Ritz Carlton Won't Honor $.01 Per Night Reservation

Mark’s sister found a room at the Ritz Carlton in London for just one penny per night on Hotels.com, only to have it snatched away.

At first, she successfully booked for three nights. Three days later, Hotels.com emailed to apologize for the typographic error, and offer a $100 voucher, but neither they nor the Ritz Carlton would be honoring the reservation.

At least she’s not stuck for the $2000 it would be otherwise. But are the hotel vendors in the right? Can they legally cancel a reservation for a typo? Mark perused their contract and couldn’t find anything to that effect. Perhaps you will. — BEN POPKEN

Your Two Cents On Typos [The Mark Pike]

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  1. homerjay says:

    This error is a little TOO obvious. I could understand if the typo was $100 for a room that was supposed to be $200 but .01? I wouldn’t have honored it either if I was hotels.com.

  2. bluegus32 says:

    The problem you have here is that this is not just a mere typo. It is a grossly inaccurate typo. In such an instance, everyone involved knows that it was mistake and cannot reasonably assume that such a price would be honored.

    It would be a different story if you were trying to book a $200 per night room and was quote a price for $100 per night. That kind of typo is within the ballpark. But when you see $.01 per night for a high class hotel, you know it’s a mistake and you can’t claim that you reasonably relied upon it.

    To put it into contract terms, no contract is formed where one party to the contract has actual knowledge that the other contracting party is under a mistake of fact as to the contract terms. In other words, you can’t take advantage of what you know is a mistake.

    There is no contractual relationship formed here and the hotel was right to not honor the reservation.

  3. mfergel says:

    Glad I’m not the only one that feels it was a bit too obvious. Consumers hate it when companies take advantage of them (Cingular, etc) but seem to have no problem turning around and doing the same thing. The thing to do here would have been to contact hotels.com or the hotel. I think the fact that they offered the voucher is pretty nice of them.

  4. brooklynbs says:

    bluegus32 hit the nail on the head. I’d be happy with the $100 voucher and walk away.

  5. Tallanvor says:

    Let’s not forget that the travel industry does have promotions from time to time. –Every once in a while you hear about airlines tossing out a few $0.01 fares… It’s not unreasonable for an occasional traveler to see such a price and think it could be legitimate, especially on a reputable site.

    And I know it’s comparing apples to oranges, but when you think about it, consumers are so used to getting screwed over by companies (such as huge late fees if their credit card payment is a day late, or high fees to change ticket dates on airlines), that is it any wonder that we tend to jump on any type of mistake a company makes that can be to our advantage?

  6. Metschick says:

    While looking for hotel rooms for a New Orleans trip, I used a few of the travel site – like hotels.com, orbitz and travelocity. One thing that jumped out at me was this: at hotels.com, a night at the Hotel Monteleone $492.00. But at Orbitz, the same hotel room goes for considerably cheaper.

  7. ikes says:

    i am surprised this wasn’t posted on fatwallet.com resulting in hundreds of people crying that they didn’t get their .01 rooms.

    i am sorry, but this is obviously a mistake and no one should expect this rate to be honored.

  8. gbbound says:

    A similar event happened this past October with Priceline.com where they were offering rooms for $20 a night at Caesar’s Palace in Las Vegas.

    I book 5 nights (which included one night at $220). They charged my credit card, and everything seemed hunky dory. 48 hours later, the reservation was cancelled (except for those who had reservations in the first two weeks of November). Priceline.com said it was an error and passed the buck to Caesar’s Palace.

    I lodged a complaint, but a Caesar’s lawyer said, “The $20 rate to which you refer was a mistake and the mistake was one made by an employee who inadvertently entered an incorrect code that caused the posting of the aforementioned rate rather than, as was intended, a percent discount off the price of the rooms for the period in question….It is Caesars’ view that, under the circumstances involved in this matter, it is not legally responsible to you to fulfill the $20 rate.”

    They did offer a room at $120, instead of at $220.

  9. RumorsDaily says:

    Hey, it’s like Contract Law day here at Consumerist. The vaguely legal answer is that the common law contracts doctrine of Mistake says that they can indeed cancel the contract unilaterally. Follow the link for more information.

  10. Antediluvian says:

    I’m with mfergel on this — consumers will sometimes jump on what is clearly a gross error, and then claim the company is being unfair when it’s revoked. This is not like forcing Best Buy to honor a mis-priced TV ($1500 instead of $2000, or something like that, which didn’t seem clearly a mistake), or an obvious loss-leader (JetBlue is offering $29 fares right now), or a “stay one night at xyz rate, stay the second for only 1 penny” -type offer, or a bait-and-switch operation. This was an honest mistake.

    When the cashier hands us back too little change, we all speak up. How many of us speak up when we’re given too much change back?

  11. Amy Alkon says:

    I do. You can’t be unethical in on one hand and then demand others behave ethically when it’s in your interest. Well ,maybe you can, but I can’t, and still sleep nights.

  12. Triteon says:

    When did Verizon buy the Ritz-Carlton chain?

  13. Beelzebub says:

    Discussion of ethics aside, they CAN’T just cancel the order.

    If the Ritz-Carlton made the mistake, then they should honor it. If you walked up in person and recieved the rate, they couldn’t chase you down later and demand you pay more. Just because the internet makes it easier to communicate doesn’t mean you get to change the rules.

    If it was Hotels.com that made the mistake, then Hotels.com should pay the Ritz the difference.

    If the purchaser was contacted, and the error was explained, and they still demanded the $.01 rate, well, then, they should get the room — and an eternity of damnation in firey torment. Or an eternity in an Extended Stay hotel. Same diff.

  14. themarkpike says:

    Thanks for all the great responses! I’ll sure to pass them along to my sister and post over on my blog how this all turns out.

    For now, I’m headed over to my contracts law professor’s office hours to hear academia’s view on this ordeal.

  15. Kornkob says:

    Discussion of ethics aside, they CAN’T just cancel the order.

    Dramatic analogies aside: why not?

  16. juri squared says:

    I think that it would be great for them to honor it, but they’re not necessarily obligated to. The fact that they offered the voucher is nice, though. At least they’re apologizing for their mistake.

    Now, if Mark’s sister had shown up to the hotel only to have it cancelled when she got there, that’s a different story. They were timely in catching the mistake and correcting it, so Mark’s sister has time to make other arrangements.

  17. Beelzebub says:

    Dramatic analogies aside: why not?

    Exchange of consideration for goods or services is a contract. Changing the terms after the agreement in terms violates the contract. The injured party could pursue the matter, and probably won’t get much sympathy, but it would be interesting to see how it played out.

    For the record: I’d take the $100 voucher, and ask for assistance booking another room, grateful for not getting stuck with a full charge, or worse.

  18. bluegus32 says:

    Beelzebub: “Discussion of ethics aside, they CAN’T just cancel the order.”

    Yeah, they can.

    Let me quote California contract law for you. I don’t know which jurisdiction’s law would apply here given that this order was placed over the internet and the hotel is in London. However, contract law in the U.S. is based upon, and has its roots in, British contract law. U.S. contract principles should be roughly the same as British contract principles. So no matter where this case would be venued, the law would be roughly the same.

    “An apparent consent [to a contract] is not real or free when obtained through
    . . .
    5. Mistake.”
    (California Civil Code § 1567.)

    “Consent is deemed to have been obtained through one of the
    causes mentioned in the last section only when it would not have been
    given had such cause not existed.” (California Civil Code § 1568.)

    “A mistake need not be mutual. Unilateral mistake is
    ground for relief where the mistake is due to the fault of the other
    party or the other party knows or has reason to know of the mistake .” (Architects & Contractors Estimating Service, Inc. v. Smith (1985) 164 Cal.App.3d 1001, 1007-1008.)(emphasis added.)

    To prevail on a unilateral mistake claim, the defendant need only prove that the plaintiff knew that the defendant was mistaken and that plaintiff used that mistake to take advantage of the defendant. (Meyer v. Benko (1976) 55 Cal.App.3d 937, 944.

    Bottom line is this: when these people secured a room at the Ritz Carlton for a penny, they knew it was a mistake. when they tried to enforce the msitake, they were trying to take advantage of the hotel.

    So, these people are wrong both morally and legally. The Ritz has no obligation to honor the reservation and is entirely within its rights to claim that the contract was never created.

  19. homerjay says:

    This would be a good time to have a forum or chatroom here. BluGus- If this was booked for $50 instead of $.01, can you still argue mistake? It seems like a very grey area open to interpretation of intent.

  20. bluegus32 says:

    Homerjay: I agree. At $50, you’re getting closer to the realm of reason. Maybe not. Hotels are pretty expensive in London so it might not be safe to assume that $50 is a proper price. But at least you’re close enough to claim that you had no knowledge of the mistake. At $.01, if one claims that s/he honestly thought that it was not a mistake, then s/he is a liar.

    And as to your question regarding intent — contract questions like this are not going to be based upon subjective intent. They will be based upon what a reasonable person should have known. So, even if someone honestly felt that the $.01 price was not a mistake, it would still fail because it is an unreasonable belief to hold.

    Gray area? At $50, maybe. At $.01, no way.

  21. homerjay says:

    Who’s decision is it to determine the validity of a claim like that? I agree, at 1 cent, there is no question, but its very possible for a hotel to offer $50 promotional room rates.

    If this was $50, where would you take your arguement if the hotel claimed a mistake and would it be worth it to try to argue that the mistake was not understood by the buyer?

  22. grouse says:

    Who’s decision is it to determine the validity of a claim like that?

    If the two parties can’t come to an agreement about the nature of the contract, then you can ask for a court to do it. But you’d be pretty foolish to take someone to court over a one-cent hotel reservation.

  23. bluegus32 says:

    Well it gets complicated because this is overseas. But for simplicity’s sake, let’s assume that this would be within the jurisdiction of the U.S. In a case like this, you would file an action in court and the court would determine whether there was a mutual mistake of fact based upon the evidence in front of it. Your argument would be persuasive. If the court buys the argument, you win. If not, you probably lose.

    At a $50 room, it would still depend on the circumstances of the particular case. Would it be worth it? Probably. Kind of depends on how pissed you are and how much you want justice. The beauty of small claims court is that it forces a large company to come in and answer to you. It is very empowering and will oftentimes get results in the face of a large company that is otherwise blowing you off.

  24. homerjay says:

    So I hate to hijack this thread but, how difficult/simple is it for one person to sue a major corporation in small claims? I’ve heard that they intimidate the SHIT out of you when they recieve the court documents and try to get you to believe that you will lose and if you do it’ll cost you a FORTUNE in their legal bills.
    If there is the slightest chance you’ll lose, should you still try to file and risk a countersuit for costs?

  25. Jesse in Japan says:

    Are we dealing with US Civil Law here or United Kingdom Civil Law? Hotels.com may be in America, but the hotel itself is in London.

  26. bluegus32 says:

    Homerjay: Yes, a major corporation will likely try to scare the crap out of you but that should not deter you. Fortitude is often all it takes to push these people harder than they push you. If your case has merit, don’t listen to their intimidation tactics. Again, keep in mind that small claims is designed for just this kind of dispute. In fact, almost all states (maybe all of them) do not allow attorneys to appear in small claims court. So if you sue in small claims, you WILL get the company to sit up and pay attention.

    As for the threat of litigation costs — in most states (California included), attorneys’ fees are rarely recoverable in a lawsuit. Attorneys’ fees are usually only recoverable if allowed by certain specific statutes or if provided for in a contract. Course, since attorneys aren’t allowed in small claims, how can the corporation hit you with attorneys’ fees?

    Jesse in Japan: the question of which country has jurisdiction is not an easy question to answer. If the reservation was made in the U.S. (from a U.S. computer) then one might be able to sue in the U.S. But you’re probably right that jurisdiction will likely rest in the U.K. since that is where the hotel is.

  27. Kierst_thara says:

    To me, trying to collect on what was promised in a situation like this really isn’t about taking advantage of a well-intentioned party’s honest mistake. IMO, the majority of errors like this are a direct result of large scale corner-cutting, and poor attention to detail.

    It’s a peeve of mine, but since I work in the print industry, I know exactly how dead the art of proofreading is. Everything is due yesterday, and expedience is apparently much more important than accuracy these days.

    Another perfect example is how many flyer correction notices I see in the newspaper every week. It’s obviously easier and more profitable for companies like Sears or Wal-mart to just churn out flyers full of errors every week and cover their legal obligations with corrections, that it is to create material that is accurate in the first place. If it were just an occasional retraction, that would be honest human error, but a dedicated weekly page in the paper just reeks of corporate disregard and irresponsibility to me.

    Maybe if we actually held some of these companies accountable to their claims, they would take a little more care in publishing the offers to begin with.

  28. Beelzebub says:

    Homerjay is correct when he says “It seems like a very grey area open to interpretation of intent.” And I’d add that if Hotels.com, or Ritz (whoever it was that made the mistake — I’m still unclear on that), has any kind of Quality Assurance at ALL, they’re going to have a tough time proving it was a mistake. And if they DON’T have any QA — well, I don’t have much sympathy.

    And in this day of &.01 promotional fares for flights and whatever else, how, pray tell, is the user supposed to know it’s a mistake? And how, exactly, is the company going to prove that? The law, as written, makes sense if the price is listed as $200, but you’re only BILLED $.01. But that’s not what happened here.

    Consider this: if the next time you booked a hotel, and you saw there was a $.01 rate, would you call to check and see if it was a mistake? Or would you say “sweet!” and book that bad boy?

    Interesting, btw, that despite the difference in opinion, we all agree the consumer should be happy with the $100 and call it a day. Then again, we are all on Consumerist.

  29. bluegus32 says:

    Kierst_thara: i think we’re talking apples and oranges. In certain jurisdictions, advertisements placed in newspapers for the sale of certain goods are enforceable even in the face of mistakes. Thus, oftentimes, depending on where you live, Sears will be required by law to honor the price as advertsed in their circulars.

    This situation is different.

    Hmmmmmmm, your tangent has actually sparked some curiosity in me. In what situations are stores like Sears bound by the price misprints in their ads? I’d imagine that this would be a great issue for the Consumerist to weigh in on and educate us. This isn’t exactly my area of expertise. So, Ben, in what scenarios is a misprinted product advertisement enforceable against the stores? Does anybody know? Let’s say, for instance, if you live in California. Citation to statute would be greatly appreciated. I’d hate to have to do my own research.

  30. grouse says:

    I live in the UK right now, and here you can initiate small claims actions from a government web page. It’s good to know that it is easy enough to sue.

    Then again we have lots of consumer protections, such as the Sale of Goods Act which provides for unsatisfactory goods to be replaced for up to six years after purchase, regardless of warranty period. The exact time period, and what is unsatisfactory varies by item.

    Also there’s the Unfair Terms in Consumer Contracts Regulations which provide that unfair terms are void in a consumer contract.

    Maybe a post about the consumer environment in the UK would be good one of these days.

  31. homerjay says:

    Bluegus, What IS your area of expertise. Your insight comes in handy around these parts. Thanks for clearing a lot of this up!

  32. bluegus32 says:

    Homerjay: thank you very much for the compliment.

    I am somewhat of a jack-of-all-trades. I get easily bored focusing on just one area of the law so I tend to try do everything. As of right now, I’ve become proficient in contract disputes, landlord/tenant disputes, vehicular lemon laws, business transactions, franchise relations, family law (blech!) including child custody disputes, appellate practice, and personal injury (double blech!)

    I have dabbled in other areas as well and will take on just about anything that is litigation oriented. I rather have a mind for disputes.

    Again, thank you for the wonderful compliment. I rather enjoy giving my two cents around here.

  33. bluegus32 says:

    Homerjay: course, my insight is only appreciated until I say something nice about WalMart. Then I apparently become an alcoholic.

    :-P

  34. Walee68 says:

    While it is certainly understandable that the Ritz Carlton would not want to honor such a rate, it does not eliminate the fact that they should have honored the rate. Regardless of who was at fault, I can promise that it was not the consumer’s fault. Perhaps businesses should do a better job of monitoring rates that are posted at different web-sites so they can address situations like this before they happen. That being said, I would not even pay one penny for another night at any Ritz-Carlton. They put on a wonderful facade, but the service (at least at Pentagon Center) falls well short of that which you might receive from a Motel 6. Also,if you have a family member that is employed at any Ritz-Carlton and you travel to another Ritz and stay using the friends and family rate..if you have a problem and express any concern, they will punish the employee that gave you the certificate-even if they caused the problem to begin with! I had a problem during my stay and reported it. The hotel apologized and sent me a letter for a free one night stay on my return to the DC area. the hotel directly for my arrangements, however, when I did so, they then filed a complaint with the Ritz that my sibling worked at, and, without asking a single question, they suspended her privileges for 6 months. And all this because I had to stay for 2 days in a shabby, dusty, tiny room with no air conditioning! I suppose I was not supposed to complain about the low-class accomodations. I still payed $100 per night but I would have probably been more comfortable and treated with more respect at a Motel 6.