A Small Mistake Can Cause Big Trouble

"There is nothing so well made

that it contains no errors."

Francesco Petrarch

Many of our readers will surely agree that internet technologies are taking up more and more space in our lives. With the growth of online trade, many buyers prefer to shop without leaving home. This considerably simplifies life and saves a great deal of time, replacing trips to shops with browsing websites, which can be done without leaving home, in a comfortable setting. Today this process covers not only retail trade but is also gradually spreading to wholesale transactions. To purchase goods, equipment or raw materials, it is no longer necessary to visit the seller in person; it is enough to exchange contracts by email and complete the entire transaction online.

Below are a few of the main reasons why e-commerce is such an attractive option for entrepreneurs:

Global reach – entrepreneurs are given the opportunity to significantly expand the geography of their trade. A businessman does not need to open another physical office when expanding the market for a product.

The ability to trade without time limits – standard shops and businesses usually have a limited number of operating hours, whereas an e-commerce online shop stays "open" 24 hours a day, seven days a week, 365 days a year. This is an undeniable convenience for both customers and sellers.

Savings – e-commerce businesses have significantly lower operating costs compared with standard shops. With online trade there is no need to pay rent, staff salaries, or bear other fixed operating expenses.

Automated inventory management – it is easier for entrepreneurs to automate the process of inventory management by using electronic online tools and third-party supplier resources.

Targeted marketing – online shops can collect a huge amount of consumer data to ensure that they correctly identify the target audience for attracting new customers.

The possibility of market dominance – thanks to lower operating costs, entrepreneurs get the opportunity to reach a global audience, which ensures higher profitability for the online company.

Freedom in choosing a location – a business owner is not tied to any particular location when running their business. To carry out entrepreneurial activity, all they need is a laptop and an internet connection. A businessman can conduct deals and manage a business without being limited by time or space.

Any entrepreneurial activity is carried out at one's own risk, and not one of the leading business entrepreneurs is immune to possible mistakes and missteps. In many cases, a timely approach to an experienced attorney can help rescue a situation that seems hopeless. We would like to share one such case from our varied legal practice with the readers of our newspaper in this article.

A young and successful entrepreneur — let us call him Vladislav — came to our law firm. He had been selling equipment for manufacturing construction machinery for about five years already, and he ran into an unexpectedly arising problem. The problem arose because of an expensive unit, the price of which, together with a complete set of spare parts, amounted to €30,000. This situation arose because of a ridiculous error made by a sales manager who had been fairly recently hired by the company. Due to a foolish mistake, the young employee had entered incorrect information on the website: specifically, in the price field he "forgot" to add one zero, so that according to the information on the website, the price of the item was not €30,000 but merely €3,000. An interested buyer was very quick to "delight" in such a "generous" offer: on seeing the surprisingly low price on the website, he hurried to place the corresponding order. Then, as had happened with other orders, the buyer received an automatic confirmation from the website the following day stating that the order had been accepted and the goods would be delivered within ten working days of the advance payment. This confirmation contained the seller's payment details for making payment for the goods. The buyer, delighted even more, hurried to pay for the order and transferred €3,000 to the specified bank account. When this situation was brought to the attention of our future client Vladislav, who was both the owner of the company and its managing director, he tried to resolve the problem on his own. Vladislav immediately contacted the buyer and explained that a technical error had occurred, that the price had been stated incorrectly on the website, and that the actual price of the equipment, which corresponded to its average market value, was €30,000. What is more, the company director was prepared to make concessions and offer a substantial discount, selling the item not for thirty but for twenty-five thousand euros. Unfortunately, even this offer did not persuade the buyer to agree to a fair deal. The latter turned to a lawyer, after which Vladislav received a written demand requiring the seller to promptly perform the concluded supply contract — namely, to provide the goods within the period stated in the contract. Finding himself in this rather unpleasant situation and wishing to avoid substantial losses caused purely by a misunderstanding, Vladislav approached our law firm hoping to find a way out of what seemed like a stalemate.

The attorney who took on the client's case carefully analysed the legal facts of the matter, the applicable legislation, and the existing case law on similar questions. Once the available information had been compared from a legal point of view, the following picture emerged. Under civil-law rules, a contract is considered concluded from the moment the buyer accepts (acceptance) the supplier's proposal (offer). What, then, constituted the offer and the acceptance in this case? Our client's company, as the supplier of the goods, had made a proposal to buyers by placing the information on the website. The buyer, by selecting a specific item on the website and submitting an order, made an acceptance to the supplier — a proposal to conclude a contract for the supply of the item selected. This order also stated the price of the item, namely €3,000. The buyer then received an automatic reply directly from the website, which in essence constituted an acceptance, that is, the supplier's consent to conclude the contract. Consequently, the very fact of agreement to conclude the contract could indeed be regarded as having taken place.

However, on the other hand, under Section 144 of the German Civil Code (Bürgerliches Gesetzbuch, BGB), for a transaction to be recognised as concluded on the proposed terms, the conscious consent of the person to whom the proposal to conclude the transaction was addressed was required. The automatic reply sent from the website could not be regarded as such confirmation. Moreover, under Section 119 BGB, a declaration made by a party by mistake does not entitle the other party to insist on performance of the terms of such a declaration.

These arguments, supported by the statutory framework, legal commentary and case law, formed the basis of the defence of the client who had approached us. We prepared a detailed reply to the demand issued by our opponent's attorney. Within just ten days we received confirmation that the buyer had decided not to pursue his claims any further, and instead agreed to the terms previously proposed, going ahead with the purchase of the expensive item at the substantial discount previously offered. Thus, the skilful and timely work of our firm's attorney allowed the client to protect his commercial interests and avoid unjustified losses that would have placed a heavy burden on a developing company. The client was pleased with the attorney's professional work, which saved him a fairly substantial sum of money.

In closing, we would like to note that good resilience to stress in business, along with the ability to learn from mistakes, can often matter far more than experience and diligence. Difficulties and setbacks in business arise almost constantly. Every successful entrepreneur must deal with them without excessive emotion, drawing on the appropriate resources and means. Few entrepreneurs possess these qualities from the outset. Almost everyone, in the process of launching, developing and promoting their business, has cultivated strength of will and developed good resilience to stress, patience, perseverance and a sense of responsibility for their own venture while solving the problems that arise along the way. We wish everyone who has decided to take the risk, step outside their "comfort zone," and start their own business the best of luck in all their worthy endeavours, and on any legal matter, we invite you to a consultation at our law firm, where experienced, qualified attorneys will help you find the best way out, even in the most complex and difficult situation.

Civil Law

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