The product offered at the wrong price was a Hewlett Packard iPAQ H1910 Pocket PC. The site also listed another pocket PC as being priced at around £23, instead of around £515.
The news spread quickly across Usenet and various websites and, according to Amazon's homepage, by midday the H1910 was Amazon’s highest selling electrical product.
BBC.co.uk reports that City workers were ordering the products by the dozen, saving themselves thousands of pounds in the process.
Amazon.co.uk was closed around lunchtime for 50 minutes, with shoppers being directed to the international site. It issued a statement admitting the error, and cancelled orders at the incorrect price. However, it said that its pricing policy allowed it to contact customers, offering them the product at the correct price if an error occurred.
According to Michael Archer, a lawyer at Beale & Company, it is likely that Amazon will claim that it is not contractually bound to sell the Pocket PC at the advertised price because it was a mistake, which is recognised by English law.
Beale & Company represented a customer of Kodak in a similar incident after Kodak refused to honour contracts for a camera mistakenly sold at £100 rather than £300. The law firm was successful in persuading Kodak to supply the cameras at the advertised price.
"Amazon's emails and website confuse matters. When the consumer places an order on Amazon's website, they are taken to an order review page. This states that by placing the order, you agree to Amazon's conditions of use. These conditions of use appear to be only the conditions of website use and not terms governing the contract. Amazon should make it clear, at this stage, the terms which it wishes to apply to the contract," Archer said.
He added: "Further confusion arises from Amazon's confirmation email. Is this meant to be acknowledgment of the order, or confirmation of the contract? We would always advise online retailers to make the first email an acknowledgment of the order, and state that the contract is not formed until the consumer receives a further confirmation email.
"Amazon's email provides information on how 'To cancel this contract...'. It could be argued that Amazon is stating that this is acceptance of the consumer's offer, and it would be surprising if a court were to decide that no contract existed at this point."
Archer said that Amazon has attempted to protect itself from pricing mistakes with a link on the order review page which enables the consumer to 'Learn more about our delivery rates and policies'.
However, because this is not drafted as part of the terms and conditions, Archer argues it would be difficult for Amazon to claim that it was incorporated into the contract.
In a statement issued by Amazon, the online retailer confirmed the price discrepancy and said that, in keeping with its policy, it would be cancelling the orders.
"In keeping with our conditions of use and our pricing and availability policy, we will be cancelling orders made for the HP iPAQ Pocket PCs at the incorrect price this morning. In our pricing and availability policy, we state that where an item's correct price is higher than our stated price, we contact the customer before dispatching.
Accordingly, customers will be contacted and offered the opportunity either to cancel their order or to place new orders for the item at the correct price. As the conditions of use clearly state, there is no contract between Amazon.co.uk and the customer for an item until Amazon.co.uk accepts the customer order by e-mail confirming that it has dispatched the item. Until that time, Amazon.co.uk is within its rights to not accept any customer order," it said in its statement.
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