It's not OT anymore : Kodak on El Reg

["Gareth Cook" <gcook@xxxxxxx>]

http://www.theregister.co.uk/content/23/23606.html

Kodak discount camera fiasco
By James Hutchinson, Beale and
Company
Posted: 09/01/2002 at 15:39 GMT


The latest internet fiasco involving
Kodak.com taking orders for discount cameras at £100, realising their
mistake and then cancelling those orders, leaves customers stranded in a
legal minefield, according to Michael Archer, partner of London IT law firm
Beale and Company. 

Clearly, on-line retailers have still
not learnt the lesson that they must set out clearly their terms of
business. The Kodak terms contradict themselves in a number of areas. Are
they selling the cameras themselves, or are they selling as agent for a
third party supplier? When is the contract with the consumer made? What
authority does the agent who operates the site have when it sells at the
wrong price? Who is liable to perform the contract? 

Kodak argue that they have not accepted
the orders placed with them by customers who visited the site at
www.Kodak.com and placed orders for digital cameras at £100 advertised on
the site and gave their credit card details by way of payment. Kodak say
that this is the same as bringing the goods to the till in a shop. No
contract is made, they say, until the shop keeper has rung up the price and
received payment. 

This analogy, however, is not correct in
this case. Kodak have issued an order confirmation which operates as a
receipt which the customer is asked to retain for warranty service. Most
consumers would believe, having received such an acknowledgement from the
site, having placed their order and given their credit card details and
been told that the £100 will be charged to their card, that their purchase
has been made. Terms on the site do not make it clear that this does not
represent confirmation that the purchase has been made and it would be very
suprising if a court were to say that no contract yet existed. 

The £100 price tag Kodak say was a
mistake. If a contract was made, Kodak can set aside the contract on the
basis of mistake only if they can show that the customer knew the price
quoted was a mistake. This will depend on what was in each customer's mind
at the time. It was clearly a good offer but then Kodak advertised it as a
"special deal". Is the £100 price, as compared to the price it is
believed Kodak intended (namely over £300) that big a difference to make a
customer realise it was a mistake? 

The Internet is awash with special
offers. Digital cameras are often a frequent subject of promotions. Kodak
are going to find it difficult to prove that the customers must have
realised that the price quoted was a mistake, which they must do to avoid
honouring the contract. 

But if a contract does exist, who is it
with? On the same terms, Kodak say that the contract is with the supplier
and not with them, but in the same clause tells the consumer that the
supplier is its agent. If the latter is the case, the contract is with
Kodak. 

Even if Kodak were operating as agent
for the supplier, named on the terms as Link Networks Limited of Edinburgh,
are Link bound by a contract made by their agent? Link could say that they
had never authorised Kodak to sell cameras at £100. In other words, if
Kodak had exceeded their authority would Link be bound? 

Where does this place the consumer?
While the full name and address of Link Networks Limited is given in the
terms and conditions issued by Kodak on their site, most consumers would
not have thought that purchasing a Kodak camera from the Kodak site would
in fact entail them entering into a contract with an entirely different
party. Indeed, many of the terms used in the explanation of the terms on
the Kodak site strongly infer that Kodak itself will perform the contract.
It even commits Kodak to providing substitute products if those ordered
were not available. 

Link Network Limited is a company
registered in Scotland with company number SC167675 and the registered
office is given as Nether Road, Galashiels, TA1 3HE. Interestingly, the
principal business of that company is described as "agent". But
Kodak would say they are principal and Kodak are the agent in this case.
While this causes obvious problems for the consumer, Kodak may find that
they have breached the Consumer Protection (Distance Selling) Regulations
2000. S.7(a)(i) states that a company shall provide the consumer with the
identity of the supplier. The confusion caused by Kodak's terms and
conditions means that it is tricky for the consumer to tell who the
supplier really is. 

Given the confusion that has been
created, consumers may have to bring proceedings against both to enforce
performance of the contract. But what Kodak company have they been dealing
with? Consumers are always advised only to deal on-line with sites which
identify the owner of the site. Kodak's site gives Kodak Limited as being
the copyright owner of the site, though this is not necessarily the same
thing. Enquirers to the helpline at Kodak were given Eastman Kodak Limited
as the name of the company trading on the site. The website at Kodak.co.uk
has a page that refers to Kodak Limited and its marketing of products,
though this does not say that it is the company operating the site. 

Communications from the site in
connection with orders for the cameras simply refer to Kodak and, contrary
to the Business Names Act 1985 s.4(1) and s.349(1) of the Companies Act
1985, fails to include details of the full company name so the customer is
still in the dark as to which Kodak company he has been dealing with.
Pursuant to s.351(1) of the Companies Act 1985, companies must also include
details of their place and number of registration and their registered
office address.®

Gareth Cook Senior Engineering Specialist EMEA ED, IBM SWG Lotus Park, Staines, TW18 3AG

Office:  +44 (0) 1784 445 166 Mobile:  +44 (0) 7980 445 166 Fax:      +44 (0) 1784 499 166

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