Out-Law / Your Daily Need-To-Know

Web pricing error is a question of degree in France

Out-Law News | 21 May 2004 | 12:00 am | 1 min. read

An e-tailer whose web site offered a Sony TV for sale at a price ten times less than that offered by his rivals was not in breach of contract when he refused to fulfil an order, because the pricing error invalidated the contract, a French tribunal has ruled.

According to a report from Paris-based law firm Franklin, writing for International Law Office, the TV, a big screen type known as a retroprojector, was priced on the unnamed seller's web site at around €750, plus shipping.

An on-line order was accepted with an order confirmation the same day. The seller then refused to deliver the goods, arguing that there was no contract because the price had been labelled incorrectly.

According to Franklin, a contract may be declared invalid in France if the consent to enter into the contract was due to an error "affecting the very substance of the merchandise" – such as the price.

The Strasbourg Tribunal of First Instance agreed with the seller's argument: there was no contract because of the pricing error.

The tribunal was influenced by the fact that rivals were selling the same product for around 10 times the price shown on the web site, and concluded that the price offered by the seller "resulted from a purely material price labelling error on the e-merchant's IT system," said Franklin's report. It declared the sale "null and void."

A UK court may be less sympathetic to the argument that an agreed contract contained a mistake – although it is an argument that a seller may try to run. The better solution is for the web site owner to prevent itself becoming legally bound to fulfil orders that are placed in the event of incorrect prices. There are three steps for the e-tailer.

First, the wording of the conditions of sale must make clear that the point at which a contract is formed with the customer is not the point at which the automated acknowledgement is received. These conditions should state that when an order is placed, the customer is making an offer and that if accepted it will result in a binding contract.

Second, the conditions of sale must be properly incorporated in the on-line sales process. They are not binding if the customer could not be expected to find them. (See the Netscape stories in the links below)

Third, the wording of the acknowledgement must reflect the conditions of sale – making it clear that the acknowledgement is not to be interpreted as acceptance of the customer's offer. (See the Amazon.co.uk stories in the links below)