When does an offer constitute a contract and when is it merely an invitation to treat? With e-commerce pricing errors increasing, it is as well to prepare to withdraw or amend.
Questions are arising almost daily about electronic communication and how it affects us. Construction is lagging behind other areas of commerce and it is to these areas that we should look for the beginnings of answers.

The recent Argos television case was one of the few in e-commerce to hit the headlines. You probably recall the circumstances. Argos advertised a Sony Nicam television for £2.99 on its web site. Unfortunately, it should have been £299.99. Some bright spark saw the price and apparently ordered 1700 of them. Argos refused to deliver the goods and the unhappy customer decided to take it to court.

It seems probable that the main issue here is whether there was a contract in place. The arguments revolve around whether there was an offer by Argos or whether it was an "invitation to treat". You will remember this from when you were a student. If a shopkeeper has a television for sale in his shop window with a price label on it, he does not have to sell it if he does not want to. The law would say that he is just inviting offers from customers.

The Argos customer, however, had input a credit card number and received a Unique Order Code to confirm the order, and would say that this is offer and acceptance. Argos says the deal was always stated to be subject to availability.

In the absence of a legal ruling, there cannot be any answers, only illustrations of the problems that can arise.

Argos has learned from its difficulties. If you visit its web site now, you will see the following message: "We try and ensure that all prices displayed on our web site are accurate but the price on your order will need to be validated by us prior to processing your order. Where an item's correct price is higher than the price stated on your order, we will contact you to let you know the correct price and give you the opportunity of cancelling before we dispatch the goods."

It is the application of the law to data communication that is changing. What we need to recognise is that practices are changing and those changes increase the risk of error

Not a 21st-century solution, just clarity. Is there a contract? Not until Argos confirms that the price is correct.

So, what does this have to do with construction? Things are changing. Quantity surveyors issue bills to the tenderers on a floppy disk. Tenders are returned with the priced bills in electronic form. Arithmetic checks can be avoided as the bills are on a spreadsheet, which is self-checking. But what happens if the data has changed? Say, for instance, that an item that was 1000 m2 is now 1 m2, and the contractor later wants to adjust the tender price. In this example, it would clearly be wise to issue bills only in read-only form. Checks should be made to see that there have been no changes in the data and that the formulae behind the spreadsheet are still working correctly. Above all, there needs to be clarity as to whether or not the tender is to be corrected for errors. These are all pretty straightforward practical answers.

There can be a degree of paranoia about e-communication. Some of the risks that are now being identified were always inherent, however information was passed over. One major current concern is whether an instruction to vary the works could be received from a bogus source. The answer, of course, is yes, and it was always so. But show me a contractor that is geared up to check the authenticity of an architect's instruction in paper form. It does not happen because the risk is considered so small.

Are there any new areas of law developing? The unexciting answer is “probably not”. It is the application of the law to data communication that is developing. What we need to recognise is that practices are changing, and those changes increase the risk of error. You only need to look at the Argos example to see that the errors can be very costly.

If you are embarking on e-communication or e-commerce, learn from Argos. Look at what can go wrong and develop strategies for dealing with those risks, both practical and legal.