When promotional sale is actionable

They are everywhere. Sales promotions aimed at attracting more patronage and more incomes for products and services providers. From banking sector to manufacturing sector, consumer sales promotion is the order of the day. Our discussion today revolves around all these consumer sales promotions and their legal implications.

A commercial bank in its bid to encourage its existing and new customers to save more with it, announced a sales promo wherein the customers were required to save up to a minimum amount per month for three months the promotion would last. Customers were entitled to some points based on their savings within the period and whoever had the highest points after the three months in each of four zones to which its branches nationwide had been divided for the purpose of the promotion, would be entitled to a brand new car each. Then, there was to be a lucky dip for the winners from each zone from which the overall national winner would emerge and would be entitled to a prize.

A customer with the bank in one of the zones by the terms and conditions of the promo got the highest point for his zone where his branch of the bank is located. He was so notified. Rather than giving him a new car as promised, the commercial bank changed the rule of the process and stated that there would not be any new car to be given to the overall winners from each of the zones but that a new car would only be given to the overall national winner! The new rule was not even made known to the customer until when the bank had announced a national winner who purportedly emerged through a lucky dip on some national television stations and he had to visit the bank to know what went wrong.

The above scenario is not one of the stories in ‘Alice in Wonderland’. It actually happened in Nigeria. I am sure some who knew about the story would be reading this now. There are many cases of unfulfilled promises embedded in consumer sales promotions we see around.

What is sales promotion? It has been described by the United Kingdom Institute of Sales Promotion as “a consumer or business -directed action that enhances product appeal by offering an extra incentive to purchase or participate”. The American Marketing Association on its part defines “sales promotion” as those marketing activities other than personal selling, advertising, publicity that stimulate consumer purchasing”.

Examples of sales promotion techniques include price deal ( temporary reduction in the price);loyalty programmes( consumers collect points, miles, or credits for purchases and redeem them for rewards);price-reduction programmes(offers of a brand at a lower price or percentage reduction in price marked on the package; coupons(coupons redeemable for price-discounts;rebates;contests/sweepstakes/games(here the consumer is automatically entered into the event by purchasing the product; point-of-sale displays;etc
Can those who organise consumer sales promotions renege on their promises without any legal liability coming to them?

In answering this question, we shall look at both common law and statutory positions in Nigeria. From the elementary law of contract, there must be offer, acceptance, consideration and intention to create legal relation. Inviting the public to take part in a sales promotion would qualify as a good offer in law.
Acceptance would have taken place where a consumer complies with the requirements stipulated in the offer e.g. in the example of the bank customer given above, the moment he saved money into his account, he would seem to have accepted and given consideration. Intention to create legal relation is a question of facts and circumstances in relation to standard set by the law. A customer who has complied with requirements of a sale promo can seek remedy before the court of law.

The National Lottery Act 2005 is a legislative intervention under which sales promotion technique that has the ingredients of a lottery can be regulated by the National Lottery Commission established under the Act.

Section 57 of the Act defines LOTTERY OR LOTTERIES to include “any game, scheme, arrangement, system, plan, promotional competition or device for the distribution of prizes by lot or chance, or as a result of the exercise of skill and chance or based on the outcome of sporting events or any other device which the President may by notice, in the gazette, declare to be lottery and which shall be operated according to a licence”. Obviously, any sales promotion technique with the intention of distribution of prizes by lot or chance or the exercise of skill and chance, or based on the outcome of a sport event or any other activity approved and gazetted by the President as lottery or lotteries will be qualified to be regarded as a lottery.

No doubt, not all Consumer Sales Promotions can be categorised as lotteries which would be governed by the Act. Where chance element is lacking in a Consumer Sales Promotion, the provisions of the Act would not be applicable e.g. a buy-one –get one free sales promotion. Nonetheless, a customer who has participated in a sales promotion would not be completely shut under the common law of contract.