When it mistakenly advertised a Hewlett-Packard PDA at £7.32, Amazon UK experienced the inevitable rush of on-line orders. But will its cancellation of all those contracts stand up in court?
Topic: Contract
Who: Amazon UK
When: March 2003
Where: UK
What happened:
Amazon.com’s UK site made two pricing errors on Hewlett Packard PDAs sold on its site. One was offered for £7.32 when it normally retails for £192.
The blunders appeared on the Amazon UK site for just a few hours on the morning of Wednesday March 19, but in this time word spread so quickly that by 11:00a.m. the £7.32 product was listed as the site’s best seller.
Shortly after the errors were discovered, the entire site went off line for a short while, returning 1:30p.m. GMT absent the HP products.
Amazon UK announced that it would be cancelling all orders made at the incorrect price, stating that no contract for sale had been formed because in none of the cases had the customers received an e-mail from Amazon stating that their order had been shipped.
Why this matters:
This is not the first time that price blunders have been made on line. Asda, for example, has featured in a previous such story, but marketinglaw.co.uk is not aware of any reported UK case in which consumers seeking to buy at the incorrect price have successfully sued in a court of law.
The law here is that under the Electronic Commerce (EC Directive) Regulations 2002, which have been in force since 21 August 2002, those selling on line in the UK are bound by law to explain in their website in a clear and accessible manner precisely how the sale process works and when a binding contract of supply is formed. Up until then, the English common law revolved around the question of when it could be said that there was an “acceptance” of an “offer” which was made with an intention to create legal relations. In a retail context, both on line and off line, the received position was that the offering of a product at a particular price was not an offer capable of acceptance by a consumer clicking to purchase or coming to the counter asking to buy. It was this second stage in the process, namely the consumer’s indication that they wished to buy at the quoted price, which was regarded as the contractual offer, and it was then open to the retailer to indicate whether that offer was accepted.
Provided Amazon UK have followed the E-commerce regulations on their website and made it crystal clear that there will be no binding contract to supply until confirmation is sent to the purchaser that the order has been shipped, then, they should be able to avoid contractual liability to supply at the misquoted price.
