Should online shops honour pricing mistakes?

by , Conversation Editor Consumer Rights 24 January 2012
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If an online retailer mistakenly discounts a sofa or TV by hundreds of pounds, should the shop honour the discount for customers who took up the offer? It seems not all companies will honour pricing mistakes.

Man pressing 'oops' key on keyboard

It hasn’t been a good few weeks for retailers. I’m not talking about the downturn in sales or news of another big high street name (Peacocks) going into liquidation – although this is all pretty pessimistic stuff.

I’m talking about the recent spate of pricing mistakes on big-value items – and the bad PR that followed.

First, Next mistakenly advertised a pair of sofas worth £1,198 on its website for just £98. The pricing error remained uncorrected for nearly six hours and customers said that they had £98, plus delivery charges, debited from their bank accounts.

Then, Marks & Spencer advertised a Panasonic 50-inch 3D plasma TV, worth £1,099, for just £199. Again, savvy shoppers were quick to snap them up, and some reported the money coming out of their account.

So how should retailers deal with this situation? The ensuing events show just how differently pricing mistakes can be resolved.

Stand by your orders

Next point-blank refused to honour the ‘deals’, pointing to the small print in its terms and conditions which, it says, allows it to cancel orders before they are dispatched for delivery. This is how a Next spokesperson justified the decision:

‘This was a genuine and unfortunate error, which we corrected as quickly as possible. We then discussed with our local Trading Standards office how to deal with any orders that had been placed at the wrong price.

‘We are contacting all customers involved, explaining that unfortunately we will not be able to fulfil their order.’

But it was power to the people over in the M&S camp. After trying to resolve the problem by offering the bargain-hunters off a £25 ‘goodwill gesture’, the customers set up an online petition called ‘Marks & Spencer supply our TV’s that we paid for’. Hardly the catchiest (or most grammatically correct) campaign in the world, but it worked – M&S backtracked and stood by the orders.

So, it was happy days if you wanted a new TV, but not so good if you wanted a new sofa to watch it from.

Your rights with pricing disputes

But should M&S have backed down – or was Next at fault for not honouring its mistake? I spoke to our senior solicitor, Joanne Lezemore, to get her view on where customers stand legally:

‘Generally, if you enter into a contract for goods which a company fails or refuses to deliver, then a breach of contract occurs and you can look to the company for damages (being the cost of having to buy the goods elsewhere). But where it is clear that a mistake has been made, the law will not allow one person to benefit as a result.’

So if the goods were advertised cheaper than usual, you may be able to hold the company to a contract. However, where it is clear there is a mistake (would you really expect that plasma TV to be under 200 quid?), the consumer cannot then take advantage of that mistake. So what does Joanne think of these cases?

‘My own view is that, where the mistake is not clear, the company should be bound to honour the contract. But consumers also have to be aware that if something seems too good to be true, it probably is, and a company shouldn’t to be bound by what are clearly typing errors. I think the law has the right balance in these situations.’

Do you agree with Joanne or do you think those M&S customers were right to kick up a fuss? What would you do in the same situation?

Should online shops honour pricing mistakes?

Yes - it's the retailer's problem (60%, 80 Votes)

No - we all make mistakes (40%, 53 Votes)

Total Voters: 133

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38 comments

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tpoots

Personally I’m surprised (and jealous) that M&S honoured the orders.

I don’t think it’s fair to expect a business to honour a ‘deal’ which has obviously been put up in error. Fair enough expecting them to honour it where the difference is £20, but when it’s a couple of hundred – forget it. The fact the M&S people set up a petition is ridiculous.

That said, there’s no harm in placing the order and hoping they fulfil it.

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wavechange

There is a danger that an incorrect price could be used deliberately as a publicity stunt, but I feel sorry for M&S having to deal with greedy people who are not prepared to accept that the company has made an obvious error.

Perhaps online traders should offer customers a small amount of compensation (e.g. £10) to disappointed customers. Any company that regularly makes mistakes should be answerable to Trading Standards.

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Surly Dev

When the retailer advertises at a price in a store, and takes the money from you then surely a contract has been created and agreed. It cannot charge you more than the labelled price, nor do they have to sell to you at that price if the cashier notices a mistake.

Surely with online systems their order processing systems is playing the role of cashier, and if it’s taken the funds from your account, then they are liable for supplying at that price.

The retailer can easily create systems and processes that delay confirmation / acceptance of the order and alert if the selling price is below the cost price, or a larger than predicted number of sales has taken place, so in these cases both retailers should man-up, accept the losses, then b****-slap the business analysts (not the developers) that defined the requirements for their online trading systems.

Yes, I’m a computer programmer.

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David Ramsay

Agree totally, the critical aspect of both cases was that the money had been debited from the persons account.

Thus a contract was formed and the people concerned should hold the company in breach of that contract.

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Em

I also agree that companies should be very careful about how their online processes give effect to a contract, but the situation in law should not be confused with face-to-face selling, where a contract normally becomes binding at point of sale.

The Distance Selling regulations gives the consumer additional rights to cancel a contract, and the supplier a limited get out if the goods ordered are “not available”.

“A contract which has not been performed [by the retailer] within the period for performance shall be treated as if it had not been made, save for any rights or remedies which the consumer has under it [i.e. the contract] as a result of the non-performance.”

The retailer could argue that the goods are not available from the supplier (certainly not at the price advertised), thus the consumer’s rights in this situation are only as set out by the original contract of sale. Because, in law, a contract has not been made, there is no contract to breach, unless the retailer also fails to honour the “rights or remedies” set out in the original agreement.

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ArgonautoftheSeas

‘Generally, if you enter into a contract for goods which a company fails
or refuses to deliver, then a breach of contract occurs and you can look
to the company for damages (being the cost of having to buy the goods
elsewhere). But where it is clear that a mistake has been made, the
law will not allow one person to benefit as a result.’

I would qualify above statement by use of word ADDITIONAL as to
‘the cost of having to buy the goods elsewhere’… say widget costs £100 in
shop A that you’ve contracted to buy but in breach of contract it fails to
make available for purchase and in mitigation you purchase identical
widget at alternative outlet B that costs say £135; recoverable
damages is the difference in price: £35, not £135.

Long settled principle in English law prices the subject of a display is
only an invitation to treat not a legally-binding offer capable of
acceptance that if it were so together with tender of specified valuable
consideration (money) would have have created a contract
enforceable in law.

Hope this clarifies things somewhat and not least as to
the ‘mistake’ bit that was alluded to and it certainly not
being a case of one ‘benefitting’ alluded to as well.

This is my understanding of English contract law
as prevailing today…. it’s all about recovering expectation
losses et al and damages to reflect the losses As IF the
contract had not been breached or the obligations contained
therein had been carried out.

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Alex

The problem comes when it’s not customers buying in good faith, expecting a bargain, the problem comes when it’s members of sites like Hotukdeals (and others) speculatively buying a dozen items each to resell on ebay. If you glance at one of these sites, you’ll see the deals marked up as probable mis-prices but it doesn’t deter the ebayers, because in the end if it doesn’t pan out, all they’ve lost is some time.

It’s a shame some behave like this because it reduces the chances of a store honouring a mis-price to genuine consumers.

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rarrar

I agree, “good faith” is required for a contract to be valid; it is obvious that a price reduction of 80-90% on a high value item is an error and the customer isnt acting in good faith.

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ArgonautoftheSeas

Speak of detrimental loss and reliance being placed and trader will cough
up, in gift vouchers that I merely suggested you understand…. value thereof
MORE than the value of item I was disappointed of (I paid nothing)….
local Trading Standards useless as doing nothing.

Concentrates minds wonderfully if you mention blog orTwitter
as to your disappointment.

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Masrat1

What detrimental loss? You find an item at a price that is obviously wrong, try to place an order it but they cancel the order as long as they refund you, what loss have you incurred? People wonder why prices are going up, only have to look at that attitude tbh

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ArgonautoftheSeas

I shd hope stuff posted 24 January 2012 at 2:41 pm shall clarify things
somewhat.

A detriment has been caused in my case by trader A being guilty
of a false trade description in the stuff it offered to sell when I turned
up to collect but rejected, as not complying with advertised specs thus
DENYING me opportunity to buy at that price, my being kept waiting for 6
weeks when I cd have bought similar stuff elsewhere at B in mitigation
AND by which time B no longer stock that item. A lot of inconvenience
caused and time wasted too.

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ArgonautoftheSeas

It’s an act of indulgence on part of M&S,
for the sake of good customer relations and
the securing of goodwill: the whole advantage
whatever it may be, of its reputation and
connection, one definition I came across
long ago.

Like I said, those disappointed do not have
a valid or sustainable claim in law. Organising
a petition is disgraceful and showing unmitigated
pure greed.

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Louis

Some online retailers have clauses in their Terms and Conditons that state that companies have a right to cancel the order in the event of a mistake and that an order is merely an offer to buy, stating that a contract is not created until the goods are despatched.

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Colin

In this case I don’t think the company should have honoured the orders. Though it was good to see, the company taking responsibility for it’s actions/mistakes. If it was by a couple of pound, then yes I believe the order should have been honoured, because the shops at times can be quick in short-changing customers when it comes to cash sales.

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Em

I think the fairest way to resolve these situations would be for the retailer to offer to supply the mispriced goods at cost.

That way, the retailer doesn’t lose out significantly, but doesn’t profit from their mistake either.

And it will sort out the customers who were genuinely in the market for a TV / sofa / whatever, from the sharks just looking to make a quick killing on the back of – what is to them – an obvious pricing error.

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Surly Dev

Read this …

http://conversation.which.co.uk/consumer-rights/ask-which-why-cant-i-order-a-currys-cooker-online/

THEN try to convince me that these companies weren’t in breach of contract. They took the money, they created the contract.

Hi Surly Dev, I think the key point in this case is that it’s clear that the companies made a pricing mistake – and that the offer was too good to be true. Joanne’s quote explains that this is almost like a loophole:

‘Generally, if you enter into a contract for goods which a company fails or refuses to deliver, then a breach of contract occurs and you can look to the company for damages (being the cost of having to buy the goods elsewhere). But where it is clear that a mistake has been made, the law will not allow one person to benefit as a result.’

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ArgonautoftheSeas

Hannah, I adhere to what I’d posted:

24 January 2012 at 2:41 pm

In particular as to the recoverable damages bit being the
difference
in price, otherwise there’d be an element of
betterment when seeking mitigation that one is obliged to
do as a matter of law in relation to any breach of contract.

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Jo

If you mistakenly ordered two items instead of one you would expect the shop to allow you to rectify this mistake. The retailer should be given the same leeway.

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goodcrafternoon

Whoever advertises the goods at a certain price, should check the listing before it goes live, then re check it, before hitting send. Then, once sent, they should view the live listing. OK all this takes a little time – but ultimately look at the time and hassle saved. (I just ordered 10 bags of dog food at an obviously wrong price!! – Waits to see – )

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Cheeky frankie

Hi, I recently was browsing a website and saw a kindle case for sale at £0.00. For a laugh I tried to order ten to see what would happen. The site let me order them but I had to pay for p&p of £3.95. I was amazed to see I then received an order confirmation email stating i would be charged £3.95 for my purchase. I was even further surprised to receive my parcel a few days later. I only did this for a joke, expecting to recieve an email saying they had made a pricing mistake, I never expected to actually recieve the items. This happened 6 days ago. Today I received an email from the company asking for the goods back. Do I have to give them back, or as they have already sent them to me can I keep them? Thanks for your help.

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David Ramsay

I think, although not an expert, that the sending of the goods after paying the requested sum constitutes a contract for a legitimate sale.

If they had voided the order before sending then that would be a different matter.

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wavechange

Offer them nine cases back if they pay the p&p and hope that someone might be tolerant next time you do something silly.

You will have the case you need and still have an amusing story to tell. :-)

Hello Cheeky, sorry for the delay. This is an interesting one. This is what one of our solicitors has said:

In order to show that you have a legally binding contract you must show that your offer to purchase the kindle case was accepted by the company. Although there is no authority on this point, the general position when dealing over the internet, is that the offer is made by you, e.g. by clicking on the “submit” or “order”, and the acceptance would occur if – and only if – the supplier accepts your offer by a further communication to you, e.g by sending you an email acknowledgment or confirmation with a reference for the order.

This principle is however subject to any terms and conditions incorporated into the contract by the supplier. It is almost inevitable that internet purchasing via the web will involve such terms. For example there could be term saying that, “even though we acknowledge your order…..this will however not bring into existence a legal binding agreement between us…. No contract will exist …. until your credit/debit card has been charged.” Or you could have a term saying that, “your order represents an offer which is accepted by us when we send an e-mail confirmation to you that we have dispatched that product to you. That acceptance will be complete at the time we send the Dispatch Confirmation E-Mail to you.”

However, even if you can show that you have a binding contract, there is a way that the supplier could try and set the contract aside by arguing that a “mistake” has been made. In other words the contract was not a true reflection of the sellers intentions. This may mean having to prove that no reasonable person could have believed the offer to be genuine. However, in your case the supplier has done something further, e.g. by charging the price to your card (£3.95), and has actually sent the cases to you. So you would be in a strong position to claim your cases at the agreed price., even if it was incredibly low.

So the position would be that assuming that their terms and conditions mirror what has been said above, and they did send out to you an e-mail confirmation that your order was accepted upon either them charging your card or actually dispatching the goods to you, then you should resist sending the cases back. You would be saying that the consideration for the cases was the £3.95 p&p

As you were dealing as a consumer it is highly unlikely that there would be some sort of retention of title clause to the goods, in the event of a mistake being made.

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Jen

I have purchased a holiday to Florida for two weeks in April for three for £280 from Thomas Cook. I have received the confirmation email and the E tickets and the money has been debsited from my account. Today they have rang me to say that they will not be honouring the deal and will be refunding the money. I have argued that I have a contract with them since the money has been paid but they are refusing anything other than a refund. What are my rights here?

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Louis

Try calling the Citizens’ Advice Bureau. I’ve had a look at its website, but cannot find any useful information for your case. I suggest that you speak to someone over the phone, or in person if you prefer.

If you live in England, the following link takes you to the England contact page. If you’re in another part of the UK, you’ll need to select your country from the drop down menu near the top of that page.

England only:

http://www.adviceguide.org.uk/england/consumer_e/consumer_protection_for_the_consumer_e/consumer_citizens_advice_consumer_service_e/if_you_need_more_help.htm

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David

There is currently a similar issue with a company called gameseek.co.uk Their website showed a large number of games, games consoles, DVD’s and Blu Ray’s at extremely low prices yesterday (05/0/2013). Many people placed orders, received order confirmation emails and payment was taken. Gameseek.co.uk have subsequently told everybody that the items were mispriced due to an internal error and they have cancelled all the affected orders. The issue is that the company clearly stated in their terms and conditions that contract acceptance occurred at the point that the customer received an email confirming their order rather than at the point that the goods were dispatched. Therefore I believe the company are in breach of contract and I have advised them of this. Subsequently the company have now changed their terms and conditions so that contract acceptance occurs when the goods have been despatched. Could a legal person advise on whether contract breach has occurred. there is rather a lively discussion about this matter on gameseek’s facebook page.

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sylvannia

I ordered a pack of 200 seeds from Thompson and Morgan, a pack of 4 arrived, online advertised 200 and also the advice note sent with the seeds stated 200. When I complained they sent another 2 packs of 4 seeds in each and 2 x £5 vouchers which can only be used by paying for post and packing on a purchase!!! Then when I complained receive a snotty letter saying that the writer had worked for many years and no mistakes had ever been made and he more or less was saying I was out of order to complain which really made me annoyed as that certainly was not an apology. Won’t be ordering seeds or plants from them again as plenty other places on line. Stores remember we have lots more choice now from online stores all over the country and a great many nurseries and don’t just rely on one supplier. Trading standards I assume could have looked into this? Surely as they had even sent the advice note stating they sent me 200 seeds they should have provided me with that amount. They stated now they have corrected the website.

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Bargain hunter

The law is wrong. If a customer sees something that is priced too low and purchases it and they get an order confirmation then I’m sorry but that purchase should be honoured.

Had the mistake been made in a shop the shop would honour the deal, why should online trading be any different? I saw a good brand pushchair selling for £17.95 on tescos website when it normally sells for £65 and I bought it there and then. It did not say it was in a sale or anything. We have received a confirmation email but have yet to receive a cancellation email.

In about 6 hours the order will have been placed 24 hours ago, if the cancellation email does not come within 24 hours of the purchase time I will take it that Tesco should honour this mistake.

If they can’t employ people to do their jobs properly and if they can’t check their products online then that’s not my problem. They advertised it for £17.95 and they should stand by their advertised price just like they would do if it was mistakenly priced in a shop.

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Tim Russell

I bought a thomson holiday for myself and 5 friends at a price of £29 per person, not bad for a 4 star hotel half board including flight! All contracts were issued including flight confirmation and ABTA certificates. A couple of days later thomson forced a refund on me and said that my holidays had been canceled as they had made a pricing error. I Immediatly contacted the company and insistted they honour the contract but they claim they have a 14 day cancellation clause as they had made a mistake. Where do I stand?

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Louise

From the retailer perspective we have a case of our shipping link to the web sonehow going down although everything my developer has done to repeat the error hasn’t resulted in an error?
But the short of it is, it allowed an order from Australia to come through with no delivery applied, so at our UK prices.
Pride myself on customer care and we would have happily covered a less costly error but cost of despatching to Australia doesn’t just eat any profit it costs 10x the cost of goods? I emailed an immediate apology letter explaining what had happened and that we didn’t yet understand how his orders had come through as if he was in the UK and offered to refund as we couldn’t cover the high delivery cost to him. But he is insisting on them being sent? Do I need to check with our solicitors (which to be fair might cost as much as the delivery)

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Holiday boy

Help – B&Q behaving badly. I ordered an oven in their big clearance sale – it was reduced from £600+ to £279. They we’re selling lots of appliances off at similar discounts and therefore, while I thought it was a great deal, I never even considered that it was a mis-price. I made the purchase on 4.August (with other items also heavily discounted) and they said delivery would be 5 September due to high demand – they took my money immediately. Last week I received a confirmation e-mail that delivery would be on 5 September today (29 August), 3.5 weeks after the order was placed they rang me and said the oven was a mis-price and they would not honour it.

There terms and conditions do say that a contract isn’t formed until dispatch – where do I stand? Surely, taking the money, sending an e-mail confirming the delivery date and taking so long to inform me it was a mis-price all come into play?

I have lived without an oven, waiting for the delivery, as I thought the saving was worth the wait? I’m now inclined to cancel everything on the order as this seems such poor behaviour by B&Q.

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HolidayBoy

To update – I called B&Q today and cancelled everything on my order due to their behaviour – none of it was important to me (other then the oven) and it made me feel better. The person I spoke to today was all apologetic, as opposed to the girl who called to cancel the oven, she was robotic – ‘I must refer you to our terms and conditions……’ Well B&Q, here are my terms and conditions – Where a supplier or retailer shows an abject disregard for me as a customer I will ensure others are made aware on public forums such as this, I will not shop with the supplier or retailer again and I will ensure as many people as I get to speak to know how poor the service provided is. I may not damage you enough to force better service, but just watch your back, Tesco started to presume customers would shop with them no matter how they treat them, they are regretting it now!

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Elizabeth

I have exactly the same situation with B and Q and Bosch oven ordered on 4th August and delivery 5th August phone call to day was offered alternative of Beko or Hotpoint oven I did not really think that the deal would go through anyway. What is really annoying is that they took the money from my credit card on the 4th August how many others have they done this to.

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Andy

I have the same problem with B&Q, I ordered two Bosch ovens to replace my two aging ovens and have removed one and modified the cabinets ready for their arrival, confirmed twice for 9th September 2014.
The ovens has been on order since 4th August 2014.
I received a telephone call stating the ovens would not be delivered citing their T&C’s as a universal get out clause.
While the ovens were reduced, it was not an obvious misprice.
Is this covered by “The Misrepresentation Act 1967″ ?
No monies have been refunded yet either.

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Louis

Come on, Which? Get your legal department to clarify the position for these B&Q customers.

As to these people, having reread the original article, kicking up a fuss on social media may be worth it; M&S backtracked. It was not an obvious mistake on the part of B&Q and the company may care about an angry backlash of customers (presumably, there were others who had the same issue and who may not be Which? members). You have all been inconvenienced, by the sound of what you have written.

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Andy

Update on the B&Q Bosch oven fiasco.

Some lucky individuals have apparently received their ovens.
This puts a different perspective on B&Q’s claim it was a mis-price.

B&Q management would have known immediately from their stock control system (M1) of the potential problem but waited 25 days to notify their customers of the problem. Continuing to hold all the monies for this time and (according to others) we will have to wait 14 days (working?) for a refund.
This is outrageous from a company like B&Q to act in this manner.

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Louis

Andy,

If you know for a fact that some people have got their ovens, this strengthens your case. It may even put B&Q in a precarious legal position (precedent?). In my opinion, the delay in notification and holding on to money for an unreasonable amount of time, instead of notifying and refunding immediately, further weakens B&Q’s case.

I am not a solicitor and can only offer my opinion. You need professional advice, hence my call for the forum moderator to contact his (or her) legal colleagues.

I still think that it’s worth you starting a social media campaign. As I said above, not all affected customers may necessarily be Which? subscribers and not all Which? members may be following this thread.

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