'Amazon Fresh': offer and acceptance in the future of retail - Charlie Furniss

In 2021 Amazon opened five Amazon Fresh stores in London described as ‘contactless’ grocery stores. They operate as follows: download the Amazon Fresh app; scan the app as you enter the store; as you pick your groceries the camera system in the store will detect what you take; leave the store and Amazon will send your receipt within a few hours. It is simple and extremely accurate. Although stores of this kind are not common place, if ‘frictionless’ shopping proves successful, this technology will likely characterise the future of in-store retail. The potential for a monumental shift in retail demands an inquiry as to whether the established law can accommodate this. Cashier-less shopping raises a whole host of legal issues from data protection to the transfer of title, far too much to cover in a single article. With this in mind, this article will tackle the challenge contactless shopping poses to one of Contract Law’s key pillars - the offer-acceptance analysis.

The leading case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 (CA) (‘PSGB v Boots’) will be familiar to any student of Contract Law so a brief overview will suffice. The salient issue in the case was at what point offer and acceptance took place in a self-service store. Somervell LJ reasoned that it would be inconvenient to treat the offer as the store putting the products on display and the acceptance being when a shopper puts an item in their basket because this would entail a contract forming as soon as a shopper put an article in their bag, stifling their ability to browse the products and change their mind on what they want to buy. To get around this issue the court concluded that the most convenient analysis would be to treat the customer bringing their shopping to the till as the offer and the cashier allowing the purchase the acceptance.



Can PSGB v Boots be applied to an Amazon Fresh store?


On a PSGB v Boots analysis there is no offer in the case of an Amazon Fresh store as there is no till for the shopper to take their items, and there is also no acceptance due to there being no cashier to accept payment. Therefore a new offer-acceptance analysis is required to accommodate the next generation of retail stores.



A solution?


Offer and acceptance are inextricably linked and thus it is not possible to have a successful analysis in this case tackling the two issues independently. Before embarking on the offer- acceptance analysis it is necessary to set out the relevant definitions. Professor Treitel described an offer as “an expression of willingness to contract on specified terms, made with the intention that it is to become binding as soon as it is accepted by the person to whom it is addressed” and acceptance as “a final and unqualified expression of assent to the terms of any offer”.



1. Offer: the shopper leaving Amazon Fresh Store with their shopping.


The shopper leaving the store appears to be a good event to regard as the offer in this analysis as it allows the shopper to pick up and change items to their heart’s desire before the contract can be accepted, and this approach is the most analogous to the offer in PSGB v Boots. Difficulty emerges, however, when one looks for the point at which acceptance of this offer could take place. The 'just walk out' nature of Amazon Fresh Stores means there are very few points at which Amazon can be deemed to have made an expression of acceptance. Despite this, there are a few expressions on behalf of Amazon Fresh at which could constitute acceptance of this offer:



i. The automatic gate of the store opening to allow the customer to leave.


A neat point at which to find acceptance would be as the shopper is leaving the store, as this would ensure the contract is concluded before the shopper has actually left the shop with the groceries. Unfortunately, the only possible expression on behalf of Amazon Fresh after the customer has set to leave is the automatic exit gate opening to allow the customer to leave. Although treating this barrier opening seems like an easy place to find acceptance in this case, to do so would be extremely artificial. It is not the case that the gates only open if your account has sufficient money to pay for the items, the only requirement for them to open is a person standing in front of them. The purpose of the gate is only to ensure customers enter and exit the store in the correct place. Consequently the exit gates provide no solution to the issue of acceptance.



ii. The email receipt from Amazon Fresh.


Another potential expression of acceptance is Amazon’s email to the shopper with a receipt confirming what they have bought. This is preferable to the exit gates in that it actually relates to the transaction between the shopper and Amazon, unlike the opening of an automatic gate. The issue with this analysis however is that it takes 30 minutes or longer after leaving the store for these receipts to be received meaning that a shopper could have got home and already loaded their shopping into the fridge before the contract is formed.


This result seems counterintuitive for two main reasons. Firstly, the shopper could withdraw their offer to buy the items at any point before acceptance. In practice this would mean that so long as the customer returned their groceries before their receipt arrived they would have no obligation to buy them. Secondly, Amazon would be within their rights to reject the customers offer to buy the products. This would not be problematic if this rejection was immediate, however if there was time between the offer and its rejection the customer could have already taken the products home or even eaten them. A fair retort to these problems is that in almost all cases these problems would not arise, but regardless they demonstrate that this idea is theoretically untidy, so although it is not an intolerable solution it leaves a lot to be desired.



iii. Acceptance by silence?


One way of getting around the lack of an expression of acceptance on behalf of Amazon Fresh before the shopper has left the store is to treat Amazon’s silence as the acceptance. Felthouse v Bindley (1862) 11 CBNS 869 sets out the courts’ hesitance to holding an offeree bound by their silence because to do so would unfairly put the offeree through the trouble of rejection. Despite this, Professor Treitel argued that this logic loses force where the offer has been solicited by the offeree, which is the case with an Amazon Fresh store. Further, Brown LJ left open in The Leonidas D [1985] 1 WLR 925 (CA) that the offeree could be bound by their silence in “exceptional circumstances”. If contactless shopping can be deemed to constitute “exceptional circumstances”, which there is certainly room to argue, the lack of any clear expression of acceptance on behalf of Amazon Fresh could be circumvented.


The advantage of this approach in removing the need for an expression of acceptance on behalf of Amazon Fresh is also its downfall as it begs the question as to when exactly Amazon’s acceptance by silence takes place, and in turn the point of contract formation. One could argue that the acceptance by silence takes place right after the offer on the part of the customer leaving the store, however it is equally logical to argue that the acceptance takes place an hour after leaving the store, or two hours, or even a day. Solving the issue through acceptance by silence would lead to an outcome lacking in certainty, so once again this is a possible solution, but not a desirable one.



In summary, treating Amazon Fresh as the offeree makes it difficult to produce a logical offer-acceptance analysis due to the stores’ “just walk out” design. One way to get around this issue is to treat Amazon as the offeror rather than the offeree.



2. Offer: Amazon Fresh putting its products on display.


Amazon Fresh displaying goods for sale is another alternative to regard as the offer. At first it would appear that this is inconsistent with the decision in PSGB v Boots where it was decided that the display of goods should not be regarded as an offer. Somervell LJ’s reasoning was not, however, that there was any inherent difficulty in the display of goods constituting an offer, it was that to regard such a display as an offer in the context of a self-service store would be inconvenient as it would lead to contract formation taking place as soon as the article was put in the shoppers bag. This difficulty rests on the assumption that the shopper putting the items in their bag has to be regarded as acceptance. This issue can therefore be avoided if the approach of Laskey v Economic Grocery Stores 65 N.E.2d 305 (Mass. 1946) is adopted where it was held that the shopper putting items in their basket was not acceptance, instead acceptance took place at a later point.



i. Acceptance as the customer leaving the store with the shopping.


If one regards the customer’s acceptance to be when they leave the store with their shopping, the inconvenience set out by Somervell LJ in PSGB V Boots is avoided as the customer will have picked out everything they want to buy before they leave the store. This offer acceptance analysis ensures that the contract is concluded as the customer leaves the store, achieving a precise moment at which it can be said the contract is formed before the customer has left the building. This approach provides certainty and circumvents the issues resulting from contract formation taking place after the shopper has already left the store.



Merely a theoretical issue?


Amazon Fresh offers a glimpse into the future of retail and this glimpse raises legal issues across a wide range of areas. Despite reaching a practical solution to the issue of offer and acceptance in contactless stores, the question that remains to be answered is whether there is any need for such a solution in practice. There are two key reasons why this analysis should not be confined to the realm of problem questions.


Firstly, it is essential to be able to rationalise any contractual relationship on the law’s formulaic approach to offer acceptance because if such a rationalisation is impossible there can be no contract. This may appear to be stating the obvious however it is important to remember that the formulaic approach of the law in requiring offer plus acceptance is often detached from the practical reality in which contracts are made, a point for which Amazon Fresh Stores are perfect evidence. The result of this is that the existence of a contract cannot be taken for granted even if from a holistic view, like that favoured by Lord Denning in Gibson v Manchester CC [1979] 1 WLR 294 (CA), there was a contract.


The second reason why performing an offer and acceptance analysis is important is an offshoot of the first. Even if it is possible to rationalise a transaction on an offer-acceptance analysis, as Lord Wilberforce noted in The Eurymedon [1974] UKPC 4, the “technical and schematic doctrine of contract” often leads to facts being forced “uneasily into the market slots of offer, acceptance and consideration”. This forcing of facts can have problematic consequences regarding the point at which an offer can be withdraw and the terms incorporated into a contract. Therefore it is essential for certainty in transactions such as that of an Amazon Fresh Store that the offer-acceptance analysis is explored so their issues can be resolved or at the very least mitigated before they arise.


 

M Tillman, 'Amazon Go and Amazon Fresh: How the 'Just walk out' tech works', 4th March 2021, Pocket-Lint.


'Amazon's totally frictionless grocery store', 11th November 2019, Retail Innovation.


Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 (CA).


G Treitel, 'The Law of Contract', 15th edition.

'About Amazon Fresh stores', Amazon.co.uk.

H Downes, 'Amazon Fresh store review: will checkout-free shopping make you spend more?', 21st April 2021, Which?.


Felthouse v Bindley (1862) 11 CBNS 869.


The Leonidas D [1985] 1 WLR 925 (CA).


Laskey v Economic Grocery Stores 65 N.E.2d 305 (Mass. 1946).


Gibson v Manchester CC [1979] 1 WLR 294 (CA)


The Eurymedon [1974] UKPC 4





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