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Sep 04 2009

A salutary tale of a mistaken price

Posted by Eoin in Contract

Best Buy logo, via their site.Via ContractsProf, I learn that US discount retailer Best Buy will not honour a $9.99 big-screen TV deal which it had offered for sale on its website, because the terms on the site reserved its right to revoke offers or correct errors even if a credit card has already been charged. This is just the latest example of a common phenomenon; the biggest Irish example was last year’s Aer Lingus mistakenly priced flights fiasco; and they are in good company: it has happened to Amazon (2003); Argos (1999 and 2005); Avon (2004); Buy.com (1998); Dell (several times: 2001, 2003, 2004, 2005, 2008 – twice); Hoover (1992); Kodak (2002); Thai Airways (2003), Sony products in France (2004), and (hat tip Legal Eagle in the comments) JB Hi-Fi in Australia (2009).

Best Buy protected themselves against such errors by providing for them in their Conditions of Use:

Errors on Our Site
… Errors will be corrected where discovered, and Best Buy reserves the right to revoke any stated offer and to correct any errors, inaccuracies or omissions including after an order has been submitted and whether or not the order has been confirmed and your credit card charged. If your credit card has already been charged for the purchase and your order is cancelled, Best Buy will issue a credit to your credit card account in the amount of the charge. …

Amazon’s Conditions of Use are similarly clear:

Pricing
… Despite our best efforts, a small number of the items in our catalog may be mispriced. If an item’s correct price is higher than our stated price, we will, at our discretion, either contact you for instructions before shipping or cancel your order and notify you of such cancellation.

Please note that this policy applies only to products sold and shipped by Amazon. Your purchases from third-party sellers using Marketplace Payments by Amazon are charged at the time you place your order, and third-party sellers may follow different policies in the event of a mispriced item. …

Nevertheless, the wonder is not that it happens at all, but that it happens so infrequently. In any event, the legal principles are well settled; and I suspect that online retailers will increasingly include and rely on similar terms. However, the Aer Lingus General Conditions of Carriage do not seem to have been updated since October 2004 – and so far as I can see, they do not contain a similar clause. Perhaps Aer Lingus haven’t learned their lesson yet?

This entry was posted on Friday, September 4th, 2009 at 9:09 am and is filed under Contract. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Responses to “A salutary tale of a mistaken price”
  1. Legal Eagle says:
    4 September 2009 at 11:13 pm

    Yes, this has happened a few times in Australia lately – most recently, JB Hi Fi listed a high definition TV for $15.00. This price was an error (real price $3500):

    One person was so enticed by the mistake he ordered 65 of the television sets, The Australian Financial Review reported today.

    The error was quickly corrected but that did not stop customers from demanding that JB Hi-Fi honour the original price. Some said they received a receipt from JB Hi-Fi by email.

    The retailer has now dangled a carrot in front of affected customers to assuage their concerns, promising to sell them the TV sets for $2500 – a significant reduction on the already discounted listed price of $2964.

    Amanda Bodger, a consumer protection lawyer with Mallesons Stephen Jaques, said it was unlikely customers could force JB Hi-Fi to honour the original price through the courts.

    She explained that, under contract law, when a product is advertised with a certain price tag, this is simply an invitation to the customer, who can then choose whether to make an offer to buy the product from the retailer.

    The retailer must then accept the offer in order for a contractual obligation to apply.

    The acceptance could come in the form of the retailer billing the customer’s credit card or giving the customer a receipt.

    Terms and conditions listed on the retailer’s website say it reserves the right to cancel any order without notice for any reason.

    “In a situation like this, customers would face an uphill battle to bring a legitimate claim,” Bodger said.

    “In terms of trade practices obligations, obviously retailers can’t engage in bait advertising; they can’t mislead customers, but genuine errors which are fixed quickly normally don’t result in any investigation by the ACCC [Australian Competition & Consumer Commission] or any further action by consumers.”

    Yesterday, the ACCC said it did not intervene in disputes when there was “a genuine error or minimal consumer detriment”.

    In an email sent to affected customers, JB Hi-Fi said the incorrect price was “caused by an error with an automated price routine”.

    “The advertised promotion of ‘15% off Televisions’ was applied to all relevant models in our catalogue apart from this model, which displayed at a $15 sell price,” the email read.

    It seems they’re smart enough to have a contractual term of the type you mention.

  2. Eoin says:
    6 September 2009 at 10:31 pm

    Thanks, LE. It’s another excellent example of the issue, and one that I can easily use in class! If you can point me towards any other examples, that would be great.

  3. cearta.ie » Is an online deal for a €98 tv too good to be true? says:
    1 December 2010 at 8:02 am

    [...] a fairly common problem of mis-stated prices on websites (which I’ve discussed here, here and here), but I’m not sure I agree with this short and simple analysis of why Arnotts did not have to [...]

  4. cearta.ie » Is a newsletter deal to sell a €395 book for €136 too good to be true? says:
    5 December 2010 at 7:48 pm

    [...] completed contract. As Daithí points out in a comment to my previous post, and as I have discussed here, Amazon’s Conditions of Use are particularly clear on this issue: Pricing … Despite our [...]

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