Enforceable T&Cs - Disney refuses to “Let It Go”

Disney has received scathing criticism during the past week for seeking to defend a wrongful death lawsuit in the United States. Disney argued that a widower had waived his right to a jury trial because he had agreed to Disney’s terms and conditions (T&Cs) four years earlier, when he signed up to a free trial of the Disney+ video streaming service.

This article highlights the potential pitfalls for companies seeking to overreach in their T&Cs and identifies the lessons that can be learned from Disney’s highly publicised misstep.

What happened?

On 5 October 2023, Jeffrey Piccolo and his wife, Kanokporn Tangsuan, dined at a restaurant in Walt Disney World Resort. Dr Tangsuan had severe allergies to dairy and nuts, which she allegedly disclosed to restaurant staff. Following her meal, Dr Tangsuan had a severe allergic reaction and sadly died later that day. In February this year, Mr Piccolo brought a wrongful death lawsuit against Disney, arguing that the restaurant staff were negligent and sought damages exceeding $50,000.

Disney defended Mr Piccolo’s claim, arguing that Mr Piccolo had waived his right to a jury trial and that the claim had to be decided by arbitration (i.e. a contractual form of dispute resolution). This was partly on the basis that Mr Piccolo had signed up to a free trial of Disney+ in 2019 and the T&Cs required that any dispute between him and Disney be resolved by arbitration, rather than a jury trial.

Disney’s attempt to rely upon the T&Cs for their video streaming service to defend a wrongful death lawsuit has understandably drawn widespread criticism and serves as a further reminder to businesses of the risks of over-extending their T&Cs.

When will terms and conditions be enforceable?

T&Cs are an integral part of day-to-day business trade, providing protection by apportioning risk and limiting liability. They are, in short, a vital part of a business’ armoury if a dispute arises. 

However, T&Cs need to satisfy certain criteria under English law to be enforceable. If they do not, then the business is at risk of being unable to rely upon them. Whilst there is no ‘one size fits all’ approach, the following principles should be considered when drafting standard-form terms and conditions:

• Who is the customer? Different rules apply depending on whether the customer is a consumer (i.e. an individual acting outside of their trade, business, craft or profession) or a business. If the customer is a consumer, they will have greater protection as the T&Cs must comply with the Consumer Rights Act 2015, which treats certain terms as automatically banned or unfair.
• Have the terms been incorporated? To be enforceable, T&Cs must be brought to the other party’s attention before the contract is entered into.
• Are the terms transparent? Terms should, where possible, be drafted in plain English. Where there are onerous or unusual terms, these must be sufficiently brought to the other party’s attention before the contract is entered into.
• Are the terms fair? Certain terms will automatically be unfair in consumer contracts – for example, excluding liability for death or personal injury caused by negligence. In business-to-business contracts, parties have more freedom to contract on the terms they wish – however, terms which seek to limit or exclude liability will be subject to a ‘reasonableness test’ to determine whether or not they are unfair.

If Mr Piccolo’s claim was decided under English law, Disney’s requirement that all disputes (even serious ones, like those involving death due to negligence) must be settled through arbitration might not have been enforceable. This is because the term was arguably onerous and unfair, and not sufficiently brought to Mr Piccolo’s attention, as it appeared to be buried in the T&Cs of their video streaming service.

Practical steps

Businesses should keep their T&Cs under regular review to ensure that they are, amongst other things, tailored to the relevant type of customer, effectively incorporated, transparent and fair. This may increase the prospect of a business being able to rely upon their T&Cs if a dispute arises.

Where there are potentially unenforceable or unusual terms already in a business’ terms and conditions, businesses should consider carefully whether they wish to rely upon them. As was the case for Disney, doing so may result in significant PR repercussions. Whilst Disney is now reported to have backed down and is no longer seeking to rely upon their Disney+ T&Cs, it may be too little, too late with the damage already having been done.