In what I think was the most tragic legal story I saw today – in terms of human nature and near financial gain (but not quite) though not perhaps true human tragedy – the Montreal Gazette reported that a Quebec court has denied a lottery player’s claim to a $27 million jackpot – for a seven second delay in buying his ticket.
According to the Gazette, Montreal Superior Court Judge Marie-Claude Lalande rejected a lawsuit by a player whose ticket had been issued to him mere seconds after the cut-off for the next draw. The result was that his ticket and another won, but alas his was not eligible.
Why? The saving answer for Loto-Québec, the promoter in this case, is that lotteries (including 6-49 draws and the like) and contests are contracts. That was also the unfortunate answer for the entrant who failed to comply with the terms of the lottery, namely that eligibility for this lottery turned not on when the entrant said he wanted to buy the ticket (before the 9:00 cut-off in this case) but rather when Loto-Québec’s computer registered the ticket (seconds after the 9:00 cut-off – 7 seconds to be precise).
A trivial matter you say? Not for a lottery operator faced with determining how to payout a $27 million prize.
According to the Gazette’s note, the entrant was told that one ticket he bought would be for the earlier draw and the other for the later draw, and accepted this (which constituted acceptance of the lottery operator’s terms, and is consistent with the unilateral contract theory of lotteries and contests, in that an operator makes an offer, through the lotteries’ terms, which is accepted by performance by entrants).
Reading the case, in which the Quebec court upheld the lottery’s terms, reminded me too of another similar case I was reading several weeks back – Thierman v. Western Canada Lottery Corp. – in which clear contest rules also saved the promoter, in that case the operators of 6/49, from a significant liability (the payout of a $623,000 prize). In that case, the plaintiff was a subscriber to the 6/49 lottery, whose subscription expired. On receiving a renewal form a month before his subscription ended, the plaintiff delayed returning the form, which was not entered into the lottery’s computer system until after the next draw (in which the plaintiff’s numbers were drawn). The terms of the lottery provided that subscribers should allow four weeks for processing and that renewal forms were deemed to be received on the date of the next draw after being entered into the lottery’s computer system.
The plaintiff argued that the lottery breached its contract with him. The Court disagreed. The Court did find that the general law of contracts applies to lotteries (and promotional contests) and that a contract is formed by a promoter’s offer and a contestant’s performance of the acts required by the offer. In that case, however, the Court found that the necessary conditions to enter and win had not been satisfied because the plaintiff’s renewal form had not been entered into the lottery’s computer system in time and the terms included a provision that the lottery could not ensure the first draw date.
Contests have also been held to be contracts and so well prepared rules can, like lotteries, also mean the difference between success and disaster if an issue arises. While in many cases contest prizes may be too modest for an entrant to raise a dispute in the event an issue arises, for significant promotions (i.e., those involving large prizes or more potential risk for a promoter, such as prizes involving trips or travel that could lead to personal injury or other risk), well prepared contest rules are rather important indeed.
Contractual terms can also be important where companies partner for a promotion, such as where one party organizes and administers a promotion and another markets and advertises the promotion (or where a contest promoter relies on third party service providers to perform key aspects of the promotion – e.g., a tour operator, broadcaster, etc.). In these cases, the potential liability, and importance of a well-prepared contract, may well have much less to do with risk associated with contest entrants than that arising from partners or promoters – e.g., for intellectual property infringement, privacy law or misleading advertising issues. Given that in many cases prizes may range from several hundred to several thousand dollars, but potential liability for a misleading advertising claim can be up to $10 million, the only potential consideration is by no means a prize award that goes wrong.
Some common contract related issues that I see generally in contests and promotions include terms that are not relevant to the particular promotion, U.S. or international rules applied to Canadian promotions, contests that purport to apply across Canada and the U.S. (where it is unclear that rules have been vetted for U.S. or Quebec specific requirements) and contests operated with no (or few) rules at all. Contests operated with no rules at all can lead to a variety of problems, including perhaps most importantly limiting a promoter’s ability to take steps in the event of unforeseen circumstances (contest rules are commonly drafted to give organizers the “sole discretion” to change key terms or make decisions in the event issues arise).
In any event, the bottom line is that lawyers needn’t go overboard in drafting rules for lotteries, contests or other promotions. But having said that, the above cases show that commonsense contract principles, including clarity, precision and relevance to a promotion, can go a long way to reduce potential risk and disasters.
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