Business Law:
Article 1
URL: http://www.stuff.co.nz/business/72722258/harvey-norman-customers-may-seek-legal-action-over-online-sales-glitch
Article: Harvey Norman Customers May Seek Legal Action Over Online Sales Glitch
Author: Collette Devlin
Date: 05/10/2015
Source: Stuff.co.nz
Brief Summary:
Harvey Norman's (HN) customers caught in a sales glitch were upset that the retailer has not delivered personal explanation and are mulling legal action. The renowned retail company advertised furniture at the wrong price on its website during its “biggest ever retail sale”. Most customers bought furniture at the stated price. However, they were eventually informed that the prices were falsely advertised.
Most of the 327 consumers now want HN to honour the sales and to promise that they get to speak to an authorised personnel regarding this matter. So far, customers only received a mass email from the retailer apologising for the unfortunate error and advised consumers to contact the customer service department. However, according to multiple customers, HN has since ignored all e-mails and phone calls regarding this matter. The retailer also offered a $100 voucher to affected customers. Nevertheless, some customers are still planning to take legal action against HN for false advertising.
Topic: Formation Of A Contract (Invitation To Treat & Offer)
Opinion:
From our point of view, even though the advertised price was an error rather than an attempt to deceive their customers, HN still has to honour their sale price. This is because based on the elements of a contract, HN has made an invitation to treat by displaying their goods online at the sale price. Consumers then made an offer based on the sale price which HN then accepted through an automated confirmation letter and the consumers’ credit cards were charged for their purchases. Hence, if the customers made an offer at the sale price and the retailer accepts, this exchange creates a contract between HN and the customer.
Besides that, we believe that it may also be in the company's best interest to honour the advertised price than to ruin their brand image and relations with their current and potential customers as HN has done through improper handling of this crisis.
However, there is no law that requires businesses to honour an advertised price if that price is false. Laws against false or deceptive advertising require an intent to deceive on the part of the advertiser. If a company can demonstrate that an advertised price was simply a mistake, then it is not false advertising. HN claims that their website had incorrect prices in the database and they could counter consumer’s claims based on HN’s website ‘terms and conditions’ which clearly states the company has the right to cancel orders and refund customers to correct any error made in pricing.