The world of online retail is on tenterhooks as it awaits the decision of the courts over whether automated email messages, sent by internet shops confirming orders, constitute a legally binding contract to supply goods at the advertised price.
Kodak is facing legal action under the civil law from an undisclosed number of angry customers, who took up the camera manufacturer’s New Year’s Eve website special offer of a 3Mp (megapixel) digital camera — the DX3700 — for just £100.
When the price turned out to be a mistake — it should have been £329 — Kodak withdrew the offer, but not before sending out a confirmatory email to expectant customers.
In the email Kodak stated that payment would duly be billed to customer credit cards and that the message should be kept as a receipt of the purchase. "You will need to provide a copy of this message if you ever need warranty service," stated the email.
The message rounded off with: "You should also be aware that you have a right to cancel this contract if you wish without stating any cause, by sending or delivering to us a notice in the form attached within seven working days beginning with the day on which the relevant goods are delivered to you."
Under the civil law once a retailer has agreed to a customer’s offer then a contract between the two has been made.
If the courts deem Kodak’s email to comprise such an agreement then the camera manufacturer will have to find new reserves of DX3700s or face damages for loss of bargain, the difference between the agreed sale price and the cheapest actual price.
In this case, Kodak would face payouts of around £229 per customer.
On contacting the Kodak press office a spokeswoman for Kodak told PC Advisor our enquiry was "bad timing" as the company’s senior management team is co-incidentally out of the country attending a conference so couldn’t field our questions.
The camera manufacturer, however, is sticking steadfastly to its guns, claiming that an automated response system does not constitute an agreement to supply at the advertised price.
"No, this is not a contract," the company said in a statement. "It is common industry practice and courteous to acknowledge customer orders... Kodak is not legally bound to honour any of these orders."
A spokeswoman for Kodak said all affected customers will be contacted individually and offered a 10 percent discount on any goods sold via its web shop.
According to Andy Singleton, marketing director for online retailer Jungle, these are not completely unchartered waters. Jungle changed the wording in its email responses a year ago from "confirming the order" to "confirming the receipt of order".
"We’ve been hit in the past," he said. "This way we’re legally in the clear and only accept a customer’s order once we’ve taken payment," he said.
Ultimately, a mass payout by Kodak will hinge on exactly what constitutes the completion of a contract between customer and retailer.
Tony Northcott, press spokesman for the Trading Standards Institute, told PC Advisor that he wouldn’t advise customers to pursue Kodak through the Small Claims Court, as "no money has actually exchanged hands".
Meanwhile, the inevitable legal weasels are gathering, eager to profit from bountiful pickings. Within hours of posting our first story of Kodak’s debacle, PC Advisor was approached by Covent Garden-based legal practice Beale and Company, warning that customers had been thrown "into a legal minefield".
In an article offered for publication to the IT press, Beale and Company claimed Kodak could be at fault on several counts from breach of contract to contradiction of the Business Names Act.