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No legal recourse for buyers as Amazon rejects £7 iPaq pricing

No breach of contract because there was no contract

Will anyone who ordered one of Amazon's £7.23 HP iPaq H1910 and £23.04 iPaq H5450 - which we reported on earlier today, see Amazon offers sub-£10 iPaq - actually have their PDAs delivered and their credit cards charged at that rate?

Unfortunately, it doesn't much look like it, and there doesn't seem much that aggrieved buyers can do about it.

According to the UK's Trading Standards Institute, under UK law a sale isn't made until there is a contract between retailer and consumer. A contract is said to be in place when an offer has been made by the retailer, the offer has been accepted by the consumer, and an exchange - either of goods or of payment - has taken place. Unless a contract is in place, consumers can't challenge the retailer for a breach of contract.

Amazon's terms and conditions, displayed here, state: "No contract will subsist between you and for the sale by it to you of any product unless and until accepts your order by e-mail confirming that it has dispatched your product." [our italics - and thanks to reader Andrew Soong for the link.]

In short, even though a buyer has ordered the £7.32 iPaq and had that order confirmed by Amazon - as many Register readers have - no contract exists between the e-tailor and the buyer.

In short, you don't become an Amazon customer until the company ships your order. At that point it bills your credit card, and the exchange aspect of the transaction is deemed to have taken place and a contract between buyer and seller put in place. This is all legal and above board, and Amazon is by no means the only retailer to include such a clause in its Ts&Cs.

Incidentally, Amazon is under no obligation to sell the PDA for £7.32 just because it made that offer earlier. "Price and availability information is subject to change without notice," says Amazon's Ts&Cs. And: "Despite our best efforts, a small number of the more than 1.5 million items in our catalogue are mispriced. Rest assured, however, that we verify prices as part of our despatch procedures." Again, there's an implication that the shipment of goods is the point at which the contract becomes firm.

With no clear contract, buyers have little recourse to challenge Amazon. Even if a buyer had received confirmation that his or her iPaq had shipped, but was later, say, charged the correct price, Amazon could claim, if challenged in court, that the price was clearly a mistake. Case law indicated that if the buyer understands that a price is a mistake and chooses to take advantage of that mistake, he or she has no right to insist the original price be upheld, Trading Standards tells us.

Given the interest in today's momentary Amazon iPaq prices, it's hard not to conclude that buyers did indeed realise the £7.23 and £23.04 were mistakes, particularly given the massive discount involved. Why else was there a rush to order more than one? Nothing on the Amazon site suggested that the price was any kind of special offer.

A recent case in which Kodak was forced to sell a £300 camera for £100 after mistakenly offering it at the lower price on its Web site hinged on Kodak's description of the lower price as a special offer. That, says Michael Archer, partner with IT law firm Beale & Co, differentiates Amazon's blunder from Kodak's. Buyers could well have assumed Kodak's lower price was genuine, whereas Amazon's seems to have been clearly a mistake right from the word go. Beale & Co. represented the consumer who challenged Kodak.

Of course, such a case as today's Amazon incident has yet to be tested in the UK court during the e-commerce era. That requires one or more buyers to take legal action against Amazon for breach of contract.

Amazon says it will not honour the incorrect pricing, so there's really no other option if anyone wants their £7.32 iPaq H1910.

Then again, company's order confirmation email details how a buyer can cancel the contract. But it doesn't state that the contract doesn't come into force until the goods ship. Certainly cancellation can't take place until the goods have shipped - ie. a contract is in force, in Amazon's terms - and buyers need to use the delivery form, but the link between contract and delivery isn't made explicit.

"It could be argued that Amazon are stating that this is acceptance of the consumer's offer, and it would be surprising if a court were to decide that no contract existed at this point," says Archer.

Reg reader Carl Fearby has established an online petition asking Amazon to reconsider its decision and honour the two low prices. For the sake of good will, Amazon may do so. We doubt it, and it seems the law is on its side. ®

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