Have you ever wondered whether an advertisement for a specific used car, at a particular price, constitutes an offer that can be accepted by simply tendering the purchase price? The California Supreme Court recently had to wonder about that very question!
In this adventure, we find our hero, Brian, searching through his Saturday local newspaper, the Daily Pilot, for used automobiles. Brian discovered a number of used cars for sale by a dealership in Westminster, California, one of which was for a 1995 Jaguar XJ6 Vanden Plas, with a specific vehicle identification number, which for $25,995.
The following day, Brian and his wife drove to the dealership to see the automobile described in the advertisement. With the permission of a dealer representative, Brian and his wife took the car for a test drive and returned to state that he would take the car for the advertised price.
The representative, however, immediately told Brian that the price was a mistake. An exchange ensued in which Brian accused the representative of engaging in a bait-and-switch advertising scheme. He was thereafter referred to the sales manager.
Brian offered to write a check for the full amount of the advertised price of $25,995. The manager, however, indicated that he would only sell the vehicle for $37,016. After some correspondence, Brian filed suit.
During the trial, the dealerís advertising manager testified that the weekend preceding the Saturday upon which Brian had read the advertisement, the car had been advertised without a price. During the intervening week, on Tuesday, she instructed the Daily Pilot to run the same advertisement again. On Thursday, however, the manager called the Daily Pilot to instruct that the ad be replaced with one for a 1994 Jaguar XJ6 for $25,995. The manager did not see a proof sheet available on Friday for the new advertisement scheduled to run on Saturday because she did not work on Fridays.
The composing room of the newspaper apparently made a typographical error which resulted in the 1995 Jaguar Vanden Plas being advertised at the price intended for the 1994 Jaguar XJ6.
Brian lost at trial and appealed to the California Court of Appeal. The Court of Appeal reversed the decision of the trial court and held that Brian could buy the automobile at the advertised price. My article in the March 2000 edition of New Era Magazine commented upon the reasoning of the Court of Appeal which concluded that the defendant car dealerís
"negligence contributed to the placement of the erroneous advertisement. The evidence is uncontradicted that defendant had an opportunity to review a proof sheet of the advertisement and chose not to review it."
Subsequent to the decision of the Court of Appeal and my article, the car dealer took the matter on appeal to the California Supreme Court which has recently reversed the decision of the Court of Appeal and thus upheld the decision of the trial court.
Although the California Supreme Court determined that the car dealerís "advertisement for the sale of the Jaguar automobile constituted an offer that was accepted by plaintiffís tender of the advertised price," the Supreme Court concluded that the car dealer could avoid enforcement of the contract on the ground of mistake.
A litigant may not rescind a contract merely because a mistake has been made which consists of nothing more than a subjective misinterpretation of a contractual provision. Since the mistake made by the Jaguar dealer was "an unconscious ignorance that the [newspaper] advertisement set forth an incorrect price for the automobile," the Supreme Court held that this transaction could be avoided by the dealership.
The court also notes, as follows:
"No evidence presented at trial suggested that [the car dealer] knew of the mistake before plaintiff attempted to purchase the automobile, that [the car dealer] intended to mislead customers, or that it had adopted a practice of deliberate indifference regarding errors in advertisements. . . . The uncontradicted evidence established that the [newspaper] made the proofreading error resulting in defendantís mistake."
The Supreme Court further concluded that requiring the defendant to sell the vehicle for $12,000 less than the intended advertised price of $37,995, a 32% error, would be unconscionable, and thus determined that the contract could be avoided as an unconscionable contract. The Court stated that prohibiting a dealer from raising a claim for relief due to mistake,
"would be holding that the dealer intended to assume the risk of all typographical errors in advertisements, no matter how serious the error, and regardless of the circumstances in which the error was made. For example, if an automobile dealer proofread an advertisement but, through carelessness, failed to detect a typographical error listing a $75,000 automobile for sale as $75, the defense of mistake would be unavailable to the dealer."
The moral of the story? If you are advertising a coin laundry for sale, and you wish to avoid this type of litigation, with apologies to Martha Stewart, proofreading is "a good thing!"