Q.
The necessity to draw a distinction as to whether a website advertisement is an invitation to treat or an offer is also where customers' response is met by a purely programmed response of a computer, without any immediate human knowledge or intervention. In such system, is it viable to consider a website advertisement as an invitation to treat or an offer?
A.
[In fact, the purpose of displaying a product in a premise of trade is already taken as invitation to treat based on the landmark case of Pharmceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953).
The issue for discussion here is that in electronic commerce nowadays the process of taking the items from the display shelf to the payment counter becomes instantaneous, instead of the usual trolley window shopping scenario.
In the subsequent 'check out' of the cart, a sale is registered. Hence, this can be construed as an acceptance of sale by the operator of website. To initiate a sale, there must be prior offer. Thus, the discussion point is that when an item is put into the shopping cart of the website, an offer has been taken into consideration. And, upon checking out with credit card numbers, and contact particulars, the sale is concluded.
Now, let us take another step back.
So you say the sale is concluded upon the checking out of the shopping cart with credit card particulars. Then, the prior event was putting the item into the cart - accepting an offer. To push even earlier, isn't the display is an invitation to treat?
This can be sensible as the display on the website being an invitation to treat, and upon taking it into the cart, it signifies an offer and checking out means accepting an offer for a consideration.]
Julian Ding in the book, E-Commerce, Law and Practice, 1999 at page 48, was of the view that, it would be more practical to consider website advertisement as an offer because upon the customer performing certain key functions it would amount to a valid acceptance, which satisfies the human intention to create a valid contract. Whereas, if website advertisement is considered as an invitation to treat, the interaction by an automated system would negate the legal requirement of intention in the formation of a contract, for machines cannot express intention as stated by Lord Denning in Thornton v Shoe Lane Parking (1971) 2 QB 163.
[Thus, in such Lord Denning's judgment where machines cannot express intention, the taking of item on display into the shopping cart is not an offer by the website - as website is a machine. On the other hand, if such action is an offer to buy from the purchaser, then the Argos and Kodak cases seemed justified.
That means, the items in the shopping cart are offers made by the purchaser to the website vendor. Upon checking out with particulars of the credit card and contact addresses, it is considered still at the offer stage by the purchasers. At this point, there had not been any acceptance by the vendor of website, hence no contract - as in the Argos case.
Until the money is credited from the accounts of the credit card, only then there is consideration paid and the forming of a contract. So, automatic generation of acknowledgement of receipt of offer is not enough as to conclude a contract. Despite, in the case of Kodak, where money is deducted from the credit cards should have signified a contract. And, errors made should never be an excuse for not performing the contract. Unless it is a mistake which later on the contract becomes void or voidable. The summary of mistakes in a contract as per Contract Act, 1950 are listed below:
Section 21 Agreement void where both parties are under mistake as to matter of fact.
Section 22 Effect of mistake as to law.
Section 23 Contract caused by mistake of one party as to matter of fact.
Section 24 What considerations and objects are lawful, and what not.
Or when there is uncertainty as in:
Section 30 Agreements void for uncertainty.]
Therefore, it is necessary for the courts to consider whether the use of advertisement in the website is an offer to the world at large to overcome the difficulty that no human intervention exists when a buyer expresses his desire or intention to purchase goods from the web store, which in fact will facilitate the expansion of Electronic Commerce, ie web-based commerce.
[My personal view is that website advertisement is NOT an offer to the world, but an invitation to treat. The mere fact that there exists too much variables and uncertainties of the item displayed cannot be an offer at this stage. The display is to a large audience in the Internet and cannot be specific to a particular buyer. Therefore, a reasonable element of uncertainty exists at this stage. Thereafter, when a prospective buyer picks up the item, he signifies its specific quantity and delivery method - which incurs further considerations. Only then a firm order is structured as an offer to buy. It is upon receiving this offer from the buyer that the website seller would consider if it is possible to conclude as a contract of sale. For there are situations that the item at display cannot be shipped to certain area, or country as it is illegal or inaccessible to the shipping route intended.]
Hence, it is important to evaluate the situation in Malaysia as to whether the 1950 Act, the ECA 2006 and the common law principles are sufficient to overcome the problem faced in the Argos and Kodak situations as addressed above if facts similar to those cases arises in Malaysia. The issue as to whether website advertisement amounts to an offer or invitation to treat needs to be clarified to avoid uncertainty and ambiguity.
Ref:
Nuraisyah Chua Abdullah. 2004. Question & Answers on Malaysian Courts, Statutes, Cases & Contract, Tort and Criminal Law. 2013 Edition. Chapter 6. Page 187. International Law Book Services.
Section 21-24, 30, Contract Act, 1950. Available at,
http://www.agc.gov.my/Akta/Vol.%203/Act%20136.pdf
Electronic Commerce Act, 2006. Available at,
http://www.agc.gov.my/Akta/Vol.%2014/Act%20658.pdf
[Own account]