1. What situation may constitute as a breach of contract?
2. What options does a party have if their contract has been breached by the other party?
3. Have you been involved in an agreement where one party breached a contract? What happened? Do you think that was the best solution? Why?

Online Pricing Mistakes

One of the worlds biggest airline is facing a wave of legal claims after it cancelled thousands of bookings for transatlantic flyers who thought they had bagged the bargain of the century.

For a few hours on Wednesday afternoon, United Airlines Danish website was selling first class and business class flights from the UK to New York and California for less than 501 return.

Thus cautioned The Independent on February 12, 2015, in its story titled: United Airlines facing wave of legal claims after it cancels thousands of mistake fares. 2Word of the mistaken fare had spread widely through social media. Thousands made bookings till the website could not take the exceptional load. The bargain of the century caption was not merely an eye-ball grabbing ploy of the storywriter. An anxious customer blogged:3

If these fares are honored, this will likely go down as one of the best flight deals in history. ... I paid $44 apiece for one-way tickets from London to Newark (which would have cost $8,700 each normally), and booked a trip for later to Australia via London. ... All told, I paid $1,597 for flights that would cost $59,862 to buy with cash as of today!4

The Guardian reported that it was a glitch which could cost the airlines tens of millions of dollars. The report pointed out:5

"It took United a couple of hours to respond to the glitch. ... But that was enough time for several thousand people to take advantage of the implausibly good deal.

Given the price of first class tickets, even if the number of customers taking advantage of the glitch was at the low end of the several thousand number, the companys potential losses were still easily in the tens of millions of dollars."

This is not the only time United Airlines had made a price mistake and it was not the only online seller making mistakes. Pricing error is an inherent risk in online transactions.

In September 2013, United Airlines listed tickets for as low as USD 5. It had to shut down its booking engine until it could fix the problem. The airline then honoured the contract.6 This time, the airline has changed the discourse. Blaming the customers of trying to "take advantage of the situation", the airlines said:7

"United is voiding the bookings of several thousand individuals who were attempting to take advantage of an error a third-party software provider made when it applied an incorrect currency exchange rate, despite United having properly filed its fares."

Each mistake by an online seller leads to legal claims. The seller claims to have made a mistake and alleges the customer of taking advantage of the mistake. The customer claims that the seller should bear the responsibility for its mistake. The customer claims that once a contract is made, the seller can neither cancel the contract nor increase the price. Can a seller, who has made a mistake, as United Airlines has in the instant case, simply declare the contract void and get out of it?

The landmark case, in fact the only case of online pricing mistakes, working through these contestations, is Chwee Kin Keong v. Digilandmall.com Ltd8 of the Singapore High Court. It is common sense that a contract once formed is binding on the parties. However, if the parties were, beyond any doubt, mistaken about the subject matter of the contract, the contract could be declared void. As mistakes were not common, the principle found limited application. Online transactions have brought mistake in contracts to centre stage and given life and currency to the relatively undeveloped principle of mistake in contracts. A contract is about agreement and consent. Mistake goes to the very root of it. This takes us to the nature and foundation of contracts. We will first review the principles of contract law and effect of mistake on contracts. We will follow this with a review of earlier cases on mistake. This will get us ready to explore the Chwee case.

Nature of Contracts

The principles of contract law are generalised common sense. These come from the past when trade and commerce was rudimentary. The world has seen trade and commerce for centuries. As disputes arose, these were taken to the local courts. The courts, on the basis of common sense, and the prevailing notions of equity and justice, decided the cases. As similar cases were decided alike, the reasoning and principles came to be formulated. The courts, thereafter, followed these principles as the law. This court-made law came to be called common law. Common law developed everywhere. Due to the British colonial expansion, however, the British took their common law to all the territories they went to, America, Australia, Canada, Africa and Asia, including India. The British common law was used in these territories with some adaptations. Contract law was the most basic and foundational common law. India wrote its contract law as the Contract Act, 1872. We can imagine the simple nature of the law, being the generalised common sense prevailing in the 1800s.Contract law is common among the commonwealth nations and America. The contract law, in other parts of the world too, is similar. We now move to the formation of contracts.

Law imposes itself on the subjects. Everyone has to follow the law. Beyond the prohibitions of the law, is the domain of voluntary activity. Contract falls in this voluntary domain. Contracts are voluntarily formed agreements. Two people are in agreement when their minds meet. The Latin expression for the meeting of minds, consensus ad idem, is frequently used. Minds are not computers to meet by connecting through a cable. We have no clue what is going on in the recesses of the mind of another person. We get to see it only when the person manifests his mind in some form or the other. Meeting of minds happens through a communicative process. People communicate through words, expressions, gestures and action. An agreement is formed when a person makes an offer to another and the other person accepts it. Through this, two minds converge. An agreement which has an exchange of benefits for both the parties is a contract. The benefit which the parties exchange is called consideration. The communication between the parties can be oral, by action or gesture or in writing. As trade is centuries old, contracts were all oral. Written communication emerged as an exception. Of course now, written and electronic contracts have taken over and become dominant.

Subjective and Objective intention

A sales executive was dealing with multiple customers. To a customer, he intended to make an offer of INR 7000. He instead said to him, "This is for INR 6500." The price of INR 6500 was for another product for another customer. The customer accepted the offer. An agreement got formed at this point of time. The customer pulled out the money to pay. At this point, the executive says: "Sorry, I meant INR 7000. It will be INR 7000." In his inner mind (subjective intention), the offeror had INR 7000 while he expressed (objective manifestation) INR 6500. Do we go with what people manifest or what is in their inner minds? We go with what people express as their intentions. One has no access to what is in the inner mind of another person. One can only go by the manifestations of the intentions in words, action and gesture. In other words, one has access to only the objective manifestations.

There is another problem in relying on the subjective intention of a party. The simplest thing for a person, who does not want to go ahead with a contract, is to claim that in his mind, he never intended to get into the contract. This will make business transactions uncertain. Contracts will become meaningless. For these reasons, law does not go by the subjective and specific intentions of the parties. Working only with the objective manifestations, one asks not what the specific person intended, but ordinarily, what a normal person in those circumstances would have intended through such a communication. Law goes with what an "ordinary and reasonable person" would understand from a communication. Lord Denning has expressed this position thus:9

"In contracts, you do not look into the actual intent in a man's mind. You look at what he said and did. A contract is formed when there is, to all outwardappearances, a contract. A man cannot get out of a contract by saying: 'I did not intend to contract', if by his words he has done so. His intention is to be found only in the outward expression ... If they show a concluded contract, that is enough."

To illustrate, most people sign standard contract forms, say for taking a mobile phone connection, without reading it. The content of the document is not in the mind of the customer because he has not read it. The mobile phone company accepts the offer and activates the service. The terms in the document are binding. In the subjective intention, the customer is completely unaware of the terms. However, the objective manifestation of the communication is the signed document. Putting a sign to a document means concurrence with it. Similarly, a person signs an offer document without reading the document. The other party too signs without reading it. The terms bind both the parties even if neither is aware of its content. There is a meeting of minds even if neither is aware of the contents. To give another illustration, a person is using his mobile phone to buy a movie to watch from the satellite television service. He has to enter a movie code. He intended to enter 112 but enters 122. He starts getting a movie he did not intend to buy. We go with 122 for this is the objective manifestation. A contract is made for the movie code 122.

Subjective intention, mistake and contract

An agreement, thus, is formed when an offer is accepted. In assessing the formation of a contract, we appraise the communication manifested between the parties as an objective reasonable person would do. The concept of a mistake comes in as a gap between the subjective intentions and objective manifestations of the communication. A person is thinking of things in making an offer to another. He is clear about his intentions in his inner mind. However, for one reason or the other, he makes a communication different from his subjective intentions. The other person accepts the offer. An offer has been made, accepted and an agreement formed. The offeror may be mistaken but he is bound to the contract.

We now take it a step further. From the objective appraisal of the offer, the acceptor knows that the offeror is mistaken. However, as the mistake is advantageous to him, he readily accepts the offer. The formality of offer and acceptance are met. However, there is no meeting of minds between the parties. The two are not thinking of the same thing in the same sense. This is because the acceptor knows well that the two are not on the same page. In this case, as the foundational requirement of consensus ad idem is not met, the contract is taken to be a void contract. A void contract is a contract which never got made. Contract law declares a contract void where the parties are mistaken about the subject matter of the contract. A party to a contract or both the parties to a contract could be mistaken. A contract where a party to a contract is mistaken is called a unilateral mistake. A contract where both the parties are mistaken is called a bilateral mistake. We are interested in unilateral mistake.

The occurrence of a mistake has to be assessed from the vantage of an objective reasonable person. This makes it a bit complex and confusing. From the perspective of an objective reasonable person, the offeror is judged to be mistaken. In himself, the offeror may not be mistaken. Further, from the perspective of an objective reasonable person, it is concluded that the acceptor knows of the mistake and taking advantage of the mistake. The acceptor, however, subjectively, may have no clue that there is a mistake. Thus, the concept of mistake brings two layers of working of the subjective and objective. We can illustrate it.

A buyer and seller have been negotiating the price of a laptop for a week. We have been watching it from a distance. The seller has resolutely informed the buyer that the price is INR 50,000 and there will be no reductions or discounts. Thereafter, an assistant of the seller prepares an offer document. The seller signs the offer document and it is scanned and sent by email to the buyer. Inadvertently, the assistant had entered the price as INR 5000. The buyer reads the offer document and sees the price to be INR 5000. He readily accepts the offer. Looking at the communication between the parties, we judge that the seller was never of the mind to sell it for INR 5000 and the buyer knew it. In this case, it is clear that the buyer, subjectively, in his own mind, knows of the mistake. By a variation of the illustration, we could illustrate where the buyer does not know of the mistake subjectively. The buyer assumes the offer is for INR 50,000. He accepts the offer without reading it. Days later, in giving effect to the contract, the buyer claims to only pay INR 5000. In this case, subjectively, the buyer does not know of the mistake. But we, seeing it externally and objectively, are not interested in what is going on in his mind. We take it that a reasonable person would read an offer document and discover the mistaken price. The contract would be void even if the buyer has no clue of the mistake.

A recent and authoritative statement of the objective principle comes from Shogun Finance Ltd v. Hudson10. The court noted:

"A contract is normally concluded when an offer made by one party (the offeror) is accepted by the party to whom the offer has been made (the offeree). Normally the contract is only concluded when the acceptance is communicated by the offeree to the offeror. A contract will not be concluded unless the parties are agreed as to its material terms. There must be

consensus ad idem. Whether the parties have reached agreement on the terms is not determined by evidence of the subjective intention of each party. It is, in large measure, determined by making an objective appraisal of the exchanges between the parties. If an offeree understands an offer in accordance with its natural meaning and accepts it, the offeror cannot be heard to say that he intended the words of his offer to have a different meaning. The contract stands according to the natural meaning of the words used. There is one important exception to this principle. If the offeree knows that the offeror does not intend the terms of the offer to be those that the natural meaning of the words would suggest, he cannot, by purporting to accept the offer, bind the offeror to a contract. Thus the task of ascertaining whether the parties have reached agreement as to the terms of a contract can involve quite a complex amalgam of the objective and the subjective... Normally, however, the task involves no more than an objective analysis of the words used by the parties. The object of the exercise is to determine what each party intended, or must be deemed to have intended."

The case where a person, realising the mistake of the other, gets into a contract to take advantage of the mistake is known as snapping up. The term snapping up was coined in an 1880 case, Tamplin v James.11 The essence of snapping up is in taking advantage of a known or perceived error. The courts are stringent in making an exception to a contract, for this erodes the certainty of contracts. However, if it is established beyond doubt that there is a snapping up, the courts declare the contract void. A landmark case on snapping up is Hartog v. Colin & Shields.12 Collins & Shield were negotiating to sell 30,000 Argentine hare skins to Hartog. In the verbal and written communications between the parties, according to standard practice, the price was being negotiated on per piece basis. Finally, the offer which Hartog received from Collins & Shield mentioned the price on per pound basis. This made the price one-third of what was being negotiated between the parties. Hartog immediately accepted the offer and claimed the goods at the contracted price. The court ruled that there was an offer and acceptance but there was no meeting of minds. Thus, no agreement had been formed between the parties. We are now ready to get introduced to the contemporary case on snapping up, Chwee Kin Keong v. Digilandmall.com Ltd.

Chwee Kin Keong and Others v. Digilandmall.com Ltd

Digilandmall.Com Ltd. was a company that sold information technology products over the internet, to consumers.13 As part of its business, it operated a website owned by Hewlett Packard (HP). The address of the website was http://www.buyhp.com.sg. On the site, only HP products were sold. The company had its own site, http://www.digiland.com. It sold information technology products of different brands, including HP products, on this site. The company had a related entity, Digiland International Limited (DIL). DIL had a site for selling information technology products for corporate clients and re-sellers.

We now come to the arrangement for shopping at the websites. A customer visiting the site would take a shopping cart. He could select items and put them in it. This would indicate the description of the item, quantity and price. The customer would then go to check-out. At this stage, he would have to mention the address for delivery, email address and phone number. The screen would next take the customer to the payment stage. Payment could be done by credit card or on delivery. The customer had to provide credit card details. He would then be prompted to press enter. Alternately, he could tick payment on delivery. The customer could change his mind about the intended purchase till this stage. If the connection got lost, the intended purchase would get abandoned. However, once the customer pressed enter, he would lose control. On pressing enter, the request went to the server of the credit card and the seller. At this stage, if there were mistakes in the credit card details or the credit limit were exceeded, a screen would get generated informing that the payment was not realised and the transaction had failed. However, if the payment got realised, the following automatic response came from the seller on the screen:

"Successful transaction ... your order and payment transaction has been processed. Successful Purchase Confirmation from HP online. ..."

The buyer also received an email which stated:

"We will be calling you in the near future to deliver the products to the address shown below. You may find the status of your order by calling us at (phone number given) ... Special instructions: Please call to advise delivery date and time."

The episode

On Wednesday, January 8, 2003, between 3.00pm and 4.00pm, DIL conducted a training session at the premises of Digilandmall.Com Ltd. for its employees, about the use of a new template for the three webpages. The template interlinked all the three webpages and allowed price changes to be reflected in all of them simultaneously. For the purpose of training the employees, a real product number, HP 9660A, was inserted in the new template to make it lifelike. The trainer, Samuel Teo, inserted a fictitious price, USD 66, for demonstration. A test website was allocated for the training purposes. In the course of the training, at about 3.36pm, Teo, inadvertently, uploaded the training template onto the Digiland commerce website operated by DIL, instead of the test website. As the template had linked the three sites, the training template got inserted in all the three websites. The price of the advanced and commercial purpose colour laser printers, which was USD 3,854 before the inadvertent uploading, became USD 66.

On Monday, January 13, 2003, at about 9.15am, an employee of the company received a call from a customer re-confirming whether the price of the printer on the HP website was indeed USD 66. It was then that the company realised that the training template had got uploaded. The company took prompt steps to remove all references to the laser printer from all the three websites. By then, a total of 4086 printers had been purchased by 784 individuals. The company informed all the buyers that the pricing was an unfortunate error and the company would not be meeting the orders.

Six purchasers moved the court against the company refusing to honour the contract.

The six purchasers going to the court

There were six major purchasers. The purchasers moved the Singapore High Court against the company refusing to honour the contract. The details of the six parties, and the events since the inadvertent uploading, are as follows.

1.Chwee Kin Keong, was 29 years old. He had a bachelors degree in business studies from Nanyang Technological University (NTU). He joined Standard Chartered Bank, Singapore, as a corporate banker, and worked for four years. Thereafter, he was self- employed and marketed aromatherapy products under the label Bel-Air. He was also a director and shareholder in a company engaged in wholesale trading. On the morning of January 13, 2003 at about 1.17 am, he got a message from his friend Desmond asking him to check an HP link. Desmond told him that he had bought three colour laser printers for just USD 66 each. The two exchanged several messages exploring the going price and the profit that could be made by resale. Chwees internet searches revealed that the going price for the printer was around USD 3000. Chwee said to Desmond that even if one could make USD 500 on one printer, it is a steal. At 2.05 am, Chwee placed an order for 100 units paying with his credit card. Soon after, Chwee sent the following email to 54 friends and business associates. The email read:

"From: Stanley Chwee To: XXXXX

Sent: Monday, January 13, 2003 2:58 AM

Subject: IMPT - HP Colour LaserJet going at only $66!! Dear friend,

Someone referred me to the HP website which shows the price of this HP Colour LaserJet 4600 Series as S$66.00. I do not know if this is an error or whether HP will honour this purchase. No harm trying right? I hope by the time you see this email, the price is still at S$66.00 coz they might change it anytime.

Good luck!

Click on this link! http://www.buy.hp.com.sg/hp/StandardProduct.cfm?prodid=HPC9960A"

2.Tan Wei Teck was 30 years old. He graduated with an accounting degree from NTU. He was currently a supervisor in the taxation department of an international accounting firm, Deloitte & Touche. He became friends with Chwee while at NTU. Chwee called him up at 2.00 am at night to tell him that HP was selling printers for USD 66. Soon, he received the email Chwee had sent to his friends. Tan searched the net to confirm the going price of the printer. He discovered it was in the region of USD 3000. Tan first placed an order for 100 printers. He then revisited the site four more times, placing orders for 20 printers in each visit. He thus placed an order for a total of 180 printers. He paid using his credit card.

3.Mark Yeow Kinn Keong was 32 years old. He had a Bachelors degree in Economics from the University of London. He worked for a short period with the Standard Chartered Bank. In the course of it, he got acquainted with Chwee. He conducted his own network marketing business. He was also engaged in marketing of Bel-Air aromatherapy products. He received a call from Chwee at about 2.00 am informing him that he had "found an opportunity to make money as there was an arbitrage position to be achieved for some Hewlett Packard printers". Mark, soon after, received the email Chwee had sent to all his friends. Mark confirmed whether the laser printer was being sold at the HP site for USD 66. He followed this with online searches to confirm that the usual price was in the region of USD 3000. He placed his first order at 2.42 am for ten printers. Half an hour later, at 3.14 am, he placed an order for 150 more printers. He followed this with two more orders of 300 printers each, at about 3.56 am and 3.59 am. He, thus, bought a total of 760 units. He was the biggest buyer of the printers. Mark then woke up his brother and informed him of the price. He bought another 330 units for his brother. Thus, he made a total purchase of 1090 units. This accounted for one fourth of all the purchases during the period. All of Marks purchases were on payment on delivery basis.

4.Yeow Kinn Oei was 29 years old. He was Marks brother. Mark bought 330 units for his brother.

5.Ow Eng Hwee was 29 years old. He held an accounting degree from NTU. He worked in an accounting firm, Ernst and Young, for three years. He was running an internet business in which Tan had an interest. He received a call from Tan at 2.30 am saying that there was money to be made through purchase of laser printers. He placed an order for 50 units at 2.58 am at the HP site. He placed another order for 50 units at 3.22 am. He then, searching the net, came to the Digilandmall website and confirmed the price of USD 66. He placed order for 25 laser printers through that website at about 3.29 am. The payment mode for the purchases was cash on delivery. Ow went back to the HP site at 4.16 am and placed an order for one laser printer. However, this time, the mode of payment was by credit card. The transaction was successful. He followed this immediately with a purchase of ten units, paying by credit card. He, thus, made a purchase of a total of 136 units.

2.Malcolm Tan was 30 years old. He was a practising lawyer. He was also a part of the Bel-Air network. Malcolm received an sms from Tan Wei at about 2.30 am about cheap laser printers being available for purchase. After a few sms exchanges, Malcolm and Tan talked on the phone. Tan asked him to see his email where he had sent the link for the site. Malcolm visited the HP website through the hyperlink sent to him by Tan and confirmed that the laser printer was priced at USD 66. Malcolm checked the terms and conditions on both the sites, HP and Digilandmall. Tan called him again. Malcolm confirmed to him that a contract on purchase at the sites was binding on the parties. Malcolm placed an order for 100 laser printers at about 3.51 am.

Contention of the parties

In the shopping arrangement at the three sites, it was the customer who made the offer. The offer was made at the point of time when the buyer clicked on enter, sending the purchase request with the credit card details. In the alternative, the request is based on payment on delivery. The seller accepted the offer by following it with the message Successful transaction. A contract got made at this point of time between the parties. Digilandmall vigorously asserted that its communication of acceptance was tentative, as it asked the buyer to enquire. A tentative or provisional acceptance does not make a contract. Deploying this, Digilandmall claimed that there was no contract. The contention did not go far. The court had no doubt that the acceptance was absolutely clear. The enquiry was only post-contract to work out a convenient time for delivering the goods.

Once the seller refused to honour the contract, the six persons took their claims to the press. In Straits Times, the report was captioned $66 printer error - angry customers seek lawyers help. It reported:

"While surfing the net at about 2 am on Monday, Mr Tan Wei Teck stumbled upon an offer he could not believe - $66 for a Hewlett Packard laserjet printer that normally sells for $3,854 before GST.

In a Channel NewsAsia report datelined January 15, 2003, it was reported that:

"Two of the customers, Mark Yeow and Malcolm Tan, have already spoken to their lawyers.

The businessmen saw a great opportunity and grabbed it - placing an order for 1,000 printers.

Mr Yeow said: After we ordered, the very next day, some of us have even gone up to talk to buyers in the market about the units. So its going to be our reputation at stake, we thought we had a successful transaction." Digilandmall resolutely refused to honour the contract. The six persons approached the Singapore High Court seeking remedy. The contention of the buyers was that a contract once made had to be honoured. It was a genuine contract made by the buyers. The company contended that it had made a mistake and the contract should be set aside.

Judgement of the Court

The High Court highlighted that the sanctity of the contract had to be held and these were not to be ordinarily or easily questioned. It noted:

"The very foundations of predictability, certainty and efficacy, underpinning contractual dealings, will be undermined if the law ... expands the scope of the mistake exception with alacrity or uncertainty. The rigour in limiting this scope is also critical to protect innocent third party rights that may have been acquired directly or indirectly. Certainty in commercial transactions should not be trifled with, as this will inevitably affect how commercial and business exchanges are respected and effected. The quintessential approach of the law is to preserve rather than to undermine contracts."

The court would consider the claims of mistake only on this foundationof sanctity of contracts. The court reviewed the law:

"There is a distinct line of cases within the narrow confines of unilateral mistake where the common law has been resolutely disinclined to enforce apparent contracts. The case of Hartog v Colin & Shields [1939] 3 All ER 566 is incontrovertibly the leading authority in this area. ...

The term snapping up was aptly coined by James LJ in Tamplin v James (1880) 15 Ch D 215 at 221. The essence of snapping up lies in taking advantage of a known or perceived error in circumstances which ineluctably suggest knowledge of the error. A typical but not essential defining characteristic of conduct of this nature is the haste or urgency with which the non-mistaken party seeks to conclude a contract; the haste is induced by a latent anxiety that the mistaken party may learn of the error and as a result correct the error or change its mind about entering into the contract. Such conduct is akin to that of an unscrupulous commercial predator seeking to take advantage of an error by an unsuspecting prey by pouncing upon it before the latter has an opportunity to react or raise a shield of defence. Typical transactions are usually but not invariably characterised by

(a) indecent alacrity; and (b) behaviour that any fair-minded commercial person similarly circumstanced would regard as a patent affront to commercial fair play or morality. ..."

The court applied the principle of formation of contract to the internet. It noted:

"It is not really in issue that contracts can be effectively concluded over the Internet and that programmed computers sending out automated responses can bind the sender. The elements of an offer and acceptance are ex facie satisfied in every transaction... It cannot also be seriously argued that there was no intention to enter into a legal relationship."

Undoubtedly, the parties had formed a sale contract. Unless there were exceptional circumstances, the sale contracts would have to be honoured. The court then turned to the contention of the company:

"The [company] has however properly asserted that there was a unilateral mistake that vitiated all the contracts. I have found that the [Chwee and friends] had at all material times knowledge of or, at the very least, a real belief that an error had been made by the [company] in the price posting. [Chwee and friends] were not being candid when they portrayed very limited exchanges between themselves, dealing allegedly with only the profits to be made and their ability to resell the laser printers. I categorically reject their evidence in so far as it attempts to hermetically compartmentalise their knowledge and discussions. .....

The stark gaping difference between the price posting and the market price of the laser printer would have made it obvious to any objective person that something was seriously amiss. Alarm bells would have sounded immediately. One is hard put to imagine that anyone would purchase such an item, let alone place very substantial orders, without making some very basic enquiries as to pricing. In the context of its true market value the absurd price of $66 was almost the commercial equivalent of virtually giving away the laser printers. I must add that these were far from being ordinary printers for home use. They were high-end commercial laser printers. ... It is significant that some [among Chwee and friends] had never made any prior Internet purchases before that eventful morning. Certainly, none of them had ever been induced to conduct transactions on such a scale on the Internet for any product, let alone sophisticated commercial laser printers.

I find, in the alternative, that [Chwee and friends], given each of their backgrounds, would in any event, each have separately realised and appreciated, before placing their purchase orders, that a manifest mistake had occurred - even if no communications on the error had taken place between them. Further, the character of the mistake was such that any reasonable person similarly circumstanced as each of [them] would have had every reason to believe that a manifest error had occurred. The amounts ordered and the hurried and hasty manner in which the orders were executed are of cardinal importance. As the Channel NewsAsia report so succinctly summarised - they saw a great opportunity and grabbed it.

If the price of a product is so absurdly low in relation to its known market value, it stands to reason that a reasonable man would harbour a real suspicion that the price may not be correct or that there may be some troubling underlying basis for such a pricing. He would make some basic enquiries to ascertain whether there is anything faulty with the product in an attempt to seek an explanation for or understanding of the basis for the price discrepancy; he might alternatively try and ascertain whether perhaps the price differential is part of some spectacular promotional exercise. If there appears to be no reasonable explanation for an absurd price discrepancy, it is axiomatic that any hasty conduct, such as [of Chwee and friends], in

snapping up products, should be punctiliously scrutinised and dissected. What amounts to snapping up is a question of degree that will incorporate a spectrum of contextual factors: what is objectively and subjectively known, the magnitude of the transaction(s), the circumstances in which the orders are placed and whether any unusual factors are apparent.

A purchaser in a case of apparent unilateral mistake, who purchases for genuine own use a product, may not always be viewed as guilty of engaging in snapping up. There could be different considerations. It can however be observed that in mass mistake cases, even when there is no direct evidence as in these proceedings, the court could be prepared to pragmatically assume actual or deemed knowledge of the manifest mistake. In such cases, where the purchaser has readily accessible means from the very same computer screen, to ascertain through a simple search whether a mistake has taken place, the onus could be upon him to exonerate himself of imputed knowledge of the mistake. Alternatively, knowledge may be readily inferred from what would be regarded as commonly known or notorious facts in the context of the transaction. The law ought to take a practical approach in dealing with such cases if it appears that by exercising reasonable care the true facts ought to be known. It may be impractical and unjust to demand that the mistaken party actually prove the knowledge of a substantial number of people who effect numerous purchases. The mere fact that they suddenly engage in predatory and atypical behaviour may in itself be telling.

It is improper for a party who knows, believes or ought, objectively speaking, to have known of a manifest error to seek commercial benefit from such an error. It is unequivocally unethical conduct tantamount to sharp practice.

The circumstances under which the orders were placed and the quantities sought to be purchased wholly undermine counsels variegated contentions that [Chwee and friends] lacked knowledge of or belief in the existence of a mistake. There is no doubt that [Chwee and friends] acted with indecent haste in the dead of the night in placing as many orders as each of them felt their financial resources credibly permitted them to do. They were clearly anxious to place their orders before the [company] took steps to correct the error. Hence Chwees cryptically worded but highly significant mass e-mail where he adverted to the fact that he did not know if the [company] would honour the contracts but in any event wished all the recipients good luck.

It is clear from the authorities reviewed that such a contract, if entered into by a party with actual or presumed knowledge of an error, is void from the outset. It is not in dispute that the [company] made a genuine error. The fact that it may have been negligent is not a relevant factor in these proceedings. Mistakes are usually synonymous with the existence of carelessness on the part of the mistaken party. While commercial entities ought not to be given a licence to relax their vigilance, the policy considerations in refusing to enforce mistaken agreements militate against attaching undue weight to the carelessness involved in spawning the mistake. The rationale for this is that a court will not sanction a contract where there is no consensus ad idem and furthermore it will not allow, as in the case of unilateral mistake, a non- mistaken party to take advantage of an error which he is or ought to be conscious of. These considerations take precedence over the culpability associated with causing the mistake. There is therefore no pre-condition in law for a mistaken party to show an absence of carelessness to avail himself of this defence; the law precludes a person from seeking to gain an advantage improperly in such circumstances. ...."

The court concluded:

"The claims by [Chwee and friends] are audacious, opportunistic and contrived. There is no larger noble principle, such as the sanctity of contracts, to be observed or protected in these proceedings. [Chwee and friends] also assert ... that if contracts are only upheld if parties acted honourably there would be very few contracts left standing in the commercial world. This is a disingenuous contention that desperately attempts to palliate their conduct in the subject transactions. This is not a case about bargain hunting - which is a time honoured and perfectly legitimate pursuit. This is a case about predatory pack hunting. In the context of the present proceedings, the extra- judicial observations of Lord Steyn in Contract Law: Fulfilling the Reasonable Expectations of Honest Men (1997) 113 LQR 433 at 433 are particularly apposite:

A thread runs through our contract law that effect must be given to reasonable expectations of honest men. Sometimes this is made explicit by judges; more often it is the implied basis of the courts decision. ... It is an important subject for the future development of English contract law.

These statements of jurisprudence are of cardinal importance in understanding and fashioning the law of contract. While a court of law does not sit as a court of commercial morality, it cannot lose sight of this central objective of contract law. This thread helps to rationalise the development of the common law but ought not to be viewed as supporting the existence of a general test of commercial morality tantamount to the test of unconscionability invoked by equity. These statements are not to be interpreted as a clarion call to rewrite commercial agreements because of a partys unreasonable or ignoble behaviour. Rather they assist in explaining how the common law has incrementally and cautiously allowed and continues to mould exceptions to the application of the objective theory of contracts. Contract doctrine is substantially predicated upon achieving an ethical equilibrium between the individualistic ethic and community ethic in order to protect reasonable or legitimate expectations. The individualistic ethic seeks to maximise individual goals and the community ethic seeks to set norms for commercial morality and to ensure that fair dealing and community cohesiveness are observed and maintained.

Interestingly, of the 784 persons who placed 1,008 orders for 4,086 laser printers, only these six [persons] have attempted to enforce their purported contractual rights. Their conduct in pursuing their claims cannot by any stretch of the imagination be characterised as having the slightest colour of being legitimate regardless of whether the subjective or objective theories are applied and whether common law or equity is applied in adjudicating this matter.

The Internet has revolutionised commerce and radically altered the manner in which commercial interaction currently takes place. The law will have to organically adapt itself to respond to new challenges without compromising on certainty and fairness. Given its global reach and ever changing technological advancements, Internet usage will pose a myriad of issues for resolution. Users may find that it may not be as forgiving as more traditional methods of communications. That said, it also offers new avenues of evidential proof offering intimate insights into realtime thought processes and reactions. The plaintiffs attempted to take advantage of the defendants mistake over the Internet. In turn, the ICQ chat session involving the first plaintiff and the respective plaintiffs exchange of e-mails played a significant role in undermining their credibility and claims. Is this a case of poetic justice?

The plaintiffs claims are dismissed. ..."

We can now revisit the question: Can United Airlines set aside the contract?