TO: Gaby Duane
FROM: Clark Thomas
RE: Loman's Fashions - Breach of contract claim (advertising circular)
DATE: April 26, 2002
QUESTION PRESENTED 1
Under New York law, 2 did 3 Loman's Fashions' description of a designer leather coat in an advertising circular constitute an offer 4 to sell the coat which became a binding contract when the text of the advertisement indicated that the coats were a "manufacturer's closeout" and that the early shopper would be rewarded, and when a shopper signified her intent to purchase the coat according to the advertised terms? 5
SHORT ANSWER 6
No. 7 Where, as here, the text of the advertisement merely stated that the sale was a "manufacturer's closeout" and that the "early" shopper would "catch the savings," the advertisement was not an offer to sell the coat which could be converted into a binding contract by conduct signifying an acceptance of the advertised terms.
Loman's Fashions, a retailer of women's and men's outerwear, distributed a circular in November 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, November 30, 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 were none left, but she 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, 9 alleging that Loman's had breached a contract by failing to sell the advertised leather coats at the advertised price. 10
Loman's president, Willi Loman, stated 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 prepared to sell other, designer leather coats at such a drastic markdown. Loman expressed concern 11 that, if the shopper's interpretation were to hold, Loman's would have to reconsider its marketing strategies; she had assumed that the advertised terms applied while supplies lasted. She asks whether Loman's would have any contractual obligation under these circumstances. 12
13 Loman's Fashions has been sued by a shopper for a breach of contract for its failure to sell a designer leather coat that had been advertised for sale at a substantially marked-down price. Loman's contends that the advertisement was intended to apply while supplies of the item lasted, and that is it not obligated to sell the shopper a comparably valued coat at the advertised price. The issue in this case is whether a retailer's advertisement will be considered to be an offer that may be turned into a binding contract by a shopper who signifies an intention to purchase the items described in the advertisement. A court would likely conclude that the shopper did not state a cause of action for breach of contract because the advertisement did not constitute an offer which, upon acceptance, could be turned into a contract but rather and invitation to negotiate.
14 In New York, the rule is well settled that an advertisement is merely an invitation to enter into negotiations, and is not an offer that may be turned into a contract by a person who communicates an intention to purchase the advertised item. Geismar v. Abraham & Strauss, 439 N.Y.S.2d 1005 (Dist. Ct. Suffolk Co. 1981); Lovett v. Frederick Loeser & Co., 207 N.Y.S.753 (Manhattan Mun. Ct. 1924); Schenectady Stove Co. v. Holbrook, 101 N.Y. 45 (1885); People v. Gimbel Bros., Inc., 115 N.Y.S.2d 857 (Manhattan Ct. Spec. Sess. 1952). The only general test is the inquiry whether the facts show that some performance was promised in positive terms in return for something requested. Lovett, 207 N.Y.S.2d at 755. However, a purchaser may not make a valid contract by mere acceptance of a "proposition." Schenectady Stove Co., 101 N.Y. at 48. Nor does the purchaser have the right to select an item which the seller does not have in stock or is not willing to sell at a reduced price. Lovett, 207 N.Y.S. at 757. 15
16 An offer to contract must be complete and definite in its material terms; a general advertisement that merely lists items for sale is at best an invitation to negotiate unless it promises to sell an item in return for something requested. In Schenectady Stove Co., for example, the plaintiff delivered to defendant a catalogue of prices containing a statement of terms of sale, but the catalogue did not state the amount of goods which plaintiff was willing to sell on those terms. Under these circumstances, the Court of Appeals held that no contract was ever made between the parties with respect to an order that defendant submitted because the plaintiff had not made an offer that was complete and definite in all material terms. Hence, it was not possible for the defendant to make a valid contract by mere acceptance of a "proposition." 101 N.Y. at 48. Similarly, in Lovett, a department store advertised that it would sell, deliver, and install certain "wellknown standard makes of radio receivers at 25 per cent. to 50 per cent. reduction" from advertised list prices. The plaintiff had demanded a particular model of radio that was not listed in the ad, and the defendant had declined to sell it at the reduced price. 207 N.Y.S. at 754. The 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, reasoning that such a general advertisement was distinguishable from an offer of a reward or other payment in return for some requested performance. Id. at 755-56. The court further held that, even assuming the plaintiff's "acceptance" turned the offer into a contract, the purchaser did not have the right to select the item which the defendant did not have in stock or was not willing to sell at a reduced price. Id. at 756-57.
17 Loman's advertisement did not contain a promise to sell the leather coats in exchange for some requested act or promise. By its terms, the advertisement announced that it had a stock of coats to sell, and described the coats as a manufacturer's closeout selling at a substantially reduced price. 18 Nor did the ad give the public an option to choose any comparably priced leather coat if the advertised coats were no longer available. As the court noted in Lovett, 19 a prospective purchaser does not have the right to select items that the retailer does not have in stock or is not willing to sell at a reduced price. Lovett, 207 N.Y.S. at 757.
20 The claimant here might argue that the advertisement did not contain limiting language, for example, that the coats were for sale while supplies lasted 21 . However, the ad indicated 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 could fairly be read to mean that the supplies were not unlimited. 22
On these facts, the court will probably 24 find that the claimant has failed to state a cause of action for breach of contract because the ad did not constitute an offer but merely an invitation to negotiate.
1) The question presented states the question(s) the memo is to address: how does the relevant law apply to the key facts of the research problem? The question should be sufficiently narrow and should be objective.
2) Generally, include the name of the jurisdiction involved, e.g., New York, the Second Circuit, etc.
3) The Question Presented is usually one sentence. It often begins: "Whether...." or "Does...." Here, the writer has chosen "did." Although questions are usually framed so that they can be answered yes or no (or probably yes or probably no), sometimes they cannot (such as "Under New York law, has a retailer made a binding offer when...?").
4) The author of this memo has been careful not to use language that assumes the answer to the legal question it raises. Here, since the question presented is designed to highlight whether the facts indicate that a formal contract offer has been made, you would not use the term "offer" in framing the question, i.e., you would not write "Did an advertising circular describing merchandise constitute an offer when it offered the merchandise for sale starting at a designated date and time?" because that formulation of the question assumes a legal conclusion -- that the conduct at issue meets the requirements of an offer. Rather, reserve your legal conclusions (here, whether or not the advertisement constituted a formal offer) for the short answer section.
5) Here, note how the writer has constructed the question in this memo to alert the reader to the following facts: description of merchandise in an advertising circular, statement in circular that item is a "manufacturer’s closeout," statement in circular indicating that the early shopper will be rewarded.
Although the "question presented" section is short, it must (i) provide a concise reference to the legal claim and relevant doctrine and (ii) incorporate the most legally significant facts of your case. A complete and well-balanced question presented is incisive — it immediately gets to the heart of the legal question — and it orients the reader to the factual context.
You may not be sure which facts are most legally significant when you first start writing the memo. Your thinking may become clearer and better organized as the writing proceeds. You would ascertain which facts are legally significant by referring to the factual criteria (based on elements or factors) in the legal authority relevant to the question — e.g., statutes or case law. For this reason, many people do not write the final version of the question presented (or the short answer) until they have almost completed the "discussion" section of the memo.
6) The short answer contains a clear answer to the question (i.e., a prediction) and an explanation of that answer. The balanced description of law and fact that you provide in the question presented should be mirrored in the short answer.
The short answer serves two functions: (i) it provides hurried readers with an accessible, bottom-line prediction as well as the core of the relevant law and facts; and (ii) it provides the more thorough readers with an outline or digest of your subsequent discussion section. The short answer should function as a roadmap to help readers feel oriented when they move on to the discussion.
7) Begin the short answer with your conclusion: yes, no, probably yes, etc., if the question can be answered that way. Then give a brief (usually no more than four or five sentences long) self-contained explanation of the reasons for your conclusion, applying the rule to the facts of your case. As a general rule, include no citations.
8) The facts section contains all the factual premises upon which your subsequent legal analysis is based. Certainly, all the facts cited in the application section (The "A" in IRAC or CRRACC) of your discussion should be presented as part of the story told in the facts section.
Bear in mind that the busy law-trained reader will value conciseness in this section, so try to present only those facts that are legally significant or that are necessary to make the problem clear. At the same time, bear in mind that the office memo should be a stand-alone document that can fully inform any colleague in your law office who may read it; therefore, the facts section should always contain a full and coherent recitation of the relevant facts, whether or not the principal reader of the memo already knows them (unless, of course, you were instructed to do otherwise).
9) It is helpful to the reader to present the facts according to some organizational scheme. In this memo, the writer has addressed the heart of the incident — the advertisement, the sale of the coats, the arrival of the unhappy shopper — in chronological order in the first paragraph; a second paragraph collects relevant background information about the client.
In your own memo, you can recount the facts completely chronologically, you can put the most important incidents or facts first, or you can cluster the facts into discrete topics if the facts are complex and if this is the easiest way to understand them. Choose the organizational scheme that you think will make the facts most clear and memorable to the reader.
10) In your fact section, be sure to specify what legal claims are being considered or are being brought, and be sure to describe any legal proceedings that have already taken place.
11) Identify your client and briefly describe your client’s goal or problem.
12) Since memo writing is predictive writing, you should try to maintain an objective and impartial tone as you recount the facts. This is not to say that you should omit facts that have an emotional impact. Rather, the facts section of an office memo should not be written in a tone that conveys a preference for a particular theory of the case, that implicitly advocates for one side in the dispute, or that telegraphs any of the legal conclusions to be drawn in the discussion section. Since you are not advocating for any side, you ought not color or characterize the facts as you would if you were writing a brief. Also, do not comment upon the facts in the facts section or discuss how the law will apply to them.
13) The umbrella section of the discussion introduces or prefaces your first section of in-depth legal analysis; for example, it restates the key facts and issue presented, and introduces the overarching legal rule. Note how the writer alerts the reader to the key point of the doctrine, that general advertisements are treated in law as invitations to negotiate, not offers.
14) The rule statement synthesizes key elements of the cases relevant to the issue in your case into a general statement of the rule. To produce an accurate and well-crafted rule statement, you must have a good understanding of the existing legal authority on which your rule statement is based.
15) Note how the writer pulls together key cases that comprise the rule, then identifies the standard of inquiry by which courts apply the rule.
16) If the rule statement serves as the thesis sentence for a longer discussion about a legal rule that has developed over time in a series of cases, the rule proof serves as your explanation and elaboration of that thesis sentence.
Note as you read this section how the writer fleshes out the facts, holding, and reasoning of the Schenectady Stove Co. and Lovett cases, focusing on facts that are similar to the Loman case.
17) A good application section weaves the cases into your facts. Language from the cases should be prominent and woven into your discussion of these facts. In the rule proof you discuss cases to support the rule statement. In the application section, you might draw analogies or contrasts between the cases discussed in the rule proof and your facts as a way to reach your conclusion.
18) Note how the writer focuses on the specifics of the language of the advertisement.
19) Note how the writer draws a direct comparison to similar facts in the Lovett case.
20) The use of a counterargument is a good way to convey that the existing legal authority is not clear, unequivocal, or unified when applied to facts like yours. It may be the case that you cannot predict with certainty the outcome of your case, given your facts.
21) Note here how the writer points to the absence of limiting language in the advertisement to support an argument that a shopper would be led to believe that appearing at the appointed time was sufficient to qualify for the reduced-price item.
22) In a longer, more complex discussion, include here a short statement of your position on the question or issue explored in a given IRAC (or CRRACC) unit -- your conclusion for that unit.
23) The overall conclusion contains a summary of the main points of your analysis. In your application section you may have struggled with areas of uncertainty in the legal doctrine and/or competing policy rationales. You may have also grappled with a seemingly contradictory assortment of facts: some seem to fit into the requirements of the rule; others suggest that the rule is not satisfied. You may have weighed arguments against counterarguments. After you have done all this, you must take a position and make a statement about how the court will apply the law. Given the more fully fleshed out short answer, the writer here has opted for a brief restatement of the ultimate conclusion.
24) As a legal writer, it helps to have an assortment of qualifiers to acknowledge how certain or uncertain you are of the actual judicial outcome. Your conclusion can convey that you are completely confident the court will rule as you predict or that, given the state of the legal authority, the outcome is really a toss-up and could go either way. Or you can convey any level of confidence in between. Keep in mind that the reader will be judging your credibility as a legal thinker based on (among other things) the congruity of your tone with the data at hand.