When is a consumer not a consumer?

In Overy v Paypal (Europe) Ltd [2012] EWHC 2659 (QB), Mr Overy wanted to sell his home. He decided that he would make more money if he offered the house as a prize in a competition. He planned to use Paypal to collect the competition entry fees. Mr Overy also ran a photography business, and in applying for Paypal’s service he clicked on the service for businesses, as opposed to that for private individuals, to enable him to accept card payments directly via his own website (rather than diverting them to the Paypal website). In support of his application, Mr Overy provided a mixture of his personal and business details.

Paypal subsequently suspended Mr Overy’s account on the grounds that he had breached the terms of his contract by providing untrue or misleading information and failing to obtain the necessary approval from Paypal in relation to the competition, and also because it had reason to believe he might have been engaged in fraudulent, unlawful or improper activity. Mr Overy sued for breach of contract.

The issue for determination by the High Court was whether the terms relied upon by Paypal were valid under the Unfair Terms in Consumer Contracts Regulations 1999. This in turn involved a consideration of whether Mr Overy was a consumer for the purposes of the regulations…

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