[Ecommerce] Contract on the Internet

Thu Jan 16 15:01:02 2003

 From OUT-LAW.com

When the web site of US hotel giant Starwood, owner of the Sheraton and 
Westin chains, offered luxury bungalows at a South Pacific resort for 
the erroneous price of $85 instead of $850 per night, the bookings 
flooded in. However, at least 136 people have been told that their 
orders will not be fulfilled.
[SNIP]
Struan Robertson, editor of OUT-LAW.COM, said:
“The key in a case of this kind is the order process and the wording of 
the web site’s terms and conditions. Together these will determine 
whether Starwood has entered into a contract from which it cannot easily 
escape. However, the risk of losing goodwill will be a significant 
factor in deciding how to react.”
[SNIP]

Full article See: 
http://www.out-law.com/php/page.php?page_id=onlinepricingerro1042642299&area=news
On-line pricing error by US hotel chain
15/01/2003
When the web site of US hotel giant Starwood, owner of the Sheraton and 
Westin chains, offered luxury bungalows at a South Pacific resort for 
the erroneous price of $85 instead of $850 per night, the bookings 
flooded in. However, at least 136 people have been told that their 
orders will not be fulfilled.

According to media reports, the hotel chain claims that honouring the 
cheaper rate would result in losses of $2 million, but says that it will 
offer 40% discounts on the full rate to compensate customers.

It is the latest e-commerce pricing error to become public, similar to 
high-profile mistakes on the web sites of Kodak.com, Dabs.com and 
Argos.co.uk.

In December 2002, the Starwood on-line booking site displayed the 
unintended bargain rate for luxurious bungalows at a resort on the 
French Polynesian island of Bora Bora. By the time the mistake was 
discovered, 136 people had booked 2,631 rooms, some making multiple 
reservations.

It’s not the first error of its kind for Starwood – last year, it 
fulfilled on-line orders from customers who booked rooms at its W Times 
Square hotel for $25 per night, the correct rate being $250.

Struan Robertson, editor of OUT-LAW.COM, said:

“The key in a case of this kind is the order process and the wording of 
the web site’s terms and conditions. Together these will determine 
whether Starwood has entered into a contract from which it cannot easily 
escape. However, the risk of losing goodwill will be a significant 
factor in deciding how to react.”

In 2002, Kodak was threatened with legal action after refusing to honour 
the orders placed on its site for cameras that were offered to UK 
customers at an incorrect price. An unknown number of cameras were 
ordered for £100 each, instead of £300, before the error was identified. 
The company eventually agreed to fulfil the orders.

In a similar incident, also in 2002, UK retailer Dabs agreed to fulfil 
on-line orders for the Microsoft Xbox, despite the incorrect price 
quoted on its site.

For more information on how to avoid web site pricing errors, see 
OUT-LAW’s articles:

How to protect your site against pricing errors

The UK’s E-commerce Regulations