On Monday 16 May 2016 South African shoppers were treated to a day of incredible savings as online clothing store Mango experienced what they have referred to as a “technical issue” as prices on their products were advertised for as little as R1.00. In the ensuing consumer furore, our consumer and electronic transactions law has come under the spotlight and in this article we give a brief overview of the issues at hand.
Can Mango be held to sell the products at the reduced prices?
Consumer Protection Legislation
In many of the articles discussing the Mango sale, reference has been made to the Consumer Protection Act (“the CPA”), particularly the protection of Section 23. Unfortunately, Section 23(1)(b) states that the Section does not apply if Section 43 of the Electronic Communications and Transactions Act (“the ECT Act) applies, which, in this case, it does. Similar provisions are to be found in Sections 19, 26 and 33 – in each case referring the consumer to the protection offered by Chapter 7 of the ECT Act, which is considerably less than that offered by the CPA.
However, there are some provisions of the CPA that do still afford some protection to the consumer in this matter:
- Section 29 prohibits producers, distributors and retailers from marketing goods in a manner that is misleading, fraudulent or deceptive in any way, including the price at which the goods may be supplied.
- Section 30(1) provides that a supplier must not advertise any goods at a specified price in a manner that may result in consumers being misled or deceived as to the actual availability of those goods from that supplier at that advertised price (i.e. ‘bait marketing’).
- Section 34 states that a person must not make a promotional offer (which, for the purposes of the section means an offer expressed in any manner of price reduction) with the intention of not fulfilling it. Further, such person must ensure the supply reduced price good is sufficient to accommodate all reasonably anticipated demands resulting from such offer.
- Section 41 makes it a false, misleading or deceptive representation to falsely state or imply or fail to correct an apparent misapprehension on the part of the consumer to the effect that a specific price advantage exists. Read with section 51(3), such a transaction, agreement, term or condition is void to the extent that it contravenes this section.
The Common Law
In terms of the common law, the court in Sonap Petroleum (South Africa) (Pty) Ltd v Pappadogianis found that where the consumer is aware of the error, of unilateral mistake (i.e a mistake by both parties), he may not take advantage of it or “snatch at a bargain”. Conversely, in Anglo African Shipping (Pty) Ltd. v Slavin’s Packaging, the court showed that the defence of unilateral mistake is very narrow in stating that the act of striking a bargain is “frequently encountered in the business and commercial world which the law recognises and enforces”.
It would appear that Mango’s legal department is aware of the challenges it faces as, in the days following the consumer fallout, Mango reportedly changed their website’s T&Cs. Clause 3.1 was amended by removing South Africa from the list of countries that can benefit from the online purchasing service of the webpage; this is despite the fact that they are currently still advertising and marketing goods to South African consumers (a further question arises as to the validity of the transactions subsequent to this change?) They also inserted Clause 3.5 which reads as follows:
“Refusal of order
Mango may cancel or refuse to accept any confirmed order on the following grounds:
In the event of a technical and/or typing error in the prices or other details of products contained on the webpage when the order was placed.”
This was likely a last ditch attempt at avoiding liability, however, there have been enough tech savvy consumers taking screenshots or saving the cached T&Cs that Mango won’t be able to get away with this. The contracts that were concluded were done so as and when Mango received notice of the consumer’s acceptance of the offer, in other words, when the consumer clicks the “Confirm payment” button. The only relevant version of the terms and conditions for the purpose of the agreement are those that were in effect at the moment the consumer confirmed their purchase.
The thorny issue of jurisdiction
That the consumers are due their orders as purchased and at the prices advertised (it would appear) is settled, in terms of South African law. However, this will mean nothing unless a court in South Africa can hear the dispute according to South African law. Mango’s T&C’s contain no ‘choice of law’ or similar clause placing the agreement in any particular jurisdiction. Our courts may have the jurisdiction necessary to hear the matter by way of the ratione contractus (ie. by reason of contract) as South Africa is the place where performance (whole / partial) was to have taken place. However, according to the doctrine of effectiveness the court will only have jurisdiction if it has the power to give effect to the judgment, which is problematic when concerned with a foreign company like Mango. Accordingly, in order to hear the dispute there will have to be an attachment of Mango’s local assets to the satisfaction of the local court that it will have the necessary jurisdiction.
This article should not be used or relied upon as professional advice and is for information and marketing purposes. Please consult with one of our attorneys should you need legal assistance relating to this area of law.