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Kodak discount camera fiasco

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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.

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.®

Michael Archer is a partner at Beale and Company, a London law firm.

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