Incorrect pricing on online stores?

“I recently bought a computer from an online store for R499.00 but now the store is refusing to send me the computer because they say the price was wrong and it should have been R8,499.00. Surely they must send it to me if they advertised R499.00 on their website and I paid for it?”

Although one’s immediate reaction to this question would generally be, “of course the supplier must deliver the computer!” the answer is not quite so straight-forward and is dependent on a number of factors.

Firstly, one must look at the position as to when is an offer accepted where goods are advertised for sale. In our common law it has long been held that the advertising of goods for sale is merely an invitation to do business and does not constitute a binding offer that a consumer could accept. But does this position also apply to e-commerce transactions and will the supplier only be bound to the transaction when it accepts the consumer’s online order, thereby allowing the supplier to still reject the order if a mistake was made in the pricing? 

The Electronic Communications and Transactions Act (“ECT Act”) generally applies to e-commerce transactions. Although still open for interpretation, it does however appear that the ECT Act supports the principle that the advertising of goods online constitutes an offer and that should the consumer accept this offer, the transaction will be binding. This position also appears to be a supported view internationally, with a New York Appelate Court recently finding that by a consumer clicking on the “I accept” button on a website, a binding transaction is made.

The ECT Act regulates the rights of the consumer in respect of errors made by the consumer as well as a cooling off period, but is however silent as to what the position would be had the supplier made a material error in pricing. This raises the second question, as to whether a supplier should be held to a clearly incorrect price where the consumer is trying to snatch a bargain. Here our courts have held that where a supplier has made an obvious error in price and a consumer tries to take advantage of that error, the consumer has a duty to inquire whether the price is correct and whether an error has been made. If the consumer fails to do this and continues to try and snatch a bargain, the supplier would not be held to the transaction, as in effect no consensus as to price existed between the parties and the consumer should have been aware that a mistake had been made.

Lastly, the terms and conditions of a website may also influence the position as to whether the supplier is responsible for the pricing. A supplier can in its terms and conditions determine that a transaction is only binding once it accepts the offer of the consumer even when payment has already been made. Such terms and conditions would then also enable the supplier to withdraw from an order with an incorrect price.

In your situation, I would accordingly recommend firstly reading the terms and conditions of the online store. If it is clear from the terms and conditions that a transaction is seen by the store as only binding once they accept your offer, they would be entitled to not accept the order with an incorrect price. If their terms and conditions say nothing regarding the acceptance of your offer, the default position of the ECT Act would apply and determine that an offer was made binding once you placed the order and they would be held liable for the order, unless there was an obvious error in the pricing. In this case, I would venture to say that the error appears to be obvious, and that if you did not inquire as to whether the price was correct, there would be grounds for the supplier to withdraw from the transaction because a mistake was clearly made.  

March 7, 2016

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