It is a common held belief that a shopkeeper who wrongly labels a product must then sell that product at the displayed price if challenged to do so by a wily consumer – and all of us know someone who knows someone who has.
In truth, though, this is one of many misconceptions about money that has no basis in fact. A price tag does not take the place of a contract, it is simply an ‘invitation’ to the customer to make an offer, upon which a contract can then be based.
Shopkeepers are often the victims of this type of persecution. For example, rumours abound that stamps are legal tender in the UK. Whether or not anyone has ever attempted pay for their groceries in stamps remains a mystery, but the truth in any event is that sterling is the only form of legal tender in the UK.
Legal tender as a term simply means that you cannot refuse to accept it as payment for a court ordered debt payment, and stamps do not fall into this category.
Insurance is another area where fact and fiction often become confused. It is widely assumed that you cannot take out insurance against Acts of God, for example, such as floods, hurricanes and earthquakes, when in fact domestic insurance policies covering these events are commonplace.
Surprisingly, even suicide is covered by life insurance these days – presumably because the benefits of a big payout when you’re dead are relatively irrelevant – although before you decide to propose to that moody depressive in accounts you should be aware that many policies include a clause wherein suicide invalidates the policy within a given initial period.
Myths and misinformation are always present where there are grey areas. There is nothing in banking law, for example, which says that you cannot write a cheque on the side of a cow – and stories about this happening have been circulating for years – but at the same time it is at the discretion of the bank whether they accept the cheque, which makes it highly unlikely that your local Barclays will accept an etched Fresian to cover the rent.
The sheer variety of these urban myths makes for fascinating reading, but on a serious note they highlight the need to ensure that less trivial myths are identified.
Buildings insurance, for example, is taken out by most homeowners and is largely understood to mean you are insured for the value of your home, which is a long way from the truth.
Buildings insurance covers the cost of rebuilding your home, which has nothing to do with its market value – that also takes into account such things as proximity to schools and the desirability of the area as well as the value of the land.
According to the Association of British Insurers, for example, an average sized semi in Hertfordshire would cost around £130,000 to rebuild – while the same property would have a market value of £310,000.
Sophie Neary, product director at BeatThatQuote.com, said: “Another popular myth is that motor insurance is cheaper if you pay for it monthly, when completely the opposite is the case – most insurers actually charge an APR on car insurance if you don’t pay for it upfront – so it really does pay to do your homework.
“BeatThatQuote.com compares thousands of quotes and puts them together for you in a way that allows you to make sense of the market – so it’s a vital resource for those looking to see through the myths that surround financial products.”