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Law review: Businesses not bound to honor ad errors

Jim Porter, Sierra Sun columnist

“Hey Blanche, check this out. A pre-owned 1995 Jaguar XJ6 Vanden-Plas for $25,995.”

“Let’s go down to the dealer and take it for a test drive.”

Brian Donovan read the advertisement in the Costa Mesa Daily Pilot for the Jaguar of his dreams – for only $25,995. He had already investigated similar Jaguars and knew it was a good deal.

After a positive test drive, Brian and his wife said “Okay, we’ll take it at your price of $26,000.” The salesperson stared blankly and did not respond. When Brian showed him the advertisement, he immediately said “that’s a mistake.”

The sales manager then got into the act and confirmed they had $35,000 into the car, and would sell it for $37,016. They discussed “bait and switch” advertising tactics. Brian tried to write a check for $26,000, which the used car dealer refused.

Brian did what anyone with too much money buying a used Jaguar does: he sued the dealer for everything under the sun, claiming he had a firm contract and wouldn’t let the dealer get away with false advertising shenanigans.

If any of this sounds vaguely familiar, it’s because two years ago we briefed this case when the Court of Appeals went around in circles trying to decide whether an advertisement was an offer which Brian could accept and form a binding contract, or merely a solicitation of an offer that the dealer could retract when the dealer discovered a mistake had been made in the pricing of the Jaguar.

In fact, as it turned out, the Daily Pilot had made a typographical error in pricing the Jaguar at $25,995. The Court of Appeals ultimately relied on a vehicle false advertising code and ruled for Brian.

Years ago in an effort to stem car dealer bait and switch tactics, Vehicle Code section 11713.1 was enacted. It is a violation for a dealer to “fail to sell a vehicle to any person at the advertised total price while the vehicle remains unsold, unless the advertisement states the advertised total price is good only for a specified time and the time has elapsed.”

That’s was Brian’s argument. The dealer didn’t have a choice, and must sell, given Section 11713.1.

My observation is that the new trick is to advertise a car at a super low price, with a fine print notice that only one car is available at that price. What do you know, the low price car is already sold “but how bout this beauty over here?”

Amazingly enough, this case made it all the way to the California Supreme Court. Must have been a slow week.

The Court concluded that because Section 11713.1 makes it unlawful for a dealer not to sell a particular vehicle at the advertised price, the Jaguar advertisement amounted to an offer that could be accepted by Brian, so he had an enforceable contract to get his Jaguar for $25,995.

However, bad news for Brian, the dealer could get out of the contract because a mistake had been made in the pricing of the car which the dealer didn’t know about and it would be “unconscionable” to let Brian keep the car at the super low price. Brian loses.

While most advertisements in newspapers constitute solicitations of offers from would-be buyers, which allows sellers to back out, car dealers are bound by their advertised prices unless there’s a mistake in the advertising – which would seem to be a big enough “loophole” to drive a Jaguar through.

Jim Porter is an attorney with Porter /Simon, with offices in Truckee and Reno. He is a mediator and was the Governor’s appointee to the Bipartisan McPherson Commission and the California Fair Political Practices Commission. He may be reached at porter@portersimon.com or at the firm’s web site http://www.portersimon.com


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