I feel sorry for them for losing out, but in a way, I could easily side with AW because they state themselves that they failed to keep the e-mails they sent.
So, in the end - its a "He Said / She Said" type thing ... they said they e-mailed and that AW agreed, but with no evidence to back it up ... the TOS stands.
If you are going to make a case against a company, have more evidence than just words on a screen.