Greenhouse v Paysafe Financial Services Ltd

High Court

Citations: [2018] EWHC 3296 (Comm).

The Parties and The Contract

Neteller was an online payment service provided e-wallets for online gambling and gaming. It contracted with affiliates who would receive commission whenever they recruited someone to use Neteller. The claimant was a renowned poker player who also ran a poker coaching business.

The claimant entered into an affiliate contract with Neteller. This contract was relatively unique in two respects. Firstly, it entitled him to commission when he encouraged inactive existing Neteller members to reuse their accounts. Secondly, it entitled him to give his referrals access to VIP accounts for different rates of commission. The contract also contained a variation clause, allowing Neteller to unilaterally vary the terms. To do this, they had to give the claimant 60 days’ notice of the changes.

The Dispute

The parties relationship later soured, and the claimant sued for breach of contract. There were three main points of contention:

• Neteller began arguing that the claimant would not get credit for a referral unless the recruited person sent in an ‘affiliate consent form’. The contract did not state this. Neteller first mentioned this in an email nine days after contracting. The claimant never submitted these forms, instead letting Neteller know who he had recruited by other (verifiable) means.
• Neteller began imposing terms on one of the VIP accounts which made referrals to that account unattractive for the claimant. These terms were also not mentioned in the contract. This caused the claimant to lose out on commission.

In relation to the first point, Neteller argued that either there was an implied term allowing it to insist on the affiliate consent forms. In relation to both points, they also argued that the agreement was later varied to justify their behaviour. Alternatively, they submitted that the parties reached an agreement in a way which gave rise to promissory estoppel. They based this on the fact that the claimant had continued with the contract knowing that Neteller was insisting on these changes.

• Neteller eventually sought to modify the agreement using the variation clause. Neteller sent the claimant an email stating that the ‘decision was made’ to no longer allow him to re-introduce old members. It then set out ‘the terms of the new commercial deal which [Neteller’s VP] has offered’.

The claimant argued that this was not a valid notice.

Issue(s)

1. Did the contract contain an implied term requiring affiliate consent forms?
2. Was the contract varied to require affiliate consent forms or change the terms in relation to VIP accounts?
3. Was the claimant bound in promissory estoppel by an agreement to submit affiliate consent forms or to permit a change in the terms applicable to the VIP accounts?
4. Did Neteller give valid notice?

Decision

The Court held in favour of the claimant.

• There was no evidence that an officious bystander would think that the parties obviously would agree to a term concerning affiliate consent forms at the time of contracting. There was therefore no implied term.
• Continuing with an existing contract knowing the other party wants to change the conditions is not the same as agreeing to those changes. Indeed, the claimant had actively complained about both changes and indicated that he did not consent. In any case, Neteller provided no consideration. The original contract had therefore not been varied.
• The claimant had made no clear or unequivocal representation that he would begin sending the consent forms or that he consented to any change in the VIP account terms. Indeed, he actively objected to any changes. There was therefore no promissory estoppel.
• The email was not a valid notice. It did not state that it was a notice and made no reference to the 60-day period. Indeed, it purported to immediately change the contract, which would have been a breach of contract. It also used the language of an ‘offer’. This indicated that Neteller intended it to be an offer, not a notice.

This Case is Authority For…

Whether a communication amounts to notice is assessed objectively. Once a notice has been given, it normally cannot be withdrawn without mutual consent of the parties.

Promissory estoppel can only be founded on a clear and unequivocal representation (by conduct or words). This means that the claimant must objectively represent that he will not enforce his strict legal rights. The specific right must be clear, as must the period for which the right will be suspended. Silence or inaction will not normally be enough, because it will not provide this clarity.

Other

Where promissory estoppel is established, it normally merely suspends the claimant’s legal rights. These rights can normally be revived with reasonable notice. However, in some cases an estoppel will extinguish the original rights.