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I recently made a purchase on an online shop for an item listed as $42 + 15% GST, this was fine so I made my order and I was sent conformation that my order had been received. The next day I received an email from the company sending me an invoice with the price almost doubled explaining "There had been an increase in price to $70 + GST". My question is, is this legal? Is a store owner allowed to change the price after an order? Am I legally obliged to pay the invoice now?

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This question is usually regulated by each respective countries equivalent Sale of Goods Act. An example from one of Australia's States: http://www.austlii.edu.au/au/legis/nsw/consol_act/soga1923128/s13.html

13 Ascertainment of price

(1) The price in a contract of sale may be fixed by the contract, or may be left to be fixed in manner thereby agreed, or may be determined by the course of dealing between the parties. (2) Where the price is not determined in accordance with the foregoing provisions, the buyer must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.

According to the Statute, that means that the agreement you entered into either had a fixed price of $42 + GST, or a non-fixed price. If it had a fixed price, then the price must be $42 + GST. If it is not a fixed price, then per (2), you (the buyer) must pay a 'reasonable price'.

Really this probably mirrors the Common Law. In a contract, when a valid agreement is made, one party cannot unilaterally vary the terms of the contract. That means they cannot unilaterally change the price, UNLESS there is a term in the contract that allows them to do so. Alternatively, in the event that price is silent, the contract would either be void for being uncertain, or a reasonable price would be implied.

To answer your question succinctly then, I'd say you probably had a contract with a fixed price, and therefore the seller is under a duty to sell you the goods at $42 + GST, and so you are NOT obliged to pay the new price.

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At common law, a contract is formed when an offer is accepted.

The website advertising the product is not an offer open to acceptance - it is an invitation to treat. You are, in fact, the person who makes the offer to the company.

Now, I would guess that after submitting your order, you were redirected to a confirmation page. Absent any other terms this would be an acceptance of your offer and create a legally binding contract.

However, most online retailers make it explicit in their webisite's T&C (which are themselves a contract that you agreed to) that the confirmation is not an acceptance of your offer and that a contract has not been formed. In such a case the retailer is entitled to accept your offer (usually by dispatching the goods) or reject it. In this case they have rejected it and made you a counter-offer which you are free to accept or reject.

Of course, all of this is subject to local consumer protection law (assuming it is applicable). For example, in Australia, it is illegal for the retailer to make such a counter offer - they must withdraw the item from sale for everyone until their website shows the correct price.

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  • Do you disagree that being sent an order confirmation would constitute the formation of a contract?
    – jimsug
    May 23 '17 at 10:11
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It looks like this issue is specific to New Zealand.

As a New Zealand born citizen and resident, my understanding is that a seller can normally pull out of a sale if there was a genuine accidental error made advertising the price.

However, if the seller wants to complete the transaction at a higher price, they would need the agreement of the customer first unless the customer had agreed to conditions of sale that said otherwise.

Online transactions do complicate things though. I found this government advice that may be relevant:

[It is] difficult to be specific about when a contract is formed with an online purchase on an interactive website. Usually a buyer will click ‘Submit’ after entering payment details; the website will display an order confirmation page and an email confirming the purchase is sent. It is still unclear whether the webpage or the email confirmation is the ‘acceptance’.

The supplier’s terms and conditions may include a term stating when the contract is formed. It is a good idea to check these before buying.

An interesting example of a similar situation in NZ is described here.

It may be worth checking the Terms and Conditions of the website. Perhaps keep a copy in case they get quietly updated. You may be able to retrieve an old copy from the Wayback Machine project, in case they've already been changed in the retailers favour?

In the absence of a specified Condition stating when the transaction is considered binding, there may be some default point in time defined by law or precedent relating to online sales. If so, I don't know what that is though.

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Unless you agreed to terms stating otherwise, a contract (including the contract for the sale of goods) that you have entered into can only be varied by mutual agreement. The purchase order would generally constitute evidence of a legal intention to be bound by its terms.

This means that unless you agree to the change, the seller is required to sell the item at the agreed price.

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  • Would you suggest emailing the company about this?
    – Hamish
    May 22 '17 at 22:15
  • You could call them and explain that you agreed to purchase the item at a certain price.
    – jimsug
    May 22 '17 at 23:58

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