When is there an Agreement?

But I Want That Pickup Truck A local car dealer advertised a late model full-size pickup truck which it had taken as a trade-in on a new vehicle purchase in the newspaper for $21,000.00. However, a salesman learned of a man who was seeking that particular model of truck and arranged for him to come and look at the truck the next day. In the meantime, another person, having seen the advertisement came to the dealership and offered to pay the advertised price. The salesman refused to sell the truck for $21,000.00 because he believed that the other person would pay at least $22,000.00. As explained in chapters 11 and 12, legally the dealership could do this because an advertisement is not an offer. Ads sure look like offers. Why do you think the law has the doctrine that ads are not offers? What arguments could you make in support of it? Do you think this long-existing legal doctrine should be changed? Why or why not?

Sample Solution

Why Ads Aren't Offers: Examining the Legal Doctrine

The law treats advertisements as invitations to treat, not offers that bind the advertiser to a contract at the advertised price. This doctrine exists for several reasons:

1. Flexibility for Negotiation: Advertisements are often used to gauge interest and initiate negotiations. If ads were considered binding offers, businesses would be locked into selling at a specific price without room for adjustments based on individual customer circumstances.

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2. Inventory Fluctuations: Stock levels can change rapidly. Treating ads as offers could create situations where a business is obligated to sell an item they no longer have.

3. Pricing Strategies: Businesses may use introductory offers or loss leaders to attract customers. Treating ads as offers would limit their ability to adjust prices based on market conditions or competitor strategies.

4. Error Prevention: Mistakes in pricing can happen. Without the offer doctrine, businesses could be forced to sell at an incorrect price due to a typo or human error in the advertisement.

Arguments in Support:

Clarity and Predictability: Knowing that ads are not binding offers allows businesses to operate with more flexibility and adapt to changing circumstances. It also protects them from accidental legal obligations due to errors.
Fairness for Negotiation: Both businesses and customers benefit from the ability to negotiate. Treating ads as offers could stifle negotiation and limit options for both parties.

Should the Doctrine Change?

There are arguments for both sides:

For Change:

Consumer Protection: Some argue that misleading ads create an unfair advantage for businesses. Consumers who rely on advertised prices might feel deceived if the advertised price isn't honored.
Price Transparency: A change could encourage businesses to be more transparent about pricing upfront, reducing confusion and frustration for consumers.

Against Change:

Business Flexibility: The current system allows businesses to operate efficiently and adapt to market shifts. Changing it could limit their ability to manage inventory and pricing strategies.
Increased Litigation: A stricter system could lead to more lawsuits for minor discrepancies between advertised prices and final offers.

Finding a Balance:

Instead of a complete overhaul, the focus could be on:

Clearer Disclaimers: Encouraging businesses to clearly state if an ad is a firm offer or an invitation to negotiate.
False Advertising Laws: Enforcing existing laws against misleading or deceptive advertising practices.

Ultimately, the goal is to strike a balance that protects consumers from deceptive practices while allowing businesses the flexibility they need to operate effectively.

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