Is It Legal For Retailers To Cancel Sales Due To A 'Pricing Error'?

Image: Supplied

Earlier today we reported on a pretty unbelievable HP laptop deal available at JB Hi-Fi, that was hunted down by a user on OzBargain. Shortly after posting, the laptop deal had been removed and JB Hi-Fi confirmed that the price was posted in error. Those that had ordered the laptop online later found out that JB Hi-Fi would not be honouring the sale. Is this legal?

In general, when a retailer incorrectly prices an item, it is up to them to individually decide on the recourse, dependent on their terms and conditions. If you were one of the multiple users that jumped on the deal this morning, you may be receiving or have already received a phone call stating that JB Hi-Fi will not honour that price and they will, instead, refund you the amount you were charged.

Is JB Hi-Fi allowed to do that?

Image: JB Hi-Fi

The HP in question - advertised at $1400 off, in error on JB Hi-Fi's website at 8am this morning

Well, yes. JB are not legally obliged to honour an advertised price if it is in error - which this case certainly seems to be.

I guess with a bit of legalese thrown in there, a contract between two parties has to form during a sale - an offer and acceptance of that offer. If that offer has not been accepted by the retailer then they are still within their rights to explain to you that the pricing is in error and deny you that price.

Working in retail for several years, this occurred multiple times. Products advertised at a lower price in error were usually corrected at the point of purchase and at the registers before the incorrect price was honoured. However, places like JB Hi-Fi have been known to be a little lax on not honouring incorrect prices. On the right day, you might find a salesperson willing to do you a solid. That's the stone cold truth of it.

On the other hand, it's a store's Terms and Conditions that usually provide a solid out.

In the case of JB Hi-Fi and the HP Spectre X360, their website Terms of Sale has this particularly pertinent clause (emphasis our own):

JB Hi-Fi reserves the right to cancel, at any time before delivery and for whatever reason, an Order that it has previously accepted. JB Hi-Fi may do this for example, but without limitation, where:

(a) JB Hi-Fi’s suppliers are unable to supply Goods that they have previously promised to supply;

(b) an event beyond JB Hi-Fi’s control, such as storm, fire, flood, earthquake, terrorism, power failure, war, strike or failure of computer systems, means that JB Hi-Fi is unable to supply the Goods within a reasonable time;

(c) Goods ordered were subject to an error on the Website, for example, in relation to a description, price or image, which was not discovered prior to the Order being accepted;

Where things get murky are the fact that their Terms clearly state "prior to the order being accepted". If you were to go into a store and get the laptop, you would have scored yourself an excellent deal. It would have scanned up at the discount price - and unless the salesperson knew it was in error - and your wallet would be thanking you.

However, because many orders were placed online, it's a little harder to discern the point of sale and acceptance of payment as finalising the sales contract. Thus, JB are within their rights to cancel the order and refund a customer before they send out the heavily-discounted HPs.


Comments

    It has nothing to do with JB's terms and conditions...learn your law. Basically an online advertisement is considered an "invitation to treat". So when you click to buy, you are effectively making an offer at that price to the retailer who then accepts, or in this case declines the offer. Thus no contract is formed.
    Where it differs for in store arrangements, is say a bottleshop has a window sign or shelf sign at a price AND you take that item to a counter. Then the law interprets the shop as having accepted the offer at the price. Typically the court measures the acceptance by the store, when the customer has "placed the item on the counter". So as a customer you would be entitled to assume that offer and acceptance has taken place and thus have formed a contract.
    A slight variation to the above is if you ask for an item that is behind a counter (like a Bar/pharmacy), then if the shop keeper does not place the item on the counter, they have the option to refuse the acceptance of the deal.
    Please look into "invitation to treat" vs "offer and acceptance" - they are two very different things.

      hi soitbegins, so is it legal for JB to cancel the sales?

      Could you please explain -
      If you shopping in an online store and have placed the item in your 'cart' and then proceeded to 'checkout' (place it on the counter) and pay, how does that differ from doing it physically? Once the payment has been taken from your card and you have a receipt, you would expect the transaction to have been completed just as legally as if it occurred a physical store.

      Mate you need to chill, especially when you aren't entirely correct. Placing the item on the counter is not enough, as per Pharmaceutical Society of Great Britain v Boots: "There is no sale until the buyer's offer to buy is accepted by the acceptance of the money...". The customer needs to actually pay for the item; that constitutes the business owners acceptance of the customers offer.

      Is there a precedent?

      I'd argue that the act of taking the money from me is ACCEPTANCE OF MY OFFER.

      Thus, while no human has been directly involved in the sale, a JB HiFi Agent or Representative (ie. their website) has explicitly accepted my offer, as demonstrated by the fact that they accepted my payment for the goods. (ie. consideration has changed hands)

      So, if your website simply takes orders, which are then later processed by a human and payment made in a second stage, then the acceptance of my offer is not at the point that I put my details into a website.

      However, if the website is automatically taking money from my credit card, then consideration has changed hands, and we have a full, legally binding contract between me and Jb HiFi (executed on their behalf by their website).

    Once the product has been paid for, the offer has been accepted and may not be changed. I had the same dispute with Accor even though their terms and conditions said that they should not have allowed the free night to be booked.

    Consumer Affairs Victoria ruled that the law was on my side. By accepting my payment they completed a contract.

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