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After payment at CHECKOUT your order is cancelled by the seller?!

Posted 12th Nov 2007
I have posted this under "Hot Deal" but what have you experienced when you had your order for goods and services cancelled by the seller? Did you think that there was a binding contract once you have checked out? How come a seller is able to say that there is no contract even thought you clicked on the CHECKOUT button and the seller's web page takes you to the payment page? Likewise if your local shop has a disclaimer at the cashier to tell you that there is no contract even after they taken your payment by credit card, this is surely absurd or is it legal?

There are three pieces of law which covers this subject 1) Contract Law 2) Trade Descriptions Act 1968 and subsequent enactment + Prices Act 1974 + amendments where relevant 3) Unfair Contract Terms Act 1977

Contract Law:

1) All goods and services on display are "invitation to treat" and not an offer that is open to acceptance (NOT a legally binding contract when you put things in your shopping basket),

2) When a person goes to the cashier or checkout the buyer makes an offer and the cashier can then accept or decline, up to this point there is no binding contract,

3) When the cashier accepts the offer then it is legally binding and the seller is obliged under the contract law to fulfill the bargain (The case Law on this was established in the famous case law "Pharmaceutical Society v Boots (1953)" a Retail contract is formed at checkout. . This law was the foundation in the principle of a contract made at the checkout and cashier since 1953. Therefore when you click on the button "checkout" on a web site you have made a contract. However web sites do put a exclusion term in and in my opinion, until I find further case law since 1953 or even since the start of the internet age, is an unenforceable term because it over turns the principle established by the 1953 case law. An example of such a term that tries to overturn the case law is the one drafted by the lawyers of PLAY.COM which is an unfair term (see the below reference to Unfair Contract Terms Act 1977) : No contract for the sale of any product will subsist between you and Play.com until Play.com dispatches the product(s) ordered. We will confirm that the product(s) have been dispatched by a confirmation email. This confirmation e-mail amounts to an acceptance by Play.com of your offer to buy goods from Play.com or a third party supplier that is engaged on your behalf by Play.com (whether or not you receive that e-mail).". This is an unfair term because by then you would have clicked on the checkout and used your credit card for payment (even though PLAY.COM) purports to delay the transaction by not taking your money. The KEY action is that YOU HAVE CLICKED AND PASSED THE CHECKOUT. And further more the button that you click on any shopping web site says CHECKPOUT and not "OFFER TO BUY". In the case of mistake made by a seller in the mis-pricing of goods. Well this is what was decided in 1880! Tamplin v James (1880) A contract will not be set aside simply because one party has made a bad bargain as a result of his own mistake. However some lawyers do believe that a seller could rely on an exclusion clause such as this: "E-tailers can avoid this risk with appropriate wording in their order acknowledgements and terms and conditions. When an order is placed, it should be immediately acknowledged. This acknowledgement does not need to "accept" the customer's offer; instead, it can state that the customer's order is being 'processed' and that, if accepted, it will form a binding contract. The terms and conditions should reflect this and clarify the point at which a contract is formed." Whether or not that they can rely on this depends on whether or law that there is a more recent case law. If a seller is able to say when he wants to accept your offer then a seller may state, for example, there is no contract until one year after payment, which is clearly absurd. Indeed any seller may even just exploit this method of disclaimer and extend the "processing" time. The seller may even take your money from your credit card and state that your ordered item is being processed by the manufacturer and is still on the drawing board waiting to be designed! May be the law has become uncertain in the internet age and not keeping up with the pace of e-commerce?! Have you had personal experience of whether such exclusion terms are legitimate in law?

4) The contract is binding whether or not that you have a receipt or a payment taken out of your account. Of course if you have an email confirming the order, or a note stating that your credit card may/will be deducted, or you have checked out on a web site, they are conclusive evidence to show that the seller had accepted your offer to buy.

5) The net is that if the seller cancels your order then the seller is in breach of contract and you can seek legal redress.

Trade Descriptions Act 1968 + Consumer Protection Act 1987 Part III., in the post war era there was a huge social change, socialism swept right across the western world as people felt that they as ordinary people should deserve much more than they had before the World War 2 in which they had made so much sacrifice. Then came the NHS, trading laws, helath and safety laws... In the sixties, after the Weights and Measures Act 1963, the landmark Trade Descriptions Act came in 1968. In a nutshell, amongst many legal sections, one specific application was the wrongful display of prices, many sellers advertised lower prices and only to charge people at a higher price or cancel the order and offer other goods.. blah blah... Another landmark law came out in 1974, Consumer Credit Act 1974. In simple terms , if you paid by credit card, and most people will do so on line, the credit card company is jointly and severally liable as the shop selling the goods.

6) So where in the case of no offer and acceptance (in contract) such as listed in 1) to 5) above, a seller may commit a criminal offence under the Trade Description Act + Consumer Protection Act 1987 Part III ( Part III of the consumer protection act deals with prices. Traders shouldn't mislead consumers about the selling price of goods, services, facilities and accommodation. They must not suggest that the price is less than it really is) even when there is no contract.

7) Clearly not all traders are dishonest and wrongful prices could be labelled, then the only defence available is that the seller must prove that he/she has taken reasonable steps to prevent the breach

However a seller is still not obliged to deliver the goods/services as there is no contract

9) Normally then a trading standards officer could investigate if there is cause for concern about a particular trader, and the officer could find that the sellers business process is defective when prices are uploaded onto the web site or displayed in shops, then the seller may be cautioned or be prosecuted

Unfair Contract Terms Act 1977 and subsequent enactment, this is the bit that I am not 100% certain as there could be some exceptions.

10) You may find that some sellers will add commercial terms such as: We can cancel your order at any time, We may cancel your order or substitute your item with an alternative if goods are no longer available or any variants

11) In a nutshell, any term that is not reasonable is unenforceable and the seller will find it that the judge will not be on his side, likewise any contract term that takes away any right that your have conferred by the law is illegal as there is a basic law of the land : no one is above the law. When a seller takes away your legal right by commercial term, he/she commits a criminal offence. However you are still not entitled to any goods unless there is a binding contract as listed in 1) to 5) above.
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