The Sears website offered the tech bargain of the decade: a 16GB iPad 2 for just $69. And wouldn’t you know, it turned out to be an error.
The listing on the site was actually placed by a third-party retailer using the Sears Marketplace service which, as with Amazon’s service of the same name, involves Sears processing the payment and order, in return for a cut of the purchase price.
While the iPad in question was only the Wi-Fi model, the price was still too good to be true. Sears explained:
Unfortunately, today one of the Marketplace third party sellers told us that they mistakenly posted incorrect pricing on two Apple iPad models on the Marketplace portion of the website. If you purchased either of these products recently, your order has been cancelled and your account will be credited. We apologize for any inconvenience this may have caused.
Naturally it’s led to a lot of press comment, consumer reaction, and the views of amateur lawyers. My favorite so far is a CNN report which had a quote from a disappointed would-be customer who wanted to buy the iPad for a son who has Asperger’s syndrome and wanted the device for his homework. I’m not entirely sure of the relevance of that: surely you could have written the same story with a quote from a disappointed would-be customer who planned to use the device to watch (non-Flash based) content of a questionable nature?
From a legal perspective, what matters is the precise stage at which Sears cancelled the order. Contrary to many of the responses on Sears’ Facebook page, a company is under no obligation to honor advertised prices. (It may be in trouble under local laws for false advertising, but that doesn’t govern the contractual relationship with customers.)
This is because an advertisement with a price is not technically an offer to sell, but rather what’s known as an “invitation to contract” in the US and an “invitation to treat” in many other countries. This means it’s the customer who makes the first formal step in the contract agreement by offering to buy, with the retailer than completing the deal by accepting that offer. (The advertised price is merely an indication of the price the customer should offer.)
With online ordering, the point at which the retailer is considered to have formally accepted the offer depends on its terms and conditions. The usual set-up, as appears to be the case here, is that the retailer retains the right to cancel the deal over a pricing error until the transaction is complete: that is, not only has the money been collected, but the goods delivered.