When Does Merchant Make Contract with Customer

[tim_lb]

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This seems like the best place to ask this question, as I'm hoping other merchants can advise me on this, even if it's not actually about affiliate schemes as such.

We've just had one of those incidents when our site was showing some items at ludicrously low prices. So we're having "discussions" with some of the people who steamed in to make orders (in quantity, in some cases) over whether or not we have to supply...

I'm trying to find the definitive ruling on this, but so far all I've found from Trading Standards doesn't really refer to online sales:
http://www.tradingstandards.gov.uk/cgi-bin/bglitem.cgi?file=badv073-1011.txt

Has anyone here been through this? Can anyone point me at a better source of a ruling on this, please?

Thanks in advance...

[Stuart]

Hi,

This is a difficult question to answer, a lot depends on the terms and conditions of the merchant, some companies will honour prices and orders even if it means making a loss, I think I remember Amazon doing this a while back. We wrote in our terms that we did not have to honour pricing if an error was made, especially as we had an automated pricing system on selected items, we had the ability to override the pricing but incase anything ever went wrong we made sure our terms stated that we did not have to honour pricing if an errror was made, we did state we would contcat the cutsomer witin an agreed period and offer a good will or reduction of the correct price!

I am not sure what the legals are but our terms were produced by a solicitor who said what we wrote was legal - dunno if that helps

[drivetowin]

I think a lot will depend on whether you have taken their money or not.

In general terms, in a retail transaction until money has changed hands then there is no contract, simply an 'offer to treat' - i.e. either the customer can decide not to buy or the supplier can choose not to sell.

Once money has changed hands then technically a contract to supply exists and afaik the customer is legally entitled to the goods.

[matbennett]

In addition to the above, I am fairly sure that there was also a ruling that when people order as a result of an incorrect price there is no obligation to honour it.

Really racking my brain here, but I am sure that it resulted from one online store getting people ordering 10 TVs at a £1 or something. Can't guarantee this, but have a feeling that it was Dixons - could be worth Googling for. If it wasn't Dixons then I am pretty sure it was part of the same group.

[Green2K]

Many places have in their T&C's that the contract only exists once the goods are shipped. You are clearly in a better position if you don't charge their CCs until you ship, too. Maybe talk to your lawyers and agree a position to present these current customers with. My gut feeling is that you'd be pretty safe not honouring if you made an honest mistake with the price. Amazon etc. have been in the same situation in the past and not shipped.

Green2K.

[tim_lb]

Thanks everyone: it looks as if we're fairly safe in not supplying. We're taking advice from our local trading standards office and they suggest that there is another aspect to this: whether the prices are clearly unreasonable. They think that may be a defense, not just the matter of when the contract is considered to be made.
So it looks as if we should tough it out.
But also, as everyone points out: makes sure our T&C, "thank you" screen and order details email all make the situation clear!

[tim_lb]

We've now had advice from our local trading standards office, as follows:

“I would state that from the email info provided, the deal would be done once the credit card transaction has been made i.e. money has been successfully taken and not before. Thus your customers would not be entitled to purchase the goods at £3.99 as far as that point is concerned. The legal position, as we discussed, being that up to the point of having accepted payment, a retailer can refuse to sell something to a customer (even without giving any reason).



Furthermore, in this instance, even if the money had been taken, it is clear NDS (HSC Plus) would be able to show that the customers knew it was a wrong price - because the £3.99 price for the DCLynx2 was obviously far below the price range of shoes in the same range as advertised.”

That seems like a common sense approach to it to me.

[SillyJokes]

Well done Tim, a bit of a hairy moment there.

After the Dixons/Comet/Argos fiasco over TVs or cameras I think a lot of merchants changed their terms.

We reserve the right to cancel an order without giving a reason and this would cover a wrongly shown price.

The customer gets emails stating we have received their money and order but it's not legally an acceptance of the order until they get the 'Shipped' email.

Money is taken at the time the order is placed but we usually ship same day in response to this.

[gary]

We work in a similar way to Sillyjokes - payment is taken at the time of purchase, but our Terms and Conditions state that a contract is only formed when the order is despatched (or occasionally when we manually confirm the order by email). Due to the automated email receipts we send, we specifically state "Receipt of an automatic email when placing your order or paying online does not constitute a contract and cannot be considered binding.".

Our solicitor strongly recommended we include a section called "Formation of a Contract and Non-acceptance of an order" where we could include the above and a number of reasons why an order may not be accepted, including pricing errors. We have had an occasion where there was a pricing error - we despatched the first order and but no more after that once we discovered it, as we were perfectly right to do under our T&C's because we had included it.

[tim_lb]

Our solicitor strongly recommended we include a section called "Formation of a Contract and Non-acceptance of an order" where we could include the above and a number of reasons why an order may not be accepted, including pricing errors.

That seems like a good idea: very explicit.

Thanks!

Tim