Amazon.co.uk refuses orders – but here’s what e-tailers should do

The e-tail giant said in a statement yesterday: "We will be cancelling orders made for the HP iPAQ Pocket PCs at the incorrect price this morning."

In an e-mail this afternoon to those who had placed orders, the company wrote:

"Despite our best efforts, with the millions of items available on our Web site, pricing errors can occasionally occur.

"In accordance with our Conditions of Web Site Use and our Pricing and Availability Policy, please know that we will be cancelling all affected orders. If you still wish to purchase this item, please place a new order online which will be charged at the correct price."

The company added in yesterday's statement:

"As the Conditions of Use clearly state, there is no contract between Amazon.co.uk and the customer for an item until Amazon.co.uk accepts the customer order by an e-mail confirming that it has dispatched the item."

This wording can be found in the Conditions of Use; but it is less clear if the Conditions of Use are properly incorporated in a contract with those who placed orders. If not, they hold no weight.

Amazon.co.uk's Conditions of Use are provided on a page which can be accessed from a link on all main pages of the site marked "Conditions of Web site use, copyright and disclaimer". But accounts can be opened and orders placed without users being forced to visit this link - and this is not consistent with e-commerce best practice.

The last step of the ordering process on Amazon.co.uk is a page entitled, "Please review and submit your order". Beneath this is a sentence that reads: By placing your order, you agree to Amazon.co.uk's privacy policy and conditions of use." The last words provide a link which opens a pop-up window setting out the terms referred to in the company's statement.

This is followed by a button entitled "Place your order" - which confirms the order, and beneath that button is an order summary together with the delivery details.

Jon Fell, a partner with Masons, the international law firm behind OUT-LAW.COM, explains:

"The flaw in this is that users are not forced to visit the conditions of use. The user's eye may see the 'Place your order' button first - and the user may click this without reading the conditions of use.

"Users could argue that they missed the conditions of use - and therefore did not agree to them. Such an argument has not been tested by UK courts; but it was tested in a US Appeals Court last year and the court ruled that a reference to an agreement purporting to bind users did not create an enforceable contract."

In that case, involving Netscape Communications, now a unit of AOL, the Appeal Court upheld a ruling that, because there was simply an opportunity to read the terms and conditions and the users attention was not clearly drawn towards reading them, they did not form the basis for a binding contract. Moreover, the user was not required to give express consent to the agreement and so could not be shown to have agreed to its terms.

"That case," says Fell, "could be influential in a similar action in this country."

The best practice, which OUT-LAW's team recommends to all e-tailers, is to put the conditions on a page to which the user is taken to whether he or she wants to read the conditions or not. At the foot of that page there should be a check box next to a statement that says "I have read, understood and accept these terms and conditions". Then there will be another button to proceed. The user must check the box (i.e. click it) before he can proceed. This should be the point at which the user is making an offer for the merchant to accept.

Fell continues:

"If Amazon.co.uk followed this practice and a user argued that he or she didn't know what the conditions were, it would be easy to show that every reasonable effort was made to make sure the customer did know what they were."

The second-best practice is to provide the check box and the sentence: "I have read, understood and accept the terms and conditions" - with a link to the conditions (as, for example, on easyJet.com's web site). Again, the e-tailer can show that efforts were made to bring the conditions to each user's attention.

Amazon.co.uk's system is more like the one which came before the New York court - which was deemed insufficient.

Accordingly, there is some scope for arguing that Amazon.co.uk has failed to incorporate its terms.
Further doubt exists in the text of the initial acknowledgement e-mail which has already been received by those who ordered the PDA this morning. A paragraph begins: "To cancel this contract, please..." The reference implies that a contract has already been entered into.

Fell concludes:

"Amazon.co.uk's Conditions of Use are sensible. They allow it to send automated acknowledgements at the time of an order without entering into a contract. In the event of pricing errors, the e-tailer can legally refuse to fulfil the order. But Conditions of Use can only work if they are properly incorporated in the contract with the customer. Doing that, and providing carefully worded, unambiguous acknowledgements, is every bit as important as getting the conditions themselves right."

If you're an e-tailer and want advice on these issues, contact Struan Robertson by e-mail or on +44(0)141 249 5422.