A New South Wales jeweller may be forced to close its doors after a customer took the business to court over an online pricing error and won.
In October last year, Royal Diamonds jeweller mistakenly listed a 2.16-carat diamond engagement ring on its online store for $1123, where the actual price of the ring was approximately $34,000.
Customer Nicholas Buttle purchased the ring for his fiancée at the advertised price, but was informed by the jeweller the selected ring was “no longer available”.
The judgment from the NSW Civil and Administrative Tribunal reveals at the time of purchase, the company’s website notified Buttle “in the event that a diamond is unavailable, a diamond of similar or higher grade may be offered, or a refund of the purchase price”.
When the customer reminded the store he would like a replacement diamond “as per the note on your website”, the jeweller denied the request, citing a typing error, according to evidence tended to the court.
“The price for the specific diamond was not correct, due to a typing error. Usually we would offer a diamond of a similar or higher grade, however in this instance, unfortunately, it won’t apply,” read the email from Royal Diamonds.
Buttle then took the jeweller to the NSW Civil and Administrative Tribunal, which ruled in favour of him as the customer. Royal Jewellers appealed the case on the grounds the customer was acting unconscionably, but the appeal was dismissed.
The jeweller has been ordered to provide the customer with a similar or higher-grade diamond ring with the value of $34,279. The store must also pay Buttle’s legal fees.
A director at Royal Diamonds, who did not want to be named, told the Daily Telegraph the “company is going to be closing down because of this”.
“We are going to make the ring and close the company,” they said.
The director was also worried the case would “set the precedent” for opportunistic customers to buy expensive items at incorrect prices.
The Tribunal said there were “several issues” related to provisions of Australian Consumer Law (ACL) that were not raised by either party, which instead relied on the law of contract. The Tribunal found an “absolute contract of sale” was made.
“Having considered various authorities, the Tribunal found that there was an absolute contract of sale made between the parties; that payment for the ring had been accepted as was confirmed by the appellant and that the appellant was unable to avoid the agreement by virtue of its claimed mistake,” the judgment reads.
Partner at TressCox Lawyers Alistair Little told SmartCompany despite the case potentially contravening areas of the ACL, the legal issues fell under “basic contract law”.
The areas of the ACL relevant to the case could include engaging in misleading and deceptive conduct, and provisions that deal with multiple pricing, Little says.
“The multiple pricing provisions say that if a product has more than one price advertised, you must offer it to customers at the lowest price advertised,” he says.
“If you catch the error you can withdraw the price, but if a customer has already bought the product, they’ve entered into a contract and that’s the end of the deal.”
While Little believes this case was straightforward and Royal Diamonds had “no real prospect” of winning the case, he says these type of disputes are usually sorted out before they get to court. In this case, it is likely it proceeded to court due to the large price discrepancy.
“Usually these disputes are sorted out without going to court – consumers will complain to a consumer body like the ACCC, who will remind the retailer of its obligations,” he says.
For businesses wanting to make sure they don’t get caught out on pricing errors, Little prescribes a strong dose of diligence.
“The key is to make absolutely sure that you have someone check over your pricing carefully, even have someone who’s job it is to make sure prices are accurate,” he says.
“Don’t leave it up to the advertising agency or the person printing your catalogue.”
SmartCompany contacted Royal Diamonds and Nicholas Buttle but did not receive a response prior to publication.
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