Offer and acceptance online

There are three fundamental requirements for the formation of a legally enforceable contract, and they are as applicable online as offline.

  • First, the contracting parties must agree on the terms of the contract, through the issue and acceptance of a contractual offer.
  • Second, they must intend to create a legally binding agreement.
  • Third, the contract must be supported by consideration: an exchange of value.

This post is concerned with the first of these requirements, a familiar subject to all law students, and known simply as "offer and acceptance".  It considers the online application of the traditional principles of offer and acceptance.

The basics are these.  An offer has been defined as an "expression of willingness to contract on specified terms, made with the intention that it is to become binding as soon as it is accepted by the person to whom it is addressed" (Treitel, The Law of Contract, 12th Edition, p9).  An offer must be sufficiently clear, certain and communicated to the offeree (the person to whom the offer is made). The acceptance from the offeree must be equally clear, unequivocal and in response to the offer.  And the acceptance must mirror the terms of the offer and be communicated to the offeror (the person making the offer).

Websites as advertisements

The general principle is that adverts or displays of products do not constitute an offer.  Instead, they are said to be "invitations to treat". An invitation to treat precedes an offer in the contract formation process; it is an invitation to make an offer.  By contrast, an offer is capable of binding the offeree if it is accepted. Websites used to market products and services may be considered as analogous to offline advertisements.  Generally speaking, such websites will communicate an invitation to treat, not an offer.

Online ordering

Internet transactions typically require the completion of web order form by the customer followed at some point by the clicking of a "complete order" button or link.  Regulation 11 of the Electronic Commerce (EC Directive) Regulations 2002 requires online traders to acknowledge receipt of an order by electronic means. After the submission of an order, the customer will usually be taken automatically to a new web page confirming whether or not the order has been placed successfully.  A confirmation email may also be sent. In the absence of any factors to the contrary, there is a risk that the contract may be formed once the confirmation page is displayed or the confirmation email is sent or received. An online trader’s T&Cs of sale may distinguish a confirmation page or email from a contractual acceptance.  In these circumstances, the buyer’s order will typically be categorised as a contractual offer.  Accordingly, the trader will not be obliged to fulfil the order until after acceptance.  This approach recognises that an online trader’s stock will be limited, and also that a trader may wish to retain some discretion over the persons with whom he contracts.

The trader’s T&Cs should specify what acts will constitute the offer and the acceptance. For instance, in relation to the sale of goods, the T&Cs may specify that acceptance will only take place (and, consequently, a binding contract be formed) once the customer is notified that goods have been shipped. However, a statement in the T&Cs may not be conclusive in all circumstances. If the order process has been configured in such a way that a reasonable customer would consider that a contract of sale has been formed, then a statement to the contrary buried away in the T&Cs may not assist a seller trying to avoid a contract.

Manufacturer-suppliers need to take particular care here.  In some circumstances an "advertisement" from a supplier who is also a manufacturer may amount to an offer.  Accordingly, sellers who are also manufacturers should be particularly careful to make it clear on their websites and in their T&Cs that the "advertisement" of products is merely an invitation to treat.

An example: £2.99 televisions

In 1999 Argos accidentally advertised Sony televisions for sale on its website at £2.99 instead of £299.99.  Subsequently, orders were placed and confirmed by Argos at the £2.99 price. However, since a website is generally construed as an invitation to treat, no binding contract had arisen between Argos and customers whose orders had not been expressly accepted.

Incorporation of T&Cs into contract

To be effective, a website's T&Cs of sale must be agreed by both parties and incorporated into the contract. The T&Cs should be available to the customer before the placing of an order. The usual way to ensure that T&Cs are incorporated into an online contract is to prevent the submission of an online order form unless the customer has positively indicated acceptance of the T&Cs, for example by clicking on an ‘agree’ button.  T&Cs assented to in this way will usually bind the customer. Less explicit forms of consent may sometimes be sufficient.  A statement proximate to an "order" button that the sale is subject to the online trader’s T&Cs, posted on another webpage and accessible through a hyperlink, may amount to sufficient notice.

T&Cs governing website use

The use of websites by casual visitors is (for usability reasons) not usually made subject to active acceptance of the website's T&Cs. Usually such T&Cs will provide that they are accepted by virtue of the visitor's use of the website. Whether they actually create a binding contract will depend upon the specific circumstances, but in many circumstances there will be no contract.  This does not mean that such T&Cs have no value: they may act as valid licences, and the disclaimers of liability they contain may still be enforceable.  Of course, to serve these function the T&Cs still must be brought to the attention of the users.

Conclusions

There is no difference of principle between the process of offer and acceptance online and the process offline. The main practical points to take away from this post are these:

  • traders should take care to ensure that they are not prematurely bound by contract;
  • to avoid being prematurely bound, traders should specify the acts that constitute the offer and acceptance in their T&Cs, and ensure that those T&Cs are properly brought to the attention of users and accepted by customers;
  • traders should also ensure that the structure of their checkout process (usually dictated by shopping cart software) and statements on their websites generally do not imply that a contract is formed before time; and
  • where particular caution is needed (e.g. because a seller is also a manufacturer) then a clear an unambiguous statement that the advertisement of products on the website does not constitute a contractual offer should be included on the website.

This article was researched and written by Jola Hajri.

Comments

Regarding third fundamental requirement - consideration -, it appears true for English contract law.
For, example, Roman law (German contract law, Latvian contract law), the third requirement is not obligatory.

On Sainsbury's website, some items are "buy two, get one free", but when I go to them, they say, "sorry this offer is only on our main big store, not our smaller ones". Surely this offer should be in all stores, not just what they decide! When I emailed them, they said with overheads etc, they cant do this. Surely this offer, if on web, should be in all their stores?

There is no legal rule that a retailer must make the same promotional offers in all its stores, or that offers made online must be reproduced offline.

Is there a legal rule/case that states it is an implied term that employees of a company are not allowed to buy/take part in sales or deals by that company?

i found a sofa online, stating it started from £267 in the sales page. I picked vaious options to suit. The price came up to £267. I paid a 10 percent deposit, and recieved an order comfirmation with a break down of the price, and the order stated the sofa is on its way to being built. 

i have recieved a call stating the price was wrongly listed. It should have been £3000. Are they obligated to sell it to me for the stated sale price?

It's not possible to be 100% certain about the legal position here, certainly without more information, and possibly without getting a judgment.

However, on the basis of the facts that you have specified, I think there is a reasonable chance that you could insist on the sale price unless:

(a) the retailer's T&Cs have been drafted with this issue in mind (ie specifying that the contract does not come into force until sometime after the order confirmation); or

(b) the sale price is so low as to be obviously erroneous.

Thank you very much for your reply - much appreciated.

I have looked at the T&C and there is nothing specifying about a contract what so ever, although the sale price is rather low. 

I called the office earlier and the clark said no monies taken and the order has not been placed, so all I have is the order confirmation order. 

She said this was clearly marked at the wrong price and other items were at the correct price, sorry we could not sell for that price. They have since updated the web site to reflect the correct price. 

Do you think it is worth pursuing this?

I don't really have the information to answer that question - but if I were you I would probably not pursue.

I placed an order with an online fashion retailer, received emails of order confirmation, and then on the same day the money left my account. I subsequently recieved an email confirming dispatch. The next day I recieved an email saying they have cancelled my order, as a result of a glitch with a discount code I used. The T&Cs say they reserve the right to cancel an order for various reasons, but surely the dispatch confirmation email binds them to a contract of sale? Just curious where I stand :) Thanks.

There are two separate questions here.

  • Was a contract formed?
  • Does the retailer they have a right to cancel?

Your short description of the facts suggest that there probably was a contract, although I cannot be sure without reviewing the relevant T&Cs and looking at the chain of communications.

Again, the T&Cs may have something to say about the circumstances in which the retailer has a right to cancel. As this is a B2C contract, any cancellation right needs to be "fair" within the meaning of hte Consumer Rights Act 2015. If I were looking to argue that a cancellation right set out in the T&Cs is unfair, I would start with a review of the relevant provisions of that Act:

http://www.legislation.gov.uk/ukpga/2015/15/part/2/crossheading/what-are...

http://www.legislation.gov.uk/ukpga/2015/15/schedule/2/enacted

I'm assuming English law applies here.

In practice, pursuing this is unlikely to be worth the effort.

Hello,

My question is academic rather than personal.

This article mentions that "If the order process has been configured in such a way that a reasonable customer would consider that a contract of sale has been formed, then a statement to the contrary buried away in the T&Cs may not assist a seller trying to avoid a contract."

How would one argue against the online retailer if the details of the sale of contract (formed once product is dispatched) is at the very bottom of the terms and conditions?

Thank you in advance for your reply.

Hello

My question is, if I was to buy an electric device for $300 instead of the usual cost of $500 from a website. I understand that's an invitation to treat and I have offered to make the purchase and I purchase 2 for the total of $600. However, there's a statement on the website stating that says 'only one per household' however when I made my order for 2 it went through fine and I received the email confirmation as well as expected delivery date. Then the next day the email me saying that I can only have one and I shouldn't have been able to order 2 and they refunded the money.

in this case, is it a limitation clause? and have they breached the contract by cancelling the order ? As it is their own problem and technical fault on their website which allowed me to purchase 2 right?

Judging by the currency, this isn't a quesiton of English law, and I'm therefore not able to help.

I joined an online website and paid 150 for a year. I have not used the website in more than six months. they tried to charge me 275 for another year, as apparently I had to cancel 7 days prior... my card declined and they are now chasing me for payment. I have made it clear that I don't want to join for another year, and I haven't used it, can they force me to pay so much for something I have no use of? it seems mean!

Is this is a B2C contract? Also, are you in the UK? Is the commany in question in the UK?

So surely if payment is taken a contract is formed, the advice provided does not give an answer. But if a company takes money for a product which they class as a cash sale (even though online) can they legally say you have not formed a contract?

Hi I recently sent a quote to a customer and I received back the email below

"Hi, Thanks very much for getting back to me and I really appreciate you working on the figures, I have had accounts raise a order number for the £xyz its: xyz if you can forward me a invoice and payment details I will get payment over to you shortly.Many thanks."

The next day I received an email requesting that they wish to cancel the order.

My question is: have they entered into a legally binding contract by sending me the official order and order number?

There's not enough information here to say definitely whether a contract has been formed and, if formed, whether it can be cancelled.

I'm conscious however that in many contexts businesspeople do treat a purchase order as binding.

I'm assuming that there was no set of T&Cs or other contractual documents communicated by the parties.  (If there was, look at them: they may provide an answer.)

On balance it looks like there is an identifiable offer and an identifiable acceptance, but there are various other ways that a contract can fail. For background, see:

http://www.a4id.org/wp-content/uploads/2016/10/A4ID-english-contract-law-at-a-glance.pdf

If there is a contract, another question arises: do the terms of the contract allow for cancellation by the customer? If there are no express T&Cs covering this (as I am assuming) then would such a term be implied? For instance, a cancellation clause might be implied where that is standard in the trade, or where it is consistent with a previous course of dealing between the parties.

I bought a commodity on line for which I received an invoice thanking me for my order. I then sent payment by efpos. I then received an email to rescind the order as they said the price was wrong. I was unaware of this. My opinion is that the invoice changes the order to a contract, which is legally binding.They say in their TandCs that once the invoice is issued I have entered into a legally binding contract. However, their TandCs also state that they can rescind the order at any time, or change the price. My submission is that the TandCs refer to "orders" being changed. Once the invoice is issued and I make payment, surely they cannot rescind the order. I have extensively read numerous cases on the doctrine of unilateral mistake and even in equity they need to prove my conduct was such as I deliberately avoided advising the seller of their error. I didn't know of their error, and paid their invoice immediately...

Thoughts.

Is the contract expressed to be governed by English law?

In what countries are you and the seller situated?

Were you acting as a business or as a consumer in making the purchase?

Contract was made in Australia, where both buyer and seller are located and I was a consumer.

In that case you should ask this question to an Australian lawyer. Our expertise is in English law, and there may be relevant differences.

Further to the above, I placed my order via a smart phone and on their website there is no hyperlink directing me to TandC, although there is one visible via a laptop, which I discovered the following day. The browseclick which they use simply says "I agree" which you must click before proceeding to checkout.I have absolutely no knowledge of the commodity being sold and they blame a price feed error for the cancellation of my contract. (Gold for $2 an ounce) All the case law supports me, but I wont be spending any money on lawyers fees chasing specific performance.

Last April, I contacted a wedding host (which is my acquintance also) to be my wedding host and she confirmed the date which is on November 11. She didnt mention any downpayment even if I asked her. Though we already agreed with the schedule, time and the her service charge. 

This sunday, July 2, she said that she already got confirmed the said date to an event organizer bec. the said organizer gave her downpayment.What we have is only pencil-booking. 

I said that last April she confirmed the service and didnt asked any downpayment, which I even asked, so I am thinking that the deal is that I am going to pay after the service. 

Given the discussion from April to July (4months) already then she will cancel. 

Do I have any right on this? Knowing that i seal the deal in good faith. 

Bride

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