Legal Article - Business Law

Pricing Alterations

The law requires you to make pricing alterations clear. So phrases like '20% off' or 'sale price £19.95' should refer to what the reduction is from. The other price should generally be quoted and identified so that the reduction can be assessed.

Where a sale e.g. 'was/now' pricing is used then generally the higher price should have been offered for 28 days prior to the reduction unless it is clearly stated as otherwise.

If therefore, say the last car came into stock 7 days ago and you now want to do a sale on all vehicles in stock, then you would need to explain to the customers that the 'was' price was valid for at least 7 days before the price reduction.

With the fall in car prices sellers of imports or used vehicles often want to compare prices with new UK vehicles. The same rules apply but make it clear how the product differs e.g. an imported cars specifications may differ from the UK version so the comparison is not like for like.

You should not use abbreviations generally except 'RRP' for a recommended retail price and 'man.rec.price' for manufacturers recommended price. Obviously any compared prices must be up to date and accurate. 

 Not surprisingly the law regarding free offers is that whatever is being offered should genuinely be free. If the price has been bumped up to get the free offer, or if the price is reduced to customers who do not take it up, then it is not free.

If customers must make a special purchase to get the free offer then this must be made clear. In some instances a certain number of items may have to be purchased before the free offer takes place or certain conditions apply. In such instances then the full conditions must be explained.

If you quote something as 'free' then it could be held to be technically incorrect if you break it down on the invoice at a price and then reducing the price of the other product for sale accordingly.

If you do wish to invoice in this way we recommend that you say the additional item is 'included in the price' rather than free.

The legal problems with incorrect prices are simply that if you state a particular price you are going to sell something at, then that should be the price it is actually sold at. Problems commonly arise when a wrong price is inserted in an advertisement, this results in the advertised price and the car screen price not matching. 

Legally you do not have to sell the car but you will be inviting the customer to race hot foot to the Trading Standards if you don't. Always quote prices including VAT.

Call out charges can be a problem for many retail sectors. In the motor trade, the common problem arises for break down services. In such cases the customer must be made aware of the charge, whether it is a minimum charge, whether the actual price may be higher and in what circumstances.

Price changes are always a risky time. When there is a price increase always ensure that the details of the new prices are changed before the actual price is charged. Problems also arise when new price lists are issued in newspaper/magazine advertisements.

The legal position here is that unless stated otherwise a price in a weekly newspaper/magazine will be valid for the 7 days when the advertisement is current.

If at any point a price indication becomes misleading then you should always make the customer aware of this before they commit to purchasing.

Published: 16 Mar 2011

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