Argos misses the decimal point

1999-09-09

It looks like Argos, the UK retail chain, may be sailing into murky electronic waters over the next few months. A few days ago, a mistyped catalogue entry on the Argos website led to hundreds of customers ordering Sony televisions at three pounds a pop. The company are now refusing to honour the orders, as (in their own words) this was an obvious error. The question is, are they liable?

This question would be difficult enough to answer even without the complication of the Internet, due to the complexities of commercial and contract law. The underlying model of the retail sale is, however, relatively simple and it is this which will be used as the basis for both sides of the case. According to Taylor Walton, a legal firm which specialises in eCommerce law, there are three elements to a retail sale. The first is the “invitation to treat,” which corresponds to an entry in a catalogue or a price on a shelf. The second is the acceptance of a payment. If a payment is accepted, this leads to the third element, namely the completed contract. In other words, once a payment has been accepted, for example through a credit card transaction, then the company which made the initial offer is liable to deliver the goods.

Reports in the press suggest that Argos is to fight any suits (and indeed, threats to sue have already been made), by saying that orders were made but would not be accepted. Sure enough, a quick browse of the Argos web site shows that customers are invited to make “orders”. However, once a customer has compiled an order, they are then requested to make a credit card payment and hit the “purchase” button. Hmm, sounds like a sale to me, but who am I to say? It is probably best to leave this to the legal experts, who stand to make a pretty penny out of this debate whatever the outcome.

Unfortunately for Argos, precedent would suggest that they stand to lose. Many in the UK will remember the Hoover competition which offered free holidays on the purchase of a washing machine. The company was forced to honour its pledges, almost bringing itself to its knees in the process. Supermarkets, too, have had their fair share of problems due to misadvertising prices. The Walkling case, for example, resulted in a family claiming (and receiving) £30,000 worth of goods. This was due to Sainsbury’s policy of letting customers keep the goods and get their money back if they found that an item was mis-priced. Another example is of an enterprising customer buying £5000 worth of beer at Tesco, then going directly to the customer service counter and asking for their money back – and getting it. The service representative is reported to have commented that the lucky customer “didn’t do as well as a chap in our Stratford store,” or words to that effect. It is understood that Sainsbury’s have now changed this policy, but Tesco, to date, have not.

Whatever the outcome, it is clear that the Argos case will be watched with interest from around the globe. One thing it illustrates is that on the Internet, nothing happens by halves – the hundreds of TVs were “sold” in a matter of hours, before Argos corrected the error. It could be said that all publicity is good publicity – even articles such as this will encourage prospective customers to visit the site. Indeed, I would wager that even now, bounty hunters are scouring the online catalogues for typos.

(First published 9 September 1999)