Binding Intent in Web Advertising and Online Contracts

Basically, in order to identify binding intentions, it is necessary to construe the language used on the website to determine if binding communication induces a reasonable mens rea that suggests an intent to create legal relations.¹ Consideration of whether a web advertisement constitutes a unilateral contract is based on existing principles. Hance (1996) suggests that the offer will be considered made unless the offeror explicitly states that they are not issuing the proposal.² Therefore, if it is displayed on a website—for instance, if a notice about product pricing and sales is presented in a window—the same results as offline advertising may be derived.

It can be argued that interactive web advertising should be treated differently, not only because it is a form of communication but also because it allows the contract to be concluded by specifying details of the price and terms of the contract in the advertisement. Christensen (2001)³ predicted that interactive websites could be treated differently, arguing that by providing conditions in the field, the seller indicates the terms under which the parties would be immediately bound. All transactions, including payments, can be completed online in a standard manner, with only the delivery pending.

However, the presence of prices and detailed conditions does not necessarily imply an intention to make an offer, though detailed information is required to enter into a contract online.⁴

Status of web advertisement

Even if the court allows some communication between the offer and the acceptance, a binding position can raise an issue if a charge of price error is made. In the context of web advertising, it is argued that policies protecting suppliers from the risk of price errors should be considered, even though such protections are not typically recognized in paper advertising.⁵ Since it is easy to generate errors when uploading advertising information to web servers, the global distribution of web advertisements has the potential to prompt global responses, and in the event of a price error, it exacerbates the risk of unlimited liability.⁶ Indeed, the Court considers broader interests, such as supporting the growth of the self-service industry, as seen in British Pharmacy v. Boots Cash Chemist (Southern).⁷

In Hartog v. Colin and Shields, it was judged that, based on the perspective of a reasonable person, if a person could be expected to have known the mistake, the contract could be avoided on the grounds of that mistake.⁸

Section 9(1)(a) of the Electronic Commerce (EC Directive) Regulations 2002⁹ does not seek to regulate whether a service provider's communication constitutes a proposal. This clause does not prescribe any rules regarding the problem, but essentially gives the party implementing the communication, namely the operator, the freedom to determine the nature of the advertisement. Basic rules may be applied while the service provider simply informs the user of the selected option.¹⁰ On this basis, as far as Section 9 is concerned, it can be said that this clause does not introduce other principles but has left matters to be determined under the same proposed rules and invitations to treat under British common law.

References

1. Rokiah Kadir, “Rules of advertisement in an electronic age” (2013) International Journal of Law and Management 55(1), 42-54
2. Hance, O. (1996), Business and Law on the Internet, McGraw-Hill, London
3. Christensen, S. (2001), “Formation of contracts by email—is it just the same as the post?” QUT Law and Justice Journal
4. Kadir, R. (2008), “Resolving the status of web advertisement under the Contracts Act 1950” Current Law Journal, Vol. ix
5. Rokiah Kadir, “Rules of advertisement in an electronic age” (2013) International Journal of Law and Management 55(1), 42-54 https://uk.practicallaw.thomsonreuters.com/Document/IF681B1417D7011E2BC6BBEBC1D875F47 accessed 18 December
6. Ibid
7. Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1951] 2 QB 795
8. [1939] 3 All ER 566
9. Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013) 11(2)(b)
10. Ramberg, C.H. (2003), “The e-commerce directive and formation of contract in a comparative perspective” Global Jurist Advances, Vol. 1 No. 2