An Advertisement May Not Be an Actual Offer

Judge Gerald A. Williams
North Valley Justice of the Peace

Before a contract can be formed, there must be an offer and an acceptance of that offer. But what about an advertisement? Is the person who placed the ad legally obligated by the terms of that ad? Probably not.

An offer is something that creates a power of acceptance in the receiving party and a liability on the part of the person making the offer. It is different than an expression of intention.

For example, if Fred says, “I’m going to sell my truck for $2,000 and Sandra replies, “All right, here is a check for $2,000, I’ll take it,” then there is no contract because Fred was stating a future intention rather than an offer. Advertisements often work the same way.

Advertisements, catalogues and similar items containing price quotations are usually considered to be only invitations for offers. They are announcements of what prices the seller is willing to consider. However, if the advertisement is very specific, it may be an offer. There are also consumer protection laws that apply to this area; but there are two very famous law school cases on this point.

In 1891, a company in England advertised a product called a Carbolic Smoke Ball, that is somewhat similar to a modern smoke grenade. It promised to prevent influenza and to cure a variety of respiratory ailments.

The advertisement offered a reward of 100 pounds to anyone who became sick after using the product as directed. The ad even boasted that 1,000 pounds had been deposited at a local bank in the event any payments would be necessary.

 A plaintiff used the smoke ball for three months until she caught the flu and then filed a lawsuit seeking to enforce what she believed to be a guarantee. Carlill v. Carbolic Smoke Ball Co., 1 Q.B. 256 (C.A. 1892). However, the court held that the advertisement was not actually an offer and that remains the general rule today.

In contrast, in a more modern case, an advertisement was held to be an offer because it was very specific. An ad reading that a stole worth $140 was available for $1 on a first come, first served basis. A state supreme court upheld that language as being an offer based on containing a combination of “first come, first served” language and a limited quantity. Leftkowitz v. Great Minneapolis Surplus Store, 251 Minn. 188, 86 N.W.2d 689 (1957).

The first step of any contract is an offer.  Before you accept it and before you sign any contract, make sure that both sides understand the obligations required. 

Judge Gerald Williams is the Justice of the Peace for the North Valley Justice Court.  His column appears monthly in The Foothills Focus.