Contract Law
Contract Law – An understanding of contract law is important for any business involved in video games and esports.[1] Among other things, contracts are used to regulate the development and publication of video games, the playing of games by end users, licensing of rights to esports events, sponsorship, and esports player agreements. Problems can arise when there is uncertainty as to what (if any) terms were agreed, or as to the meaning or enforceability of those terms.
A legally binding contract comes into existence only when: (i) the parties have reached an agreement, which (ii) is intended to be legally binding, (iii) is supported by consideration and (iv) is sufficiently certain and complete to be enforceable.[2] These requirements will generally be met when there is a signed written agreement involving payment in exchange for services (as in a game development agreement) or a customer clearly indicates their acceptance of written terms and conditions in exchange for the right to play the game in an end user licence agreement (“EULA”).
However, the presence of a written document (or indeed starting work on a development project) does not necessarily mean that a legally binding contract exists. Parties often prepare detailed written “heads of terms” or exchange drafts on a “subject to contract” basis, in each case on the understanding that a contract will not exist before signature. On the other hand, contracts do not generally need to be in a particular form and can even be made orally. As such, a contract can come into existence without any single written document detailing the terms – which could instead be found, e.g. in exchanges of emails and records of conversations, and/or demonstrated through the parties’ behaviour.[3]
EULAs which involve the user clicking to confirm their acceptance of the terms will usually be an enforceable contract, as the key requirements outlined above are likely to be met. Other EULAs may not satisfy these criteria. In particular, “browse-wrap” EULAs, which state that the use of the game is subject to its terms but do not require the user to click an accept button, are unlikely to be contracts.[4] EULAs must also comply with applicable consumer law, including that the contract must be written in plain and intelligible language and that its terms must be fair.[5]
There is also uncertainty as to whether EULA terms are enforceable against players under the age of 18. The Judge in Take-Two Interactive Software Inc v James[6]considered the question of whether EULA contracts with minors are voidable (including whether games may be “necessaries” for minors or that EULAs may be granting an interest in the property), but these legal issues could not be resolved at an interim hearing.
[1] This terminology considers the legal position in England & Wales only
[2] See for example Blue v Ashley [2017] EWHC 1928 (Comm) at [49] to [62]
[3] See for example RTS v Müller [2010] UKSC 14 at [45] to [56]
[4] Discussed in Appendix C of Law Commission, Scottish Law Commission, Unfair Terms in Consumer Contracts: Advice to the Department for Business, Innovation and Skills (March 2013)
[5] Consumer Rights Act 2015, see ss. 62 and 68
[6] Summary judgment application in [2020] EWHC 179 (Pat) at [26] to [33]
