When it comes to forming contracts, whether electronically or by any other manner, there are some vital factors that must exist for the contract to be enforceable. These are, offer, acceptance, consideration, and an intention to form legal relations. However, there can sometimes be confusion as to whether it is an offer or a mere invitation to treat.
A simple way to understand the difference is with age restricted products in a supermarket. For example, if the supermarket was making an offer by displaying alcohol on its shelf with a price, then the customer would be accepting that offer by placing it in their basket and taking it to the till to pay the consideration. Offer and acceptance, making it legally binding, before any age verification. However, products displayed on supermarket shelfs or in shop windows are merely an invitation to treat. Meaning, it is an invitation for the customer to make an offer. In the above example the customer therefore makes an offer when they present the alcohol at the till. The retail assistant then choses to accept that offer after possibly verifying the customers age.
How does it work with products displayed on a website then?
It is vital that an offer is distinguished from an invitation to treat, which is a mere assertion of a willingness to enter negotiations. If a website makes an offer, the customers acceptance of it forms a contract, without the website operator having the opportunity to correct any errors.
This was considered in 1999 when Argos mistakenly displayed 21-inch Sony TVs on its website at £2.99 each instead of £299. Many customers placed orders, one reportedly ordered 1,700. The Argos situation led to a discussion on whether the display of TVs and a price on its website was an offer or an invitation to treat. Similarities can be drawn from two legal opinions. Thornton v Shoe Lane Parking involved ticket machines and rules that they generally make offers. Fisher v Bell showed that shop displays are an invitation to treat.
Even if displaying goods on a website is regarded as an invitation to treat, the placing of an order by a customer would then be the offer, and any automatically generated confirmation email could then be regarded as an acceptance.
Therefore, it is vital that a website operator clearly sets out in their terms and conditions what actions signify both offer and acceptance. It is advisable to specify the communications that amount to acceptance. This could be acceptance takes place when a confirmation email is sent instead of when it is received. To minimise the risk of any error, acceptance could occur when the goods are dispatched and consequently with an email confirming dispatch.
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