Theo Theol v Bike Bug Pty Ltd

reasons for decision 1By application filed 10 June 2014 the applicant sought an order for the respondent to deliver goods to the value of $224.00. 2The facts of the matter can be summarised as follows: (a)On 6 June 2014 the applicant purchased the following goods from the respondent's internet site (Bikebug.com.au) - one Kask Bambino TT Silver Mirror Visor and one Kask Bambino TT Helmet- White size Medium. (b)The sum of $224.00 was the advertised price of the goods on the respondent's internet site. The applicant transferred that sum of money to the respondent's account through PayPal. (c)The money was paid to the respondent. The respondent then issued to the applicant a receipt/tax invoice on 6 June 2014, for the sum of $224.00, for the purchase of the stated goods. (d)On 10 June 2014 the respondent contacted the applicant and advised that; "Unfortunately there was an error in the listing of the price for the helmet that you ordered and we are unable to supply it at that cost. We have had to cancel your order and refund your money. We apologise for this error and hope that you understand our position. You are of course, free to reorder at the correct price." 3The applicant and the respondent appeared before the Tribunal. They told the Tribunal that they were ready to proceed to hearing. Despite encouragement by the Tribunal to try to resolve the dispute, Mr Walsh told the Tribunal that he was instructed by his employer to proceed to hearing. 4The applicant wants the goods that he purchased for $240.00 delivered to him. In other words the applicant seeks enforcement of the contract. 5The respondent seeks to rely on section 15D of the Electronic Transactions Act 1999. The respondent submits that it has made an input error in its electronic transmission and it is not bound by the contract that it entered into with the applicant. 6A contract forms a legal relationship between two or more parties which is enforceable at law. An essential feature of a contract is a promise by one party to do something, creating a legal obligation as set out in the contract. A valid contract has six ingredients: a capacity to contract, an intention to contract, a meeting of the minds, valuable consideration, a legal purpose, and sufficient certainty of terms. 7There is no doubt that a contract was formed between the parties as all six of the required ingredients have been fulfilled. Both parties had the capacity to contact. They had an intention to contract as the respondent advertises its goods and the applicant sought to purchase those goods. There was a meeting of the minds as the applicant was able to purchase the goods on the website. There was valuable consideration, being $224.00 acknowledged by the issue of a tax invoice. The purpose of the contract was legal as there is nothing illegal about the selling of bike helmets and visors. Finally, there was sufficient certainty of terms of the contract at the time that the contract was entered into. 8The respondent did not seek to rely on any terms and conditions of the contract that may have made the contract void. After the contract had been formed, the respondent arbitrarily cancelled the contract and the money was refunded to the applicant's PayPal account. 9The respondent relies on Section 15D of the Electronic Transactions Act 1999 allowing it to rescind the contract. The respondent submits that it made a mistake about the price of the goods on its webpage and that the Electronic Transactions Act allows it to rescind the contract when there is an input error. 10Part 2A of the Electronic Transactions Act 1999 contains provisions applying to contracts involving electronic communications, including provisions (relating to the internet in particular) for the following: (a)an unaddressed proposal to form a contract is to be regarded as an invitation to make offers, rather than as an offer that if accepted would result in a contract; (b)a contract formed automatically is not invalid, void or unenforceable because there was no human review or intervention; (c)a portion of an electronic communication containing an input error can be withdrawn in certain circumstances; (d)the application of certain provisions of Part 2 to the extent they do not apply of their own force. 11Section15D relevantly provides as follows: 15D Error in electronic communications regarding contracts (1) This section applies in relation to a statement, declaration, demand, notice or request, including an offer and the acceptance of an offer that the parties are required to make or choose to make in connection with the formation or performance of a contract. (2)If: (a) a natural person makes an input error in an electronic communication exchanged with the automated message system of another party; and (b) the automated message system does not provide the person with an opportunity to correct the error; the person, or the party on whose behalf the person was acting, has the right to withdraw the portion of the electronic communication in which the input error was made if: (c) the person, or the party on whose behalf the person was acting, notifies the other party of the error as soon as possible after having learned of the error and indicates that he or she made an error in the electronic communication; and (d) the person, or the party on whose behalf the person was acting, has not used or received any material benefit or value from the goods or services, if any, received from the other party. (3) The right of withdrawal of a portion of an electronic communication under this section is not of itself a right to rescind or otherwise terminate a contract. (4) The consequences (if any) of the exercise of the right of withdrawal of a portion of an electronic communication under this section are to be determined in accordance with any applicable rule of law. Note: In some circumstances the withdrawal of a portion of an electronic communication may invalidate the entire communication or render it ineffective for the purposes of contract formation (see paragraph 241 of the UNCITRAL explanatory note for the United Nations Convention on the Use of Electronic Communications in International Contracts, done at New York on 23 November 2005). 12Section 15D of the Act refers to a situation where a natural person (being a consumer) makes an input error in an electronic communication exchanged with the automated message system of another person. The reference to automated message system in the Act is defined in the Act as: A reference to automated message system means a computer program or an electronic or other automated means used to initiate an action or respond to data messages in whole or in part, without review or intervention by a natural person each time an action is initiated or a response is generated by the system. 13The applicant in this case has not made an input error in an electronic communication exchanged with the respondent's automated message system. The error has been made by the respondent. The respondent cannot rely on section 15D(2)(a) of the Act because the applicant does not have an automated message system on which the respondent has made an error. 14Section 15D does not apply to the trader or seller making an input error. It refers to a situation where a consumer makes the error. This is further enforced in s 15(d) which provides that the person, meaning the natural person, can withdrew the portion of the electronic communication in which the input error was made, if the person notifies the other part of the error as soon as possible and that the person has not used or received any material benefit or value from the goods or services, if any, received from the other party. 15Section 15D covers situations where a consumer may have made a mistake and paid a trader the incorrect amount for goods on an automated service and the automated service does not provide the person with an opportunity to correct the error. Consequently, the consumer has the right to withdraw the portion of the electronic communication in which the input error was made. It does not give the trader the right to withdraw if an error it may have made in its own automated message system occurs, once that error has been made. 16Section 15D is a Consumer Protection provision and does not protect the respondent from its own errors. 17The Sale of Goods Act provides that the rules of common law apply to contracts for the sale of goods, as well as the rules of equity relating to the effect of misrepresentation. 18The learned authors of Contract Law in Australia 4th edition, Butterworth's at 1252 set out that, "Equitable principles and remedies may be used to give effect to the treatment of a contract void( or avoided) for unilateral mistake, for example, by declaration and consequential orders by way of adjustment. It is also possible, in cases where the contract is neither void or voidable that an order for specific performance would be refused on equitable grounds". 19Section 36 of the NCAT Act provides that the guiding principle of the Act is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. This enables the Tribunal to resolve the real issues in proceedings, justly, quickly, cheaply and with as little formality as possible. The Tribunal where it considers it appropriate use a resolution process to encourage parties to resolve or narrow the issues between them in the proceedings. 20Evidence was given by the respondent that the cost price of the goods to them from the manufacturer is $324.00. The Tribunal suggested to the respondent that an equitable way to resolve the dispute was to offer the goods to the applicant at the cost price that the respondent paid for the goods. The respondent did not wish to make that offer to the applicant. 21To determine a consumer claim, section 13 of the Consumer Claims Act sets out relevant factors for the Tribunal to weigh including, inequality in bargaining power between the parties, whether a party was not able to protect its interest, whether or not the contract was the subject of negotiation, whether the consumer could alter or reject any provisions or the contract and the setting and purpose of the contract. 22In this matter the applicant has gone to the respondent's website to purchase goods. The website is accessible to anyone all day, every day. The goods were priced at $224.00. There was no ambiguity about the published price. The applicant had no bargaining power with the respondent as he was dealing with a website. The contract was formed and acknowledged by the respondent as a generated tax invoice was issued. There was nothing that would alert the applicant to the fact that the respondent had made a mistake. It is not unusual for traders to sell goods below cost to dispose of stock. In any event there is no evidence provided to indicate that the applicant was aware that the goods were being sold below cost price to the respondent. 23Once the contract was entered into, the respondent reneged on the deal when it considered that the terms were unsuitable to it. The respondent has more resources available to it than an individual consumer. It uses these resources to create and maintain a website to publish its wares and close its deals. Consequently, it has a duty to ensure that all information advertised and contracted on its website is correct. 24When making an order under the NCAT Act, the Tribunal is required to make orders that, in its opinion will be fair and equitable to the parties. The Tribunal gave the respondent an opportunity to resolve the dispute prior to the formal hearing and again after evidence was heard from both parties but the respondent did not wish to take the opportunity offered to it. 25The Tribunal determines that the fairest result is to return the parties to the position that they were in when the contract existed prior to the respondent unilaterally cancelling the contract. 26The findings and decision of the Tribunal are reflected in the above orders. M Eftimiou General Member Civil and Administrative Tribunal of New South Wales 16 July 2014