Lonergan v. Scolnick

California Court of Appeal · 1954 · Contracts

offerinvitation to dealpreliminary negotiationdefinitenesscontractsofferpreliminary negotiationsadvertisement

Facts

Defendant placed a newspaper advertisement offering a 40-acre tract near Joshua Tree and stating he needed cash and would sacrifice. In subsequent letters, defendant described the property, gave a price of $2,500 cash, stated that one letter was a form letter, answered plaintiff's questions, approved a suggested escrow agent, and told plaintiff that if he was really interested he would have to decide fast because defendant expected to have a buyer in the next week or so. Defendant sold the property to a third party on April 12, 1952, before plaintiff mailed his April 15 letter stating he would open escrow and deposit $2,500 in conformity with defendant's offer. Plaintiff opened escrow on April 17 by depositing $100 and agreeing to furnish the remaining $2,400 later.

Issue

Did the advertisement and correspondence between the parties constitute a definite offer by defendant that plaintiff accepted, thereby creating an enforceable contract for the sale of the land? Or were the communications only preliminary negotiations requiring further assent by defendant?

Rule

There is no contract unless the parties mutually assent to a specific thing. Under Restatement section 25, if from the language used or the surrounding circumstances the addressee knows or has reason to know that the speaker does not intend a fixed offer until giving a further expression of assent, then no offer has been made. An advertisement is a mere request for an offer, and correspondence showing only preliminary negotiations does not create contractual power of acceptance.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nina Porter saw a newspaper ad in Phoenix offering a vacant lot outside Flagstaff: "$48,000 cash—must sell soon." She emailed the owner, Omar Velez, who replied with parcel details and directions to the site, but did not say he would hold it for her. The next day Nina emailed, "I accept your offer and will arrange payment immediately."

Under the majority rule, is a contract most likely formed when Nina sent her email?

Explanation. No contract is formed unless the parties mutually assent to a specific bargain. The majority treated an advertisement as a mere request for an offer, and a follow-up communication giving particulars as still preliminary if it does not show a fixed purpose to be bound. Here, Omar's ad and informational reply resemble preliminary negotiations rather than a definite offer.