Dick Smith iLife $5 Blunder

12 02 2009

Here is an e-mail sent to me from the ACCC regarding the Dick Smith Price Blunder. It arrived today, they must have a lot of consumer issues to deal with. Hopefully someone out there can understand it. Please leave comments if you have any legal advice regarding this.

Dear Mr Misko,

Thank you for your email dated 3 February 2009 to the Australian Competition and Consumer Commission (ACCC) regarding purchasing items online from Dick Smith.

The role of the ACCC is to ensure compliance with the Trade Practices Act 1974 (TPA), which is designed to encourage fair trading and discourage anti-competitive conduct through a specific set of competition and consumer protection rules.

I note from your email that you recently responded to online advertising by Dick Smith offering to sell software on their website for $5. You stated that you agreed to this offer and provided them with your credit card details and you were given an order number and electronic invoice. You are inquiring whether Dick Smith have to honour this advertised price now that the transaction has been processed and your payment has been accepted. You indicated that it would seem that Dick Smith has honoured this price with some customers but not with others. I set out below your consumer rights in this regard.

An ‘invitation to treat’ is a contract law concept that means displaying an item with a marked price does not constitute a binding offer to the world at large; rather, it constitutes an ‘invitation to treat’, or an offer to deal with the trader concerning the item and as such the retailer has the option to withdraw the item from sale.

Whether or not a consumer can force a trader into completing the transaction will depend upon whether the elements of a binding contract are present:

The important stages of contractual negotiations are the ‘offer’, ‘acceptance’ and the ‘consideration’ stages. While it is not the role of this office to provide legal advice, it is arguable that at the point in which you clicked to agree to the purchase is the point at which you had entered the contract – by accepting the offer and paying a consideration. The ACCC cannot give you any more specific advice in this regard. You may wish to seek independent legal advice in relation to Dick Smith’s decision to honour its contract with some customers and not with others.

Furthermore, if you wish to find out more about the concept of “invitation to treat” you can visit the ACCC’s website at link: http://www.accc.gov.au/content/index.phtml/itemId/322984.

In relation to online traders, please note that the TPA and contract law apply with equal force to ecommerce (Internet) transactions as they do to any commercial transactions conducted upon physical store premises. The only limitation would be whether or not the trader is a registered business in Australia as if the online trader is based overseas then their conduct will be unlikely to be captured by the TPA or fall under Australian jurisdiction.

Thank you for contacting the ACCC with your concerns. I trust this information is of assistance.

Yours sincerely

ACCC Infocentre

1300 302 502



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