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Online Pricing Errors

Failure to bring adequate notice of onerous terms to the customer’s attention could result in subsequent complaints and challenges that the online agreement is not enforceable.

Courts have also upheld the enforceability of “browse-wrap” agreements, which involve customers signing an agreement allowing the retailer to amend the terms at any time by posting amendments online. Notwithstanding this practice, when dealing with repeat customers, a better approach is to require the customer to scroll through and read the terms and conditions, prior to the first purchase. Included in these terms and conditions would be a clause such that their agreement thereof would apply to all future purchases. If the terms and conditions change over time, the customer should not be permitted to make additional purchases until the customer is made aware of and agrees with the updated terms and conditions.

Pricing mistakes have long been a hazard that retailers strive to minimize. Although pricing errors happen from time to time in all retail businesses, given the size, scope and accessibility of an e-commerce environment, pricing errors can be particularly harmful to online retailers. For example, there have been instances in which products (e.g., computers) have been mistakenly listed on a retailer’s website for well below the actual retail price. If honored, this would result in significant losses for the company.

How then, does a retailer attenuate these mistakes?

A suggested approach is to structure your online purchasing model so it is made clear to the customer up front that although every reasonable effort is made to ensure the accuracy of the prices listed on the website, the prices are subject to error and that you reserve the right to correct prices at any time.

In addition, it would be prudent to insert a clause in the terms and conditions that provides that the company has the right not to complete sales at erroneous prices. For example, language similar to the following may be one of the terms and conditions of your online agreement:

“All prices and specifications are valid in [name of applicable country] only and subject to error and change without notice. ABC Inc. will not sell products at prices that are listed on the website in error and ABC Inc. reserves the right to correct the prices and specifications on the website at any time.”

Finally, as the laws in different jurisdictions will vary in terms of how contract principles relate to pricing mistakes, your legal team can provide guidance with respect to the most preferable jurisdiction to use for the law that governs the online agreement as well as the most appropriate forum for any disputes.

Visa e-commerce cross-border handbook for U.S. retailers

Copyright 2010 Visa. All rights reserved.


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