Tuesday, July 31, 2001
Car Dealer Not Obligated to Sell at Mistaken Advertised Price—S.C.
By ROBERT GREENE, Staff Writer
A divided state Supreme Court yesterday handed a victory to newspaper advertisers with a ruling that lets a car dealer off the hook for a bargain price—printed by mistake—on a used Jaguar.
The Lexus of Westminster ad in the Costa Mesa Daily Pilot for a sapphire blue 1995 Jaguar Vanden Plas for $25,995 created a real offer, Chief Justice Ronald George said, and the contract was completed when plaintiff Brian J. Donovan appeared on the lot in April 1997, saw the car, test drove it, pulled out his checkbook and offered to pay the advertised price.
But the dealer could not be held to the price, and the contract could be rescinded, because of the unilateral price mistake, the chief justice said. It didn’t matter that the Daily Pilot provided the dealer with a proof sheet containing the advertisement, or that the dealer’s staff didn’t bother to look at it.
The dealer’s failure to proofread might well constitute negligence, George said, but it did not “involve a breach of defendant’s duty of good faith and fair dealing that should preclude equitable relief for mistake.”
“In these circumstances, it would not be reasonable for this court to allocate the risk of the mistake to defendant,” George said.
Three of the chief justice’s colleagues agreed, but Justice Kathryn Werdegar, joined by Justice Marvin Baxter, took issue with the majority’s analysis of rescission.
The dealer never briefed rescission theory, Werdegar noted, but presented instead a case that no contract was ever reached. Even after rescission was offered in oral argument by the amici curiae—the California Motor Car Dealers Association, the Times Mirror Company and the California Newspaper Publishers Association—counsel for the defendant resisted it, Werdegar noted, “although counsel did eventually agree he ‘would be pleased to prevail on any theory.’”
Since the amici are supposed to restrict their briefs to the issues on review, the justice said, the disappointed car buyer was justified in limiting his response on rescission to a few lines. He never fully briefed the rescission issue—nor should he, Werdegar said.
The case stems from the dealer’s April 26, 1997 full-page ad in the Daily Pilot for 16 used cars, including the 1995 Jaguar that caught Donovan’s attention. The ad made clear that the prices were good for two days only.
The ad was based on one that ran in the paper several days earlier that listed the same car, except used the word “Save” without any reference to a price. The dealer’s sales manager instructed the paper to delete the car from the next ad, and instead run a 1994 Jaguar with the price of $25,995.
The word “Save” was replaced with the price, but the 1995 sapphire blue Vanden Plas was mistakenly left in.
Donovan saw the ad and immediately shopped around and saw that the price at Lexus of Westminster was $8,000 to $10,000 less than at other dealers for the same car. So he went to the Lexus dealer and asked a salesperson for a test drive, mentioning that the price he saw in the paper “looked really good.”
The Lexus salesperson answered that his dealership might well offer better prices on a used Jaguar than a Jaguar dealer would.
During the test drive Donovan and his wife discussed some problems, including the car’s high mileage, worn tires, and rust. But it was still a good price, and he told the salesperson he would take it.
The salesperson did not respond to the offer until Donovan pulled out a copy of the ad—and was immediately told that it was a mistake.
Referred to the sales manager, Donovan was offered reimbursement for the time and gas he used to get to the dealer to check out the car. The real price, he was told, was $37,016. Donovan responded:
“No, I want to buy it at your advertised price, and I will write you a check right now.”
The sales manager refused.
Donovan sued, citing Vehicle Code Sec. 11713.1(e), which prohibits car dealers from not selling a car at the advertised price.
The dealer won in municipal court, but lost in the Orange Superior Court’s Appellate Department and the Forth District Court of Appeal.
In rejecting the dealer’s assertion that there was no valid contract, the high court majority said the ad “reasonably justifies a consumer’s understanding that the dealer intends the advertisement to constitute an offer and that the consumer’s assent to the bargain is invited and will conclude it.”
The Statute of Frauds requirement of a signed writing is satisfied by the printed name of the dealer in the ad, George said.
But he added that the goof in the ad operates to let the dealer rescind the agreement.
“No consumer reasonably can expect 100 percent accuracy in each and every price appearing in countless automobile advertisements listing numerous vehicles for sale,” George said. “The degree of responsibility plaintiff asks this court to impose upon automobile dealers would amount to strict contract liability for any typographical error in the price of an advertised automobile, no matter how serious the error or how blameless the dealer. We are unaware of any other situation in which an individual or business is held to such a standard under the law of contracts. Defendant’s good faith, isolated mistake does not constitute the type of extreme case in which its fault constitutes the neglect of a legal duty that bars equitable relief.”
The case is Donovan v. RRL Corporation, 01 S.O.S. 3701.
Copyright 2001, Metropolitan News Company