In general, advertisements, catalogs, brochures, and announcements to the public that are associated with the sale of merchandise at a specific price are not considered to be offers to enter into binding contracts. In rare cases, advertisements are considered to be invitations to make a deal.
Because of this, it is typically not considered to be a breach of contract when an advertiser refuses to sell an item at the price that they advertised. Advertisements may be considered valid offers if they meet the following three elements:
- It is sufficiently definite in its:
- terms;
- meaning descriptions;
- quality;
- quantity;
- price;
- It is communicated to a specific individual or individuals, generally a limited group of individuals;
- The circumstances surrounding the advertisement demonstrate that the advertiser intends to enter into a contract.
When Can an Advertisement Be Considered an Offer?
Under contract law, offers that are made to the public at large may be considered a valid contract even though there is typically no notice of acceptance. The following may be included:
- Advertisements;
- Contests;
- Competitions.
If an offer is public, performance is sufficient to satisfy acceptance. For example, if a company offers to give a prize to the winner of a golf tournament, there is a valid contract between the company and the winner of that tournament.
The exception to this rule is if the offer would violate public policy in some way. For example, if the offer involved gambling and gambling was illegal in that state, the offer would be void.
When Can an Advertisement’s Offer Be Legally Enforceable?
In many cases, when determining whether an advertisement’s offer can be legally enforced, the court will consider the objective manifestation of the intent of the advertiser. This means the court will consider whether a reasonable person would read the advertisement and believe the advertiser intended to form an agreement.
The circumstances of the situation are also taken into consideration. For example, if an advertisement offered a cow to farmers in exchange for $50, this would not be taken seriously in a large city.
In a more rural area, however, it may be considered a legal offer.
If the Advertisement Contains a Pricing Error to My Advantage, Can I Make the Advertiser Sell the Item to Me at the Erroneous Price?
Generally, there is no law that requires a company to honor an advertised price if that price is not correct. A typographical error, miscommunication, or other glitch may cause an item to be offered at what appears to be a deep discount which would be detrimental to a company that was forced to honor them.
It is important to note that consumer protection laws vary by state. However, if a consumer believes they have been misled by, for example, an incorrect price tag on a website, they have the option to complain to state authorities.
Can the Advertiser Choose to Sell the Item at the Erroneous Price?
As noted above, there is no law requiring a company to honor an advertised price when it is wrong. An advertiser, however, may legally choose to sell the item at the incorrect price.
This may be done to preserve business goodwill with customers as well as to affirm the contract, even though it contained an incorrect price. When advertisers voluntarily choose to do so, however, it may bar the purchaser from recovering damages from the printer or publisher of the advertisement that was responsible for the error.
An advertiser may also sell the item at the incorrect price if they use bait and switch selling tactics that violate consumer protection laws.
Can the Advertiser Withdraw an Offer if an Advertisement Is Considered an Offer?
Typically, once an offer is made, the party that is making the offer cannot revoke their property. However, an advertisement usually does not constitute an offer to fulfill a contract.
Advertisements are typically viewed as preliminary negotiations that invite other parties to make an offer. For example, a company may advertise televisions for sale, which invites potential customers to visit the company’s retail store to offer to purchase the televisions.
An advertisement allows the advertiser that is making the offer the opportunity to revoke its willingness to enter into a contract. For example, if a company advertises that it has televisions for sale, it may revoke that offer if it runs out of televisions.
It is important to note that an offer is considered to be revocable unless the advertiser already received the benefit or the other party already acted in reliance on the offer. One example of this issue would be an advertisement promising medical treatment for cancer patients being revocable unless the advertiser received payment from the patient.
What Types of Advertisements Are Forbidden by Law?
There are numerous different wants that businesses can engage in false advertising practices, including:
- Deceptive business practices;
- This may include adding misleading information, such as advertising that a food contains no sugar, but actually does;
- Advertising violations;
- Making inconsistent or incomplete comparisons to competitors’ products or services;
- Using deceptive illustrations, for example, a food item or product appearing larger than it is;
- Advertising a certain price but leaving out the fact that extra fees apply;
- Claiming a company is having a going out of business sale in order to raise prices;
- Applying bait and switch tactics, which involves advertising one product, substituting it with a similar, more expensive product, and claiming the advertised product is sold out.
Private citizens have just recently obtained the ability to sue a business for false advertising. Before states implemented consumer protection and deceptive advertising laws, consumers could only submit complaints to the FTC.
The FTC would then have to notify or penalize the business. Currently, however, individuals who were injured by false advertising may pursue a private lawsuit in accordance with the laws enacted in their state.
What Else Should I Know About Advertisement Contracts?
If there is an advertisement that contains a pricing error to an individual’s advantage, the individual, in general, cannot force the advertiser to sell them the item at the erroneous price. Unless the advertisement meets the elements of an offer discussed above, an individual will usually not be able to benefit from an erroneous advertisement.
An advertiser will generally assert that either they did not intend to sell the item at the erroneous price or that the terms of the advertisement were not definite enough. False advertising is prohibited by both state and federal law, including the Latham Act.
These laws prohibit deceptive business practices, which may include claiming that a product is on sale and then raising the price of the item. In addition, advertisements cannot discriminate against protected classes.
Protected classes apply to job and real estate advertisements in particular. These are specifically regulated by the Fair Housing Act and the civil rights act.
It is important to note that state laws can also restrict discriminatory advertisements. This means that if a business invites the public, it cannot be selective regarding who is invited unless they would pose a danger to the business or to other individuals.
Should I Consult an Attorney for My Contract Issues?
If you enter into any type of contract, a contract lawyer can help with drafting in order to provide you with legal protection in the future. Your lawyer can help you draft, review, and edit the terms of your contract.
Your lawyer can also help you negotiate the terms of the contract. This can help you minimize the risks that are associated with entering into the contract as well as prevent legal disputes over contract terms in the future.
If you are sued for breach of contract, you should also consult with a lawyer. Your lawyer can help prepare your case, determine what defenses may be available to you, and represent you in court as necessary.
