People's Court: Luckin Coffee Won't Face Criminal Charges for Bug Incident, but "Bargain Hunters" Might!

The Luckin Coffee Bug Incident: A Legal Analysis

On Luckin Coffee's unilateral cancellation of orders during the recent bug incident, netizens and lawyers have voiced a range of views on whether it amounted to infringement or breach of contract. Yesterday a reader noted that the People's Court Daily published an article on its official WeChat account the same day the incident occurred. The article discussed not only whether Luckin's handling of the bug was reasonable and lawful, but also whether those who "exploited the loophole" were acting reasonably and lawfully.

To start with a definition: "exploiting loopholes" refers to consumers buying products at discounted prices offered by merchants through various promotions, thereby saving money - with the premise that such promotions are intentionally provided by the merchant. Where there is a significant price discrepancy caused by system failures or human error, however, consumers who engage in excessive purchasing may be acting unlawfully.

During this Luckin bug incident, some netizens discovered that combo package prices at Luckin stores on Ele.me were abnormal, letting them buy two coffee drinks for less than 5 yuan, or even for just 1 cent. Once the loophole was found, numerous netizens swarmed the ordering platform hoping to take advantage.

Meanwhile, multiple stores across various cities on the delivery platform saw order congestion, prompting many stores to enter closing mode and cancel most orders placed at extremely low prices. This left netizens who failed to "exploit the loophole," or whose refunds were not processed promptly, dissatisfied. Under Luckin's official apology post, they demanded compensation in the form of discount coupons and related benefits.

Legal Perspective on Order Cancellation

On whether Luckin's approach of unilaterally canceling orders without communication was reasonable and lawful, the People's Court Daily quoted a post from the well-known legal blogger Tan Dian Kanfa: objectively speaking, when consumers buy low-priced products, they don't know whether the merchant is genuinely running a promotion or has made an error. Therefore, once consumers place orders and complete payment, a purchase contract is established and becomes effective. In that situation, if Luckin Coffee unilaterally cancels the order without communicating with the buyer, it constitutes a violation of the law, and consumers can demand that the merchant continue to perform the contract or seek compensation for losses.

Luckin Coffee's explanation after the incident was that the issue came from staffing mistakes, so the cancellation does not constitute direct order cancellation but rather contract revocation based on a major misunderstanding.

According to Article 19 of the Supreme People's Court's Interpretation on Several Issues Concerning the Application of the General Provisions of the Civil Code of the People's Republic of China, if a party has an erroneous understanding of the nature of the act, the other party, or the variety, quality, specifications, price, quantity, etc., of the subject matter - and by common understanding would not have made the corresponding expression of intent had the misunderstanding not occurred - the People's Court may determine it as a major misunderstanding as stipulated in Article 147 of the Civil Code.

Revoking a contract on the grounds of major misunderstanding, however, requires filing a lawsuit with the court. According to Article 147 of the General Provisions of the Civil Code of the People's Republic of China, for civil legal acts carried out based on a major misunderstanding, the party has the right to request the People's Court or an arbitration institution to revoke them. Because that process is costly and cumbersome, Luckin could negotiate with consumers to obtain their understanding and support - for example, by offering certain compensation in exchange for consumers agreeing to the cancellation.

Luckin's Response and Compensation

That is why Luckin's statement in the same-day apology letter that it would consider user compensation was a process of negotiating with consumers. On April 19, Luckin gradually issued "32 yuan vouchers" to delivery-platform users whose orders it had unilaterally canceled. It would also issue coupons to non-delivery-platform users who experienced abnormal waits and order cancellations during the morning peak on the day of the incident.

Legal Implications and Advice

Although Luckin Coffee handled the matter too hastily, resulting in a lack of reasonable communication, legally speaking the incident does not constitute illegality. Nor did those who had the chance to buy low-priced drinks act unlawfully - after all, no one knew whether it was a promotion or a mistake. But recognizing it as a bug while still maliciously "exploiting the loophole" or placing large orders constitutes unlawful behavior, regardless of whether any profit was gained.

To that end, the People's Court reminds the public that bargain-hunting should have its limits. Opportunities to "exploit loopholes" by obtaining discounts beyond the normal range due to system vulnerabilities should absolutely not be touched. "Exploiting loopholes" must also follow the principle of good faith. Even if some merchant platforms have technical vulnerabilities, that does not mean they can be illegally exploited, and consumers cannot use it as an excuse to cross legal red lines.

Image source: Internet

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