Why don't retailers have to honour misprices?

19 January 2012

Bitterwallet-Len-Dastard-featuredHola amigos! It is I, Len Dastard, full time litigation executive and part time pretend lucha libre! I get my kicks from assisting the fearless consumer. There is nothing that Len wouldn’t do for you. Believe that.

There is always some confusion as to the rights of the consumer when a retailer offers an item at a price which is clearly incorrect. Now seems like the perfect opportunity for me to give you all a quick recap following this deal found over at HUKD. Member paul124 posted a deal for a Panasonic Viera 50" 3D plasma TV for just £199. The actual price, we now know, should have actually been £599 (reduced from £1099). Many people got wind of the £199 price and placed a speculative order. Surely they didn't believe that they would get the item at that price? Orders were placed and then swiftly cancelled with M&S claiming that there had been an error. Members were obviously disgruntled and some went on the attack against M&S claiming that they were the owners of this television and M&S should be sending these out.

Items on the internet or in a shop are known as "invitations to treat" as opposed to "offers to sell". There needs to be a clear distinction between the two otherwise there will possibly be many claims for potential breaches of contract. One of the easiest examples of an "offer to sell" would be a ticket machine within a car park. It is offering you the chance to park your car in exchange for a fee. By you placing your money in the machine you are showing a clear acceptance of their offer. There is therefore no chance to negotiate. An "invitation to treat" is a way of letting people know that they are willing to receive offers. The key difference is that the other party has the opportunity to accept or reject your offer. They therefore do not have to sell you the item regardless of how much money you are willing to pay. This is the general position for items in a shop. I won't bombard you with boring case law but one of the well known cases regarding an invitation to treat is Pharmaceutical Society v Boots where Boots were being sued for selling medicines in the absence of having a doctor within the store. They successfully pleaded that they were not selling the items and they had the opportunity of rejecting the sale at the till and the placing of the item in the basket by the consumer doesn't mean that a contract is formed.

The next consideration is at which point is a contract formed when someones shops at a distance. It is always important to get to grips with a retailers Terms and Conditions as this usually explains at which point the retailer would consider themselves to be legally obliged to sending you the item. It is very common that retailers will state that the contract is formed at the point of despatch so that they can ratify the transaction and correct any errors. Going back to the above deal, these are the Terms and Conditions that M&S initially intended to rely on:

Acceptance of your order

Please note that completion of the online checkout process does not constitute our acceptance of your order. Our acceptance of your order will take place only when we dispatch the product(s) or commencement of the services that you ordered from us.

As you can see from the above, M&S were, by their own Terms, not legally obliged to honour the misprice. However, after much effort on the part of the disgruntled customers, they gave in and honoured many of the orders and members have started to receive their televisions. Hooray! However, retailers do not always "give in" as can be seen in this example. Another misprice but this time from Next. Two small sofas for just £98 from £1300. Many members placed an order and Next are point blank refusing to honour. Slightly different wording from their Terms but they also confirm that the contract is formed when the item is shipped.

Many disgruntled consumers say that this particular Term is grossly unfair and wonder whether or not it is legally enforceable. I have made the point in previous articles but I think it bears repeating. Retailers deserve a certain level of protection for these eventualities. Is it fair that a mistake should be punished to the extent it would be if the term was made unfair and the retailer could therefore not rely on it? Consumers do get plenty of protection from the Sale of Goods Act 1979 and the Distance Selling Regulations 2000 (amongst others). The consequences could be dire for retailers if it was ever made unlawful.

What are your thoughts? Are consumers getting too greedy or should retailers be hung out to dry for their mistakes?

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TOPICS:   High Street News   Complaints

16 comments

  • Mike H.
    If you read all that, you have to much time on your hands.
  • A T.
    Of course, under criminal law there is a duty on them to display accurate prices, and not to 'bait and switch'.
  • Meh
    There's nothing wrong with people having a punt at a misprice, but I can't stand the sense of entitlement some people get when they miss out. Human error is a part of life and the larger the catalogue of products, the more likely and frequently mistakes are bound to occur. Consumers who like to jump all over this and badmouth companies who wont honour likely loss-making prices are just plain greedy.
  • Dick
    Retailers should not have to honour mistakes if they are genuine, and the pricing error is corrected as soon as they first cancel an order at the wrong price. If they cancel orders but allow the incorrect price to remain, then they are knowingly advertising with false prices. If they do honour them to some people, then they should honour all orders placed at the same price (as long as there is stock). And this should be done on a first come, first served basis when there is limited stock.
  • maxtweenie
    Of course the moral is, don't post a misprice on HUKD until you've got the one you ordered for yourself.
  • Mark
    I seem to remember a very poular deal on HDUK for the Humax PVR that was advertised for £99 rather than the normal £250 from BestBuy. It was great to see the BestBuy honoured the mistake and many people (including myself) got a bargain. Then Bestbuy announce they have made a £30m loss and are pulling out of the UK. Hmmm - Should I feel guilty ????
  • Phil76
    You'd think in this day and age the savvy e-tailer would have a system that highlighted sales prices so far below cost, or at stupidly low margin that it can't possibly be right. Surely it can't be hard to do this at the stage before the offer hits the website? If they do have this in place (and I'd be suprised if they didn't) and chose to ignore/override it then they deserve everything they get. Also be nice if there was some kind of time limit on their protection - IE if they don't pull the offer from the website X hours after first becoming aware then they're bound by the price. Lost count of the number of times theses "offers" are available for days even though the website has no intention of honouring them.
  • Frank P.
    Where does the law stand in situations where the retailer may state in there terms and conditions that a contract is formed when items are despatched, then takes the money for said items out of your bank account and then decides several days later that for whatever reason or excuse they can think off that they cannot/will not sell you the item and instead say they will return your money to your bank within a set number of days. Can a consumer not argue that by taking the money that the retailer has accepted the invitation/terms of contract. I ask as this happened to me twice recently. Sites like Tesco, Asda etc take your £ when you place your order, surely this is not right if theres a chance your order may not be fulfilled and you then have to wait 5 to 7 days for your £ to go back into your bank account. Also I have too much time on my hand and cannot spell for shit.
  • Gunn
    There is certainly a bit of a confusion when sites do take money from your account before dispatch, I think this needs to be defined in law so that they cannot decline the order if they accept payment even if a mistake. To protect themselves, they should just accept the order and inform you that its not binding until payment has been successfully taken and the item dispatched. That should protect both parties. I think there are clear cases where it is obvious that its a misprice and in these cases it should be declined, it would be simple for them to provide evidence that the same item/product is for sale elsewhere at much higher prices and therefore clear it is a mistake.
  • william
    Hi there a very good article, however missing some key points in the M&S argument, Most people who disputed that they should get the TV did not do so, just blindly moaning to get the TV. You quote one term form their terms and conditions, however in their main communication with their customers the order acknowledgement, they state that acceptance is when preparing to dispatch they then set a time line by stating that they then take full payment. In this they are saying once we accept the offer to treat we will take payment. This may not be legally binding such as being in the T&Cs however is the main thing people will read. However you then look down their main T&Cs, and you come to this term; "All card payments are subject to authorisation by your card issuer and we take payment when we accept your order shortly before dispatch. If your payment is not received and you have already received the products you ordered from us, you must pay for the products or return those products to us in accordance with reasonable return instructions that we provide to you and in the same condition that you received them at your own expense. If you do not do this within 30 days of the date on which we cancel your order, we may collect or arrange for collection of the products at your expense. We reserve the right to charge you for any and all damage to (or other adverse interference with) any products that are the subject of an unpaid order." Again suggesting that acceptance is when payment is taken then they dispatch, this is why many fought for this deal as payment had been taken thus although one term states dispatch other clearly state acceptance is before money is taken.
  • Kevin
    Phil76 is completely right. That there is not a system that is built into any of their systems to stop this is their responsibility if they want to stop this happening. Massive discounts are now a very common thing so are not ridiculous, although obviously some are obviously 'wrong' straight away. The thing about them staying up when it's a mistake is certainly another major thing. A lot of times we're not talking about it happening over a weekend for example, there are people in offices who could have changed things during the working day in the past but didn't. That is an admission that it is a valid deal in my mind. When the money is taken should be the point at which the contract is agreed. Some companies seem to be perfectly able to leave it a day or two after me buying something from their website and it actually going from my bank account. Even buying a tv on my credit card recently took 3 days and the delivery date was 4 days after that. So why not?
  • tightar5e
    The Nokia Lumia Deal. Argos do 40% of their business via their website. To leave an offer up for 14hours after they have been aware of the problem, is blatant viral marketing. Don't tell me they had no staff on to remove it. If your doing 40% of your business on the web, you employ people 24/7 to keep an eye on it. Its an attempt to gain web traffic, new registrations, and news column inches. Anyone that says its simple human error/misprice is unbelievably naive, and really doesn't understand how technology works, in terms of getting the attention our 'eye balls'. Argos have potential destroyed the inherent intangible value (above the manufacturing costs), of the Nokia Lumia and Microsoft WP7 (if there was any to start with). What I mean by this is an iPhone is worth more to some people than others, as it aids their life, and they see this a 'worth the additional cost'. Whether thats right or wrong, its true. People heading to a phone shop now will look at the Nokia Lumia see it priced at £499 PAYG, and say, 'Isn't that the phone Argos were selling for £119?, not paying that - its not worth that much'. I think the damage has been done to the Nokia/WP7 Brand (in terms of built-in intangible value). Still, plenty of people probably know what a Nokia Lumia is now, so maybe the viral marketing has worked to some extent.
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    [...] a post on consumer blog Bitterwallet elucidates, offering something for sale at a certain price legally counts as an ‘invitation to [...]
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    [...] So feel free take my word for it, or if you’re really interested, you can read about it here. Anyway, my point is that you can argue all you like about false advertising but i’m still [...]

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