Amazon.co.uk will not honour orders from customers who tried to buy HP iPaq handheld computers after a blunder saw them listed on its site for a bargain £7.

The handhelds usually cost around £300, and bargain hunters across the country attempted to order hundreds at the rock bottom price.

But in a statement Amazon said: "We can confirm that there was a price discrepancy on the site for iPaq Pocket PCs this morning.

"In keeping with our conditions of use and our pricing and availability policy, we will be cancelling orders made for the HP iPaq Pocket PCs at the incorrect price this morning."

Amazon said that its pricing and availability policy states that where an item's correct price is higher than Amazon's stated price, it will contact the customer before dispatching.

It added that customers will be contacted and offered the chance to cancel their order or to place new orders for the item at the correct price.

Amazon.co.uk pointed out that there is no contract between it and the customer for an item until Amazon.co.uk confirms the order by email and dispatches the item.

Up to that point, it said, Amazon.co.uk is within its rights not to accept any customer order.

Dai Davis, IT law consultant at Nabarro Nathanson, said Amazon is only legally obliged to honour any sale once the contract is deemed complete.

"Amazon is liable if the contract has been made. But I expect Amazon to engage in the Great British art of fobbing people off," he said.

The company confirmed that no credit cards were charged for orders made at the incorrect price, as credit cards are not debited until the order has entered the dispatch process.

If customers find that money has been debited from their credit cards before Amazon confirms dispatch, then they would have a good chance of contesting it in court.

"If they have already debited your credit card I do not see how Amazon can say that the contract is not complete, and I don't think the company would get much sympathy from a UK court," said Davis.

The legal precedent in such cases is unclear. Last February Kodak decided to honour customers who bought £329 cameras mistakenly advertised on its website for £100.

But in 1999, when Argos erroneously offered £300 TVs for just £3, the company refused to ship the orders, claiming that it had been a mistake and that customers must have known it was the wrong price.