ALsBTALK:
I'm traveling so I'm catching snippets not necessarily in sequence. Adust your dial accordingly.
Assume a sneaky and immoral corporatuion seeking to use law to abuse. Now add creativity in repeatedly crafting believable deniabily. Not naming names -- just making assumptions.
Might such a ne'erdowell draft a contract that was both intentionally illusory at the solely unilateral option of that corp as well as enforcable at the unilateral option of that corp via an arbitration clause with that corp as the arbtrator?
Quality varies across the continuum of quality, good and evil can be an entirely different continuum.. Thus, sometimes evil spawns achieving excellence.
Michael
Professor Michael J. O'Hara, JD., Ph.D.
Mammel Hall 228
Finance, Banking, and Law Department
College of Business Administration
University of Nebraska at Omaha
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Omaha NE 68182
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From: Academy of Legal Studies in Business (ALSB) Talk [[log in to unmask]] on behalf of Petty, Ross [[log in to unmask]]
Sent: Monday, November 11, 2013 8:52 AM
To: [log in to unmask]
Subject: Re: Moral Compass 2?: Wal-Mart On-Line Snafu
I don't know much about contract law, but I would have thought that most unilateral mistake cases involve situations where the contract was executed and one party seeking rescission so a mistake on the confirmation might be exactly where we would expect the mistake to be caught.
As a former FTC attorney, I would be shocked if the FTC took any action here, but I do agree with Henry that private action under state law seems much more likely, particularly a state like California where such lawsuits are becoming rather common for all sorts of things. I explain to my students that these are entrepreneurial consumer protection attorneys trying to earn attorneys fees if not contingency fees.
Ross D. Petty
Professor of Marketing Law and Faculty Scholar
Babson College
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From: Academy of Legal Studies in Business (ALSB) Talk [[log in to unmask]] on behalf of Henry Lowenstein [[log in to unmask]]
Sent: Sunday, November 10, 2013 1:43 PM
To: [log in to unmask]
Subject: Re: Moral Compass 2?: Wal-Mart On-Line Snafu
All good points. On contract, however, the fact that Wal-Mart went beyond a mere mistake to issue a confirmation and take the funds makes the unilateral mistake argument problematic. But the acts go beyond contract law. The practical effect is Wal-Marts acts may be so dis-balanced between a sophisticated vendor (Wal-Mart) and the significantly less-than-sophisticated Wal Mart consumer as to raise an issue with the FTC of a "unfair and deceptive act in commerce." State unfair trade practices acts may expose Wal-Mart further. From a pure public relations/marketing standpoint Wal-Mart would have been well advised to just honor the sales and take what would have been any minimal loss given their size. Why take the regulatory/legal and bad PR risk? They will surely end up paying as much or more when some entrepreneurial class action law firm in a state with very pro-consumer laws attempts to make a cause of action out of it. I'm waiting for the trolling law firm TV commercials to begin! :)
Henry
Henry Lowenstein, PhD
Professor of Management and Law
James P. and Elizabeth R. Blanton College of Business Leadership Professor
E. Craig Wall Sr. College of Business Administration
Coastal Carolina University
P.O. Box 261954
Conway, SC 29528-6054 USA
(843) 349-2827 Office
(843) 349-2455 Fax
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From: Academy of Legal Studies in Business (ALSB) Talk [[log in to unmask]] On Behalf Of Maurer,Virginia G [[log in to unmask]]
Sent: Sunday, November 10, 2013 12:33 PM
To: [log in to unmask]
Subject: Re: Moral Compass 2?: Wal-Mart On-Line Snafu
They'd have the burden of proving it was an error, presumably an error of fact and not of judgment. The contract clause, I guess, would remove from them the need to prove that the customer knew or should have know it was an error.
Virginia G. Maurer, M.A., J.D.
Professor of Business Law and Legal Studies
Director, Poe Center for Business Ethics
Darden Restaurants Professor of Diversity Management
Warrington College of Business
352 256 0295 (cell)
352 376 2867 (home)
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From: Academy of Legal Studies in Business (ALSB) Talk [[log in to unmask]] on behalf of Kenneth Schneyer [[log in to unmask]]
Sent: Sunday, November 10, 2013 12:03 PM
To: [log in to unmask]
Subject: Re: Moral Compass 2?: Wal-Mart On-Line Snafu
Hm – if Wal-Mart reserves the right to cancel orders unilaterally, based on what Wal-Mart unilaterally says is a pricing error, then has any contract been formed in the first place? Wal-Mart’s promises would appear to be illusory, and consequently not provide any consideration for the purchaser’s promise to pay or accept delivery.
Ken
From: Academy of Legal Studies in Business (ALSB) Talk [mailto:[log in to unmask]] On Behalf Of Petty, Ross
Sent: Sunday, November 10, 2013 11:29 AM
To: [log in to unmask]
Subject: Re: Moral Compass 2?: Wal-Mart On-Line Snafu
Great example not only of a possible exculpatory clause but also arguably of unilateral mistake in contract formation where the mistake should be obvious as a mistake to the other party. Back in the day, one's losses might have been limited to a single mistaken contract, but with the internet hundreds if not thousands of "mistakes" could occur in a short period of time.
I can't help wondering if it was really United Airlines lawyers or more their PR folks that pushed to honor ten dollar fares to Hawaii.
Ross D. Petty
Professor of Marketing Law and Faculty Scholar
Babson College
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From: Academy of Legal Studies in Business (ALSB) Talk [[log in to unmask]] on behalf of Henry Lowenstein [[log in to unmask]]
Sent: Saturday, November 09, 2013 11:12 AM
To: [log in to unmask]<mailto:[log in to unmask]>
Subject: Moral Compass 2?: Wal-Mart On-Line Snafu
Bill-
Thanks for your email. Ironically, it came about the time I was sending my students and colleagues in the Marketing Department (where we B-Law faculty reside) a similar question about Wal-Mart's decision to disavow paid and confirmed sales on its on-line web site through a very questionable exculpatory clause. Its a good example for students I share below.
Best,
Henry
Henry Lowenstein, PhD
Professor of Management and Law
James P. and Elizabeth R. Blanton College of Business Leadership Professor
E. Craig Wall Sr. College of Business Administration
Coastal Carolina University
P.O. Box 261954
Conway, SC 29528-6054 USA
(843) 349-2827 Office
(843) 349-2455 Fax
[log in to unmask]<mailto:[log in to unmask]>
www.coastal.edu<http://www.coastal.edu/>
Confidentiality Note: This message is intended for the use of the named recipient(s) only and may contain confidential or proprietary information. If you are not the named recipient, kindly contact the sender and delete this message. Unauthorized use or distribution of this message or its contents is prohibited.
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November 8, 2013
Colleagues and MBA Students
One of the concepts we teach in our business law courses in contracts is the issue of EXCULPATORY CLAUSES. These are terms (usually buried in contracts) that absolve a business of liability and when challenged in court they are often questionable and often times struck down by courts as inequitable or contrary to public policy.
Wal-Mart this week finds itself in potentially this situation (see below). In October United Airlines had a like situation on-line for 15 minutes selling and confirming flights such as to Hawaii for $10. UA's lawyers (and public relations staff) wisely told them to honor it and United did, ultimately generating a positive consumer image. Wal-Mart has not.
A legal contract for sale of goods is normally established when there is an offer, acceptance, consideration passes (in this case payment). All these elements are present with the Wal-Mart customers who placed and paid for goods on-line, including a confirmation of order and transaction being in written form (electronic). (In law would be considered "ratification.") So under state contract law, FTC and "Little FTC" acts (such SCUTPA), can Wal-Mart's "exculpatory" clause nullify same? This is an important peril and legal risk of on-line marketing that is evolving in the courts. Stay tuned.
One thing for sure, Wal-Mart has left itself a tempting target for one of those class action lawyers trolling for business on TV. Anybody in the department buy that kayak on line for $11? :)
Print<http://www.bloomberg.com/news/print/2013-11-07/wal-mart-cancels-online-orders-made-during-errant-pricing-snafu.html#print> Back to story<http://www.bloomberg.com/news/2013-11-07/wal-mart-cancels-online-orders-made-during-errant-pricing-snafu.html>
Wal-Mart Cancels Low-Priced Orders Made in Online Pricing Snafu
By Renee Dudley - Nov 7, 2013
Wal-Mart Stores Inc. (WMT)<http://www.bloomberg.com/quote/WMT:US> is telling online shoppers who bought erroneously low-priced merchandise yesterday that their orders are being canceled.
“Given the wide discrepancy in pricing, we are notifying customers who ordered these items that their orders have been canceled and that they’ll be refunded in full,” Ravi Jariwala, a spokesman, said in an e-mailed statement yesterday. Wal-Mart will send customers $10 e-gift cards within five days for future purchases, he said, declining to say how many orders were canceled.
Pricing issues on Wal-Mart’s website yesterday morning had stemmed from technical errors caused internally, Jariwalasaid.
The Bentonville, Arkansas-based retailer was selling steeply discounted merchandise online such as kayaks for about $11 and computer monitors for about $9. The company’s Internet store was intermittently unavailable throughout yesterday as the issues were fixed, possibly resulting in lost sales.
Some items including kayaks, monitors, televisions and gym equipment were heavily discounted while other items were priced up, said Christian Antonio, a Pittsburgh-area blogger who wrote about the pricing abnormalities. A can of Lysol was priced at more than $100 and Kool-Aid packets were selling for more than $70, Antonio said in an e-mail.
Exercise Equipment
The price issues affected many departments, Antonio said. Children’s cribs were offered for $28 and highchairs for $7, he said. Exercise equipment such as elliptical machines and treadmills that normally sell for hundreds of dollars were offered for $33 and $21, he said.
On the “Terms of Use” page of its website, Wal-Mart says it “cannot confirm the price of an item until after your order is placed” and acknowledges that “pricing errors may occur.”
“Walmart reserves the right to cancel any orders containing pricing errors, with no further obligations to you, even after your receipt of an order confirmation or shipping notice from Walmart,” the website’s terms say.
Some shoppers, anticipating that their purchases might not be fulfilled, opted for “Site to Store,” which lets them pick up online orders at a store. They posted pictures yesterday of their early-morning receipts alongside their discounted merchandise.
The errant prices were available for at least six hours yesterday morning, Antonio said. Sales were uninterrupted other than a prompt instructing shoppers to pay using PayPal accounts rather than credit cards, he said.
Computer Monitors
The pricing issue alienated Charles Allen Jr., a shopper in Midwest City, Oklahoma<http://topics.bloomberg.com/oklahoma/>. Earlier yesterday, Allen had purchased six computer monitors priced at $8.85 each for his business, which conducts
research for legal firms, he said by e-mail. Wal-Mart canceled that order before it shipped, he said.
“We have reviewed your order and this was cancelled due to a price error,” according to a Wal-Mart e-mail Allen received from the company’s customer service department, that he provided to Bloomberg News<http://topics.bloomberg.com/bloomberg-news/>. The e-mail said, “prices are subject to change without notice.”
Allen was turned off by the experience: “Most likely have bought my last TV from Walmart,” he said in the e-mail.
Two years ago, Target Corp. (<http://www.bloomberg.com/quote/TGT:US>TGT)<http://www.bloomberg.com/quote/TGT:US>’s site crashed a handful of times during peak shopping hours after the company took control of its online operations from Amazon.com Inc. Steve Eastman, president of Target.com, subsequently left the company.
To contact the reporter on this story: Renee Dudley in New York<http://topics.bloomberg.com/new-york/> at [log in to unmask]<mailto:[log in to unmask]>
To contact the editor responsible for this story: Robin Ajello at [log in to unmask]<mailto:[log in to unmask]>
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From: Academy of Legal Studies in Business (ALSB) Talk [[log in to unmask]] On Behalf Of Bill Shaw [[log in to unmask]]
Sent: Saturday, November 09, 2013 6:58 AM
To: [log in to unmask]<mailto:[log in to unmask]>
Subject: Johnson and Johnson announced that it will pay $2.2 billion to settle claims , , ,
. . . it illegally promoted the sale of an anti-psychotic drug (Risperdal) and
several others?
The moral compass . . . where is that and who remembers when J&J was
the darling of Corporate America and of business law/ethics classes for
withdrawing Tylenol from the shelves and, two years later, for withdrawing
a children’s cough medicine product.
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