Drafting a Client Letter
Suwyn, Siska & King
Attorneys at Law
65-21 Main Street
Flushing, New York 11367
October 23, 2006
885 Seventh Avenue
New York, New York 10017
Dear Ms. Loman:
I hope you've been well. Recently you wrote to us that Loman's Fashions had been sued by a shopper in Small Claims Court for a breach of contract. As you've described it, the shopper claims that she responded to an ad for a "manufacturer's closeout" of designer leather coats; the ad stated that the "early" shopper would "catch the savings." The shopper complains that Loman's failed to have the merchandise to sell at the advertised price. Specifically, you have asked for advice on the question whether Loman's breached a contract with the shopper under the circumstances. After researching the issue, and based on the facts set out below, I believe that a court would likely conclude that Loman's did not enter into a contract with this shopper because the advertisement was not an offer to sell the coats; thus, there was no contract that Loman's could breach. I will explain this conclusion more fully below after first setting out the facts as I understand them. 1
Loman's Fashions, a retailer of women's and men's outerwear, distributed a circular last July advertising a manufacturer's closeout of designer women's leather coats for $59.99, coats that regularly sold for $300.00. The ad announced that the store would open at 7 a.m. on Friday, July 21, and stated that the "early bird catches the savings!" After about fifteen minutes, all the advertised coats had been sold. At 7:30 a.m., a shopper inquired about the coats and was told that there was none left. She then complained that Loman's was obligated to sell her a comparably valued designer leather coat at the advertised price. The store manager declined, and the shopper filed a complaint in Small Claims Court, claiming that Loman's had breached a contract by failing to sell the advertised leather coats at the advertised price.
You mentioned to me that the store occasionally gives rain checks when it is possible to replenish supplies of an item that Loman's can purchase at a discount. In this case, the manufacturer had discontinued the line of coats and Loman's was not willing to sell other, designer leather coats at such a drastic markdown. You are concerned that, if the shopper's interpretation were to be honored, Loman's would have to reconsider its marketing strategies. Although you had assumed that the advertised terms applied only while supplies lasted, your ad had not included language to that effect. 2 You have asked for this law firm's opinion whether this shopper could succeed on her breach of contract claim.
Under these facts, a court would likely apply the well-settled law that a general advertisement that merely lists items for sale is at best an invitation to negotiate, not an offer to form a contract. 3 The courts that have considered this question focus on two related considerations. 4 The first is whether the advertisement is complete and definite in its terms. For example, where an advertisement containing terms for sale was missing the amount of goods available for sale, a court held that the seller had not made an offer that was complete and definite in all material terms. Thus, no contract was ever made between the seller and a person who submitted a purchase order. 5
The second consideration is whether an advertisement promises to sell an item in return for something requested, for example, if a storeowner promised to sell an item for a specified price to anyone who came to the store ready to pay that amount. 6 Where such a promise was lacking, a court held that an advertisement by a department store was not an offer but an invitation to all persons that the advertiser was ready to receive offers for the goods upon the stated terms. 7 Even if a person's willingness to purchase the advertised item could be thought to turn the offer into a contract, that court ruled that a purchaser did not have the right to select the item that a seller did not have in stock or was not willing to sell at a reduced price. 8
Applying these legal rules to Loman's advertisement supports the conclusion that the ad was not an offer to enter into a contract of sale and created no contractual duty in Loman's. 9 Here, the advertisement did not specify the amount of coats to sell, but rather described the leather coats as a "manufacturer's closeout" selling at a substantially reduced price. 10 In addition, the advertisement did not contain a promise to sell the leather coats in exchange for some requested act or promise. 11 Furthermore, the ad did not give the public the right to choose any comparably priced leather coat if the advertised coats were no longer available. 12 Although the shopper here might argue that the advertisement did not contain limiting language, for example, that the coats were for sale while supplies lasted, 13 the ad did state that the store, opening for business on the day of the sale at 7 a.m., was catering to early morning shoppers. By announcing that "the early bird catches the savings," the ad implied that the supplies would run out. 14
To sum up, based on the facts as I have recited them in this letter, I believe that a court would conclude that Loman's ad did not make an offer to sell leather coats that a purchaser could accept, but that it was at best an invitation to negotiate. Thus, no contract came into existence from this transaction. 15 To avoid the possibility that Loman's will face future claims on this same point, I would recommend that, going forward, Loman's ads include language such as "while supplies last," "first come, first served," or "quantities limited--no substitutes permitted." In this way, Loman's would communicate to shoppers that there were no guarantees that they could purchase an advertised item, or a substitute. Although the additional text might increase the cost of advertising, in the long run inserting this additional language in the ads could save you time and the costs involved in defending claims such as this one. 16
I hope this is helpful, and would be happy to discuss this matter with you further. Please feel free to call my office at (718) 340-4200 if you have questions, or would like to set up a time to meet. 17
Very truly yours,
Madala Suwyn, Esq.
1) Opening paragraph states the client's problem, specifies the legal issue on which the client seeks advice, and states the writer's conclusion.
2) This paragraph and the preceding paragraph set out legally significant facts--facts upon which the writer will base her analysis. The factual criteria of the rule for offers under contract law, discussed in the following paragraph of the letter, are the source of the legally significant facts.
3) The writer here restates her conclusion.
4) The writer begins translating the law into relatively straightforward language, without naming specific cases.
5) The writer here offers an example of how the rule would operate and then explains the implication of this analysis: that no contract was formed.
6) The writer explains part of the rule by providing an example.
7) The writer illustrates the point of law by discussing the facts and ruling in a similar case.
8) The writer refers to an alternative holding in the case.
9) The writer restates her conclusion as she moves to an analysis of her client's facts.
10) The writer applies the first part of the rule--relating to definiteness and completeness of material terms--to Loman's facts.
11) The writer now turns to the second part of the rule, requiring a promise in exchange for a requested act or promise, and applies it to Loman's facts.
12) The writer points to facts (specifically, the absence of facts) in Loman's that provide an alternative basis for the writer's conclusion.
13) The writer introduces a possible counterargument.
14) The writer resolves the counterargument in favor of her original conclusion.
15) The writer summarizes and restates her conclusion.
16) The writer offers some preventive advice that addresses the possibility of future legal claims and also addresses extra-legal factors--cost and time.
17) The writer invites a follow-up conversation with the client.