills and deeds, below the level of large corporates) lack the insight to decide what ‘value’ means, and rely instead on what their industry, family, or own proclivities are, in deciding what ‘value’ means to them.
Now, in the black and white scenarios you paint I’d tend to agree with you. But the law is, was, will always be, about the grey bits of life. Otherwise we would all be our own lawyers with, as the saying goes, a fool for a client.
And lastly, it is possible for a firm to concentrate on both their billing targets, and client satisfaction. In fact the two are irrevocably intertwined in my experience – i.e. you can’t get the one without the other.
One of the weird things for me is how sometimes people expect legal advice for free. I had some former friends who became embroiled in a dispute and sought advice from me. I spent a number of hours suggesting what they should do. Afterwards, they didn’t bother to drop me an e-mail thanking me, or send me a card, or perhaps even buy me a bottle of wine. It was just taken for granted.
No, I didn’t want to be paid, but some kind of acknowledgement of the time, effort and brain power I’d spent on their problem would have been nice. The thing is with legal advice, you don’t get something concrete which you can put your hand on – it’s not easy to put a value on, unlike a house or a car or a tonne of beans. That’s why firms turn to time billing – because of the problems of putting a value on advice.
Good legal advice is literally worth its weight in gold, IMO. But often it’s hard to spot, as a problem avoided or resolved or a neat solution doesn’t look like a big deal – you only know how good legal advice looks when you have bad legal advice to compare it with.
LE there’s a very good page of advice which you should read sometime. Pay particular attention to #2
kvd is right.
LE, then you tell the client to find another lawyer and have lunch thinking about how to better serve the clients who are willing to pay you. Lawyering is a business like most others, at the end of the day, most lawyers just pretend it isn’t even though most of what they do is extremely easy to understand from an institutional self-interest perspective.
No doubt about it, Patrick is a lawyer. Best part is I’ve now got Two amoral lawyer quotes to add to my “yes, someone really said THAT” file.
Lawyering is of course a business, but not like any other. It is one that gets paid regardless of outcome, and is not a business model that is encouraged to be efficient. Everything, including inefficiencies, are billed to the client. This will change as the law industry moves to set fees & away from the billage hour.
KVD is right, says Patrick, in a cute twist, everything kvd said is diametrically opposed to Patrick’s beliefs.
kvd intimates that lawyers are humans, regular blokes, Patrick however intimates outrage at the suggestion that a lawyer should not bill someone, anyone, for the time taken to gobble lunch. If no client offers to take you to lunch:
(item #54 on your bill sir: 1 hour sitting in office thinking how to better serve you, whilst partaking of sandwiches)
Oh-My-God!
LE: It could be worse, you only lose time:
Even when you deal in something concrete you can put your hands on (say liquor) friends will drink themselves into incoherence on my hospitality, (at a BBQ say) and likewise to your experience, afterward not even a thank you, merely the blithe expectation that I will do the same next time, without any reciprocal obligation from them.
Regards legal advice: I know good work when I see it. I’ve made my favourite lawyer almost blush with compliments. I’m not afraid to say how good I think some of her work is.
However, it can be high pressure for my lawyer, (as it should be with every client, but apparently isn’t) as I take close interest in work in progress, as one should.
The core of the grandaddy of all dust-ups with my law firm is/was caused by just that, me taking close interest in the work, (i.e. I detected just how heavily I was being scammed).
Bill padding is unethical, unconscionable, etc. & not only should a lawyer lose their licence over it (for life) but I have at one time in my life seriously considered ..er.. extreme prejudice against a lawyer over it.
Steve, mate. You need a male lawyer, soonest. Concentrate on the subject, not the object.
???????????????
kvd. I’m not with you.
I think there’s a suggestion floating around that you might fancy her, Steve… Just a thought, could be completely wrong , of course.
Be rather an uphill battle for me if I did fancy her SL. In the time that has passed since I got her fired, she hasn’t contacted me once. Understandable. I’ll go to my grave believing it was her supervisor who should have got the chop.
Interesting that people think that way though.
kvd@51:
Probably shouldn’t read the back of the ticket next time you fly, either…
Don’t worry, Steve, I don’t believe in bill padding, or for that matter billing by the hour at all.
I do some things practically free and others actually free, yet other times I charge three times our ‘hourly rates’. I ‘discount’ often I bill at a margin othertimes.
I don’t deal in hours of work except incidentally, I try and do things as quickly as I can in fact! I try to deal in value and satisfied customers, like any other business would.
PS: my last comment was probably just as cynical and anti-lawyer as anything you’ve said! Lawers are not the only ones who use hourly rates to calculate costs, they are just the only ones who think they have a right to.
Patrick, you’ve had me busy for 2 days trying to work out if “bill padding” & “exuberant billing” have the same meaning or not.
Steve I’m not sure what exuberant billing means.
I just want to bill my clients for the value, not merely the hours we spend. Sometimes that means we get less than we would for hourly billing other times it means that we get more than we would. In almost all cases it means that the client is happier.
Surely not such a bad thing?
One of the great fallacies about time-billing seems to be that only lawyers do it. The fact is that every wage-earner does it. Plenty of other professionals do it.
Unlike other professionals, lawyers do not have access to the only truly fair method of charging in commercial relationships – a commission. There are perfectly good policy reasons for this, but the fact is that lawyers can’t actually tie their charging directly to the value they add.
The problem with time-billing is, of course, the risk that time spent will not always correspond with productivity or value added. Other approaches have the same problem. Lawyers who bill by product or outcome rather than by time sometimes make a motzah and sometimes take a haircut (as Patrick observes @88). That is not an improvement on the (un)fairness of billing. It just means that clients are cross-subsidising.
The fact that clients are happier represents a marketing triumph rather than an ethical one.
There are a few different issues in what Nick@89 just said. Firstly, if somebody ever invents a ‘better way’ than time based billing, I would expect that time recording per se will continue to be essential to the efficient management of all but the smaller law firms; how else can the firm budget its operations, provide adequate staffing levels for anticipated work, recompense the ‘brighter’ fee earners, etc., other than by an analysis of output by employee, by type of instruction, blah blah blah?
Secondly, although ‘value add’ seems attractive, it is not applicable to all areas of legal practice; subject to some mythical overlord’s view of just what is ‘value’ in any one instruction, and hence somewhat less defendable than “look how much time we spent on your PI claim”
Thirdly commissions ‘at the margin’ actually work against the client imo. While it might be great to get 5% of $1M for a successful action, there exists always the temptation to ‘wrap it up, move on’ if you can more quickly achieve a value of, say, $900k. The lawyer loses $5000 while the client drops $100k. Ask any real estate agent how earnestly they pursue the last $10k of a sale price. Not a lot.
I think the reason why time based billing is so hard to expunge is fairly simple: there hasn’t yet been a more reasonable broad-based approach invented – and as noted above, the internal time based controls probably will always be with you for very sound management reasons.
This is not to indicate my disagreement with Nick’s comments; just to add a bit of background.
I agree with Nick and KVD, except as to the ‘defensibility’ of value. Sometimes the value is simply the level of comfort, which usually translates fairly directly into time spent – in which case you need to make sure that you are getting the right level of comfort. Sometimes the client just doesn’t want your services (or not at a price you are willing to provide them at) and you need to just tell them that – I am not suggesting that my practice does that but they should!!
While we’re all agreeing, I’ll say that I think everybody is right.
Patrick you say ‘defensibility’ with quotes, whereas I prefer defendable without. You possibly are comfortable with insoluble, where I would use unsolvable or irresolvable. I once said of a comment by DEM that “those are just words”; her reply was “words are all I have”.
So if you don’t wish to be belted with my well thumbed copy of the Humpty Dumpty Dictionary, I would ask you to at least remove those quotes
kvd, you would have loved the solicitor’s letter to an opponent that I saw yesterday. The author asserted that their respective clients had “inretractable differences”.
Thank you Nick! May I use that?
Patrick – wot ‘e said!
Well, I don’t think I can take it back.
You are intimating the inretractability of your comment? As SL might mutter: “this language is so… progressive”.
Some of you lawyers may find interesting the “valid reasons to fire your lawyer” tag on my site.
I don’t normally hawk for traffic, but any comments (now that the matters are all historical) will be considered.
I seem to have had bad luck with law firms, or is it just that I notice what is going on?
Nick & Patrick between them have put their finger on my most recent dilemma, a junior partner deciding to bill me to the max for what should have been a routine minor job.
When it blew up (as it had to) they didn’t have the wordly smarts to understand the consequences of their actions.
Hi Steve. Not a lawyer, but I’m game for the game, if you’ll allow. I can’t find a tag to “valid reasons to fire your lawyer” so if you can help with a direct post reference, I’d be obliged.
Try this one kvd, you should be able to follow the tag from there.
http://the-public-house.blogspot.com/2009/10/marching-orders-part-1.html
But Nick, it’s fairness concerns that bar lawyers from working on a commission basis – it risks compromising the independence of their advice which is why they’re moving financial advisors across to a fee model and phasing out product commissions in the UK. The difficulty of charging for the value you add as a lawyer is of course quantifying it – you’d risk turning the whole practice into a mutant derivative of IP law.
Spot of WD40 will fix that.
Thank you Steve – not least for a link back to an earlier LE post on this blog. You write well, but I’m not overly impressed by the content of your tagged posts. Just being honest here, plus remembering many years ago being advised that the solicitors working in and for the liquor industry were very much a closed shop – dealing as they necessarily were with some fairly powerful individuals, families and corporates used to having their way, while governed by some fairly archaic regulations.
I admire anyone who can succeed in that environment, be they lawyer or licence holder, but I think I will just leave it at that.
kvd, I don’t see the relevance. None of those solicitors were working in, or for the liquor industry, & none of the matters were specific to the liquor industry. Most were straightforward commerical transactional work. If any of that stuff were to happen in 2011 I’d try to have the solicitor involved sent to gaol.
Please comment on the posts you think suck (there are only 7 posts under that tag). My perceived problems with those solicitors may not be inretractable. I have had to since rehydrate one solicitor.
Hence my observation:
The point I was obliquely trying to make is that rules take some more commercially effective practices off the table.
Except of course, the better quality advice, or the better the quality of service, attract a higher hourly rate.
Am I right?
Getting the thread back on track…I have decided I am going to write a casenote on this decision. Incorporation of statutory terms into a contract simply by mentioning the Act applies is something that warrants further investigation, along with the assertion that gambling contracts are “different” and the fact that the contractual decision seems to contradict the decision on misleading and deceptive conduct. WATCH THIS SPACE. >:-}
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