2. The creation of electronic
contracts via the Internet.
One of the most important ways that ecommerce can be effected is through
the Internet.
In fact the rise in e-commerce
throughout the world has in the most
part been due to the increase in the use
of the Internet.
3. E-commerce and the
Internet
There are numerous online stores,
some more famous than others, but all
engage in e-commerce.
www.funrecords.de
www.marksandspencer.co.uk
www.amazon.co.uk
www.crocus.co.uk
4. Why trade on the Internet?
1.
Virtual shops can be open
24 hours a day, 7 days a
week, 52 weeks in the
year. There are no public
holidays on the Internet.
2.
Virtual shops do not
experience the problems of
location. They are always
as close to the consumer
as the nearest computer.
3.
Virtual shops can take
advantage of huge
economies. For example,
heating, lighting, staffing,
staff training and perhaps
most importantly High
Street rents.
4.
A virtual shop can appear
as large as the largest
department store but be
based in a small room.
5. What is the legal status of a
website.
When considering trading on the
Internet, it is necessary to determine
whether a website amounts to an
invitation to treat or an offer for sale.
Let us look at a real life example.
6. www.argos.co.uk
Late in 1999 the UK’s catalogue
shopping company ARGOS started its
own web site in order to take advantage
of the e-commerce revolution.
7. www.argos.co.uk
On their website, Argos made a pricing error.
They misplaced the decimal point and priced
a Sony Nicam TV at £2.99 as opposed to
£299 – a saving of 99%.
Word spread and before the mistake was
noticed Argos had received orders for
hundred’s of these bargain TV’s.
Argos refused to honour the sales.
8. www.argos.co.uk
The legal issue here is:
1. Was the website offering the
televisions for sale? Or
2. Was the website merely inviting
offers from the public as a whole?
9. Proposition 1
If the website was offering the
televisions for sale, then the orders by
the public would amount to acceptance.
Argos would be legally obliged to
deliver the televisions.
10. Proposition 2
If the website was an invitation to treat
then the customers orders would be
offers to buy which Argos would be free
to either accept or reject.
11. ?
In order to answer the problem we will
need to go back to basic principles.
There are three cases that are of
interest.
12. Basic Principles
In order to determine the answer to this
problem we need to consider previous
case law and see how it fits in with the
current situation.
13. Is there any case law of
relevance?
What is an e-commerce website most
similar to?
Advertisements?
Shop?
14. Adverts v Shops
There are some similarities between
both of these and therefore 3 cases
should spring to mind.
Partridge v Crittenden
Fisher v Bell
Pharmaceutical Society v Boots
15. Partridge v Crittenden
[1968] 2 All ER 421
Facts
An advert was placed in a magazine
which read: ~
“Bramblefinch Cocks, Bramblefinch
Hens, 25s [£1.25] each”
16. Partridge v Crittenden
He was reported to the RSPCA who
brought a prosecution against him.
He was charged with offering for sale a
protected species. He was convicted of
this offence.
17. Partridge v Crittenden
On appeal it was held :~
The advert was an invitation to treat and
not an offer for sale.
The conviction was therefore quashed.
18. Partridge v Crittenden
In this case the Court suggested, albeit
obiter, that where a retailer was
advertising goods it was likely that this
would amount to an invitation to treat as
stock would be limited and the retailer
may find that he is unable to provide
goods to all who want them.
19. Fisher v Bell
[1961] 3 All ER 731
Facts
A shop keeper was prosecuted for
offering for sale an offensive weapon .
The shop keeper had displayed a flick
knife in his shop window.
20. Fisher v Bell
Held
The display of an article with a price tag
in a shop window is an invitation to
treat.
It is not an offer for sale
21. Pharmaceutical Society v Boots
[1953] 1 All ER 482
Facts
This case concerned a self service
shop. Customers would pick up their
chosen items from shelves and then
take them to the checkout where they
would be sold.
22. Pharmaceutical Society v Boots
Some of the items on the shelves where
deemed poisons and had to be sold in
the presence of a pharmacist.
A pharmacist was present at the
checkout.
23. Pharmaceutical Society v Boots
Held
The court decided that goods displayed on
shop shelves were invitations to treat.
When a customer took the items to the
checkout s/he was making an offer to buy the
goods.
This offer to buy could be rejected or
accepted by the checkout operator under the
supervision of the pharmacist.
24. Advert v Shop?
In order to decide whether a website is
an invitation to treat we need to decided
which category a website falls into.
Is it an advert or a shop?
26. Advert v Shop
In all likelihood an e-commerce website
is likely to be deemed to be a shop.
Visitors to the website are greeted with
a shop window (the website home
page) where perhaps the best bargains
the shop has to offer are displayed.
27. Advert v Shop
A shopper can enter the online store by
clicking on part of the screen, or by
searching for the goods that are
required.
Once a shopper has found the item that
they want they will add it to their virtual
shopping cart.
28. Advert v Shop
Customers will then proceed to the virtual
checkout.
Prior to the checkout, the goods displayed on
the virtual shelves will be invitations to treat
and the shopper is able to put them into the
shopping cart and remove them without
entering into any contractual obligations.
29. Advert v Shop
Therefore the law as it stands in Fisher
v Bell and Pharmaceutical Society v
Boots is likely to be correct and
therefore the law that should be applied.
30. Argos
Goods displayed in the virtual shop are
merely invitations to treat.
Invitations to customers to make an
offer, which Argos is free to accept or
reject.
31. Argos
This can also be backed up by the
obiter statement in Partridge v
Crittenden regarding retailers making
invitations to treat and manufacturers
making offers (as they are able to
manufacture extra goods to fulfil
orders.)
32. Is the Argos site an
invitation to treat?
In this case, Argos eventually rejected
them. Therefore on the face of the
problem, there would be no contract.
Alas this is not the end of the matter.
33. Argos’ shopping cart
Argos employed a virtual shopping cart
system.
Customers who ordered a £3.00 Sony Nicam
TV passed through the checkout without a
problem.
Customers were told that the order had been
accepted.
34. Argos
Customers were emailed thanking them
for their orders and their delivery details
were confirmed.
In some cases, the money was even
debited from shoppers’ debit or credit
cards – later to be refunded.
35. Does this mean that Argos
were legally bound to
deliver the televisions?
The answer is probably yes.
36. Is there a possible defence
to this claim?
There is the possibility that Argos would
claim that the customer was Snatching
at the offer?
Webster v Cecil (1861) 30 Beav. 62
37. Other pricing errors
Since the Argos problem there have
been other similar occurrences.
Amazon – HP pocket PC for £7.32
Thai Air – London Bangkok for TAX
Lastminute.com – holiday for £29
million
PC World – 100 CDRs for 89p + VAT
38. What is the legal status of a
website?
Again there is no authority on this.
It would ultimately depend upon
intention.
