An item in the Readers’ Queries feature on the Consumer page in last week’s Irish Times caught my eye, not least because it raised very interesting issues about ordering goods online:
A reader was on the Arnotts website recently pricing televisions when he found a 42” model for €1,498. According to the site it had a discount of €1,400. “A TV for €98? Where could I go wrong? So I put in my Laser card details, expecting to be told the order could not be processed due to a pricing error but no, it went through. I got a confirmation e-mail a few minutes later with an order number,” he writes.
He “kept checking the tracking of the order on their web page and it said the order was processed and waiting for a delivery date. Later that evening I got an e-mail saying they had made an error in pricing and my order was cancelled.”
The incident has left him curious. “Since Arnotts never took any money from my account but did issue the order number, do they have to honour the order or are they completely within their rights to cancel it? I’ve mentioned this to a couple of my friends and no-one has any idea where they stand if they see something for one price and then are told the price is a mistake.”
The answer is short and simple. Arnotts was not under any obligation to process the order because money had not changed hands – in a virtual sense – so there was no contract in place. Stores, both online and off, do not have to honour a price displayed because in law, it is an invitation to treat rather than a price fixed in stone. If a price is wrong, consumers cannot expect to profit from the genuine mistakes of a retailer.
This is another example of 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 honor their discount of €1,400 and sell the tv for €98. Don’t get me wrong; I agree that Arnotts did not have to sell the tv for €98; I just don’t agree with the explanation in the extract above.
The starting point for any analysis of a contract is that one party must have made an offer which the other must have accepted. I agree that in most examples of the sale of goods, the display of a price doesn’t usually amount to an offer (calling it an invitation to treat doesn’t add anything to this point). Instead, the customer’s email will be the offer to purchase, and (depending on the circumstances) either the processing through the vendor’s server or the follow-up email will constitute the acceptance (as it happens, the Arnotts terms and conditions make it clear that they take the view that the contract is complete when they send their confirmatory email). The fact that no money has changed hands is irrelevant to whether there has been an offer and acceptance. However, the issue of money is relevant in as much as the offer and acceptance must be about an exchange of benefits; the classic case, as here, is the exchange of money for goods; and it is enough that the offer is a promise to pay and the acceptance is a promise to deliver.
So, it would seem that there is indeed a contract between Arnotts and the customer. However, that is only one stage in the analysis. The next question is: what are the terms of the contract. Unsurprisingly, the terms and conditions on the Arnotts website specifically deal with this issue:
PRICE OF GOODS
The price listed on the Website (the ‘price’) for Arnotts products (the “products”) will be as stipulated at the time when you place your order on the website. We are entitled to make adjustments to the price to take account of any increase in our supplier’s prices, or the imposition of any new taxes or duties, or if due to an error or omission the price for the products on the Website is wrong. …
MODIFICATION OF TERMS
So, there you have it. Although the price clause might have been better written, Arnotts have nevertheless expressly protected themselves against just this kind of error, by giving them the possibility of making adjustments to the price if, due to an error or omission, the price for the products on their website is wrong. It will have been this clause (rather than the absence of a contract) which allowed them to cancel the order here. A customer unhappy with this outcome and insistent that Arnotts should have sold the tv for €98 would then have to argue that the price term was unfair (having regard to the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995 (SI No 27 of 1995)), but I don’t think that there’s anything in that point. All in all, therefore, the reason why Arnotts did not have to sell the tv for €98 was not because there was no contract but because the contract contained a clause which allowed them to avoid the consequences of their mistaken price.