By Shmuel Gershon
(Disclosure: I am not a lawyer!) (Request: Are you a lawyer? Please send me corrections )
Matters related to law, and all the discussions around it, interest me much — especially when related to Software.
This made me read about the subject and keep contact with the legal representatives within the company I work for. This also motivated me to learn and lecture about the legal guidelines in software development adopted by our company, and to lecture about legal matters on software in general at the last Israeli SIGiST conference.
Most important than all, this made people share with me a lot of comments, questions and stories pertaining to the law.
For example, one colleague brought to my attention a case in which he and some friends had bought a PlayStation 3 in the local Office Depot website for 220NIS – when the normal price is almost tenfold! They believed it was some special sale promotion, but at the end Office Depot announced it as a typing mistake and cancelled the sale after it had been acknowledged (sale confirmation by email).
(There is an article about the episode in Hebrew here if you want to see it).
What is my opinion on the legal aspects of the story? I was asked.
I don’t have one, as I am not a legal professional, I answered. I am, though, a Testing professional, and here is the tester rambling I sent by mail commenting the occurrence:
In fact, electronic transactions are special and different that normal stores. They can be built without any human interaction whatsoever, and the lack of human monitoring can bring new and unexpected problems.
Note that I can’t have an official Legal opinion, as I am not a lawyer. I’ll just write what I learn.
A usual understanding in contract law is that once both parts show agreement to the deal, then the deal is closed and valid (I think a lawyer would explain this by stating that there is a mutual offer and acceptance of goods or services). Such agreement is shown, for example, by accepting the payment money.
In such a case as this story, the electronic sale often includes a debit in the buyer’s Credit Card (that turns into a credit at the cancellation of sale). If a service provider accepts payment for a service, he is in obligation to provide the service at the agreed terms. If he didn’t agreed to the terms, he would not have taken the payment. So in our case the fact that a payment transaction was completed supposedly forces the two parts to honor it (the store should not cancel the delivery just as you should not cancel the money debit).
However, apart from the amateur philosophy, we can find a bit more of info in the net about this sort of things…
a) Not only the payment debit can be viewed as a contract acceptance, but also the confirmation mail you receive when buying online can be seen as such, depending on what it writes.
b) The Terms of Service of the website can be used for or against the store, depending on their presence and the judge interpretation of them.
Buy.Com (huge company, 290 million revenue) announced at $164 a $588 monitor. They tried to cancel the sales, and lost more than $60000 in a lawsuit (CNET link).
Buy.Com had no such protection in their terms, and after the lawsuit they updated the terms to include “have the right to refuse or cancel any such orders whether or not the order has been confirmed and your credit card charged”.
If it will always help? Not sure. In this link a representative of the FTC says that it will depend greatly on the state the lawsuit is taking place.
In the US, there is a concept of “loss of bargain”, that could allow one to buy the PS3 at normal price and sue for the difference (which represents the bargain lost due to the store’s malpractice). Of course, if the judge identifies the buyer as having bought it to exploit a weakness or obvious typo, the attempt can backfire…
Now that we learned some principles of the domain… We go for the most important…
As I said, I have no legal opinion, but I do have a tester opinion.
First, this shows (again) that there is no final answer in the law yet for new technologies and new problems.
And I now know that for assessing risk on an e-store product, one has to answer these questions too:
Does the system have any protection against mistakes
This can be done by issuing an alert if there is a big discrepancy after:
comparing the product to similar ones
or comparing to the previous price
or comparing to the price in the normal (brick) store
Does the system require a manual human confirmation before sending the payment or confirmation mail?
This can be bad for a large operation, but for small-medium business, can be a good way of catching mistakes
Does the system alerts the administrator if there is a sudden surge in the purchases of a newly added product?
Do the Terms and Conditions protect the company in case of mistakes?
Are the Terms and Conditions clear to the end user? At least in a visible place?
Is the user obliged to mark an acceptance to the Terms during log-on, or it is just a link in the page footer?
These are some of the questions I would ask when faced with such a product. There are more, certainly — please share your own ones in the comments or by email
One last comment…
Sometimes the typos make the prices higher than the norm… See this picture, a real example from Amazon selling this $400 card for a whopping $5 million!! That’s a lot of money for a graphics card…
Hummm… would they cancel this sale as a mistake too?