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It was Black Friday Again for Amazon for all the Wrong Reasons...

Dec 15, 2014

Last Friday was quite the headache for the retailer giant Amazon, the owners of RepricerExpress and hundreds of online sellers. For some unknown reason a computer glitch in the software provided by RepricerExpress set the prices of thousands of products at 1p between the hours of 7pm and 8pm. As a result of this glitch, thousands of orders were processed through Amazon, costing suppliers hundreds and even thousands of pounds in loss of revenue. Products like mattresses, mobile phones and toys were on the shopping list of all those who realised. Although Amazon quickly realised the error and corrected it, many sellers remain out of pocket.

Customers of RepricerExpress use their software to ensure that all the products they sell online are competitively priced on the market. The software then changes the price accordingly; with the luxury and benefit to the seller being they do not have to manually change all this themselves.

Following this online disaster, RepricerExpress has confirmed that “Amazon have assured … that seller accounts will not be penalised for this issue. Amazon has also issued a statement which states that the vast majority of orders placed were cancelled”. This is good news for the sellers.

It is a stark reminder that computers cannot always be 100% correct and mistakes do happen. It also raises interesting issues for the legal position. Without knowing the terms and conditions between the parties it is difficult to speculate on whether the sellers will get their money back and who, if at all, the responsibility lies with in paying that money. However it does highlight the importance of getting your legal obligations right from the beginning if you trade online.

Basic contract law allows a contract to be formed if there are four ingredients present: a) an offer, b) an acceptance of that offer c) some sort of consideration (such as money) and d) an intention by the parties to create that contract. With all these ingredients present, there is a contract. If one part of this recipe is missing, then a contract cannot exist.

The Courts have often taken the view that a contract is unenforceable where the offer does not show the true intention of the seller – clearly many sellers online did not intend their stock to be sold at 1pence. You only have to look at Twitter to see customers realized there had been an error and quickly took advantage of it.

Products on websites have also been known to be an invitation to treat, rather than an offer. An invitation to treat is more of an advertisement rather than an actual acceptance to purchase an item. Instead the customers make an offer to the seller to order products from the seller, and the seller then confirms to the customer that their offer has been accepted, presumably once stock levels have been checked. It is then a contract is then formed.   

There are a few simple things you can check and make sure are part of your business to ease any headaches of your own below:

How you can help get your online contracts right

  • Ensure that Web sites are set up as invitations to treat, not as offers.
  • Ensure you comply with all recent and relevant changes in legislation, particularly recent European legislation
  • Make sure your terms and conditions are updated regularly, should any changes be necessary
  • Clarify any conditions which affect the basis of accepting the order to the customer early on in the ordering process.
  • Have reliable systems (and a backup!) in place to stop errors happening or at least identify them before it is too late

If you have any queries or questions about an online order you have placed, or even if you would like to check your terms and conditions are all compliant with legal requirements, please get in touch with Nicola Lucas on 01279 755 777. 

Nicola Lucas

About the author

Nicola Lucas

Nicola is a member of our Business Law Team handling all the commercial requirements of her clients such as shareholder agreements and negotiating on commercial ...

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