IIRC there are laws against this that relate to false advertising depending on how it is interpreted.
I'm not sure but you could look at it one of two ways.
1. Transaction was complete via paypal, and the retailer then provides tacit consent to carry out the order when they make the sale online instantaneously. He agrees to provide the goods and services since the money is already in his possession, and the social contract is then binding.
2. The transaction was never complete because the retailer never agreed to an order. The money was technically never in their possession because they did not acknowledge or fulfill the order.
It's really iffy since you ordered it online: http://www.telegraph.co.uk/finance/p...-mistakes.html
I guess you're lucky that they refunded it all without hassle? Worst case scenario they're lowering the price even more, but unlikely.