D posted an ad in a newspaper about some land he needed to sell urgently. P saw the ad and inquired about it.
D sent P information about the property, along with directions to get to it. D stated that the rock-bottom price was $2500; D also made sure that the letter purported itself to be a "form letter".
P wrote to D asking for more info on the land and suggesting an escrow service "should [he] desire to purchase the land".
D wrote back giving the legal description of the land and saying that if P was really interested, he should decide quickly since D expected to have a buyer in a week or so.
D sold the property to a third party.
Three days later, P opened an escrow account and sent D a letter telling him that he was purchasing the land.
Upon finding out that the land had already been sold, P sued D for breach of contract.
Procedural History:
Lower court found for D, said that the D made an offer which was qualified and conditioned upon prompt acceptance by P. Since P delayed, contract was not entered upon.
CA COA affirmed, found for D, no contract, but for totally different reasons than the lower court.
Issues:
Where is the line between contract negotiation and contract formation?
Does an advertisement qualify as an offer?
Holding/Rule:
A contract is officially formed when one party makes an offer and the other party assents to the offer.
"If…the person to whom the promise is addressed knows or has reason to know that the person making it does not intend it as an expression of his fixed purpose until he has given a further expression of assent, he has not made an offer."
An advertisement is a mere request for an offer.
Reasoning:
The can be no contract unless the minds of the parties have met and mutually agreed upon some specific thing.
The correspondence indicated an intention on the part of the D to find out whether the P was interested, not an intention to make a definite offer to the P.
The statement that D expected to have a buyer in the next week or so indicated that D intended to sell to the first-comer and was reserving the right to do so.
P should have known that he was not being given time to accept an offer, but that some further assent on the part of the D would be required.
Dissent:
None.
Notes:
"Manifestation of contractual intent" is required to form a binding contract and is judged using the "reasonable person" standard.
