Johnson v. Capital City Ford Company
85 So. 2d 75, 1955 La. App. LEXIS 1090 (1955)
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Rule of Law:
A newspaper advertisement containing clear, definite, and specific terms, which explicitly calls itself an offer, constitutes a binding unilateral offer that a consumer can accept by performing the required act.
Facts:
- Capital City Ford Company, Inc. ran a newspaper advertisement titled 'TWO FOR ONE' to sell its inventory of 1954 Ford cars.
- The ad stated, 'BUY A NEW '54 FORD NOW TRADE EVEN FOR A '55 FORD... this offer good only for the remainder of September.'
- The advertisement specified that the 1955 Ford would be the same model and body style, and the customer would only pay sales tax and license fees.
- Leland H. Johnson and his wife saw the advertisement and, in response, went to the Capital City Ford dealership on September 21, 1954.
- Johnson purchased a 1954 Ford by trading in his old car and paying the balance in cash.
- During the transaction to purchase the 1954 Ford, there was no discussion between Johnson and the dealership's salesman regarding the 'TWO FOR ONE' offer.
- In December 1954, after the 1955 Ford models became available, Johnson returned to the dealership to exchange his 1954 car in accordance with the advertisement.
- Capital City Ford refused to honor the advertisement's terms and rejected the exchange.
Procedural Posture:
- Leland H. Johnson filed suit against Capital City Ford Company, Inc. in the District Court, the trial court of first instance.
- Johnson sought specific performance of the alleged contract created by the advertisement.
- The District Court found in favor of Johnson and rendered a judgment decreeing specific performance.
- Capital City Ford Company, Inc., as appellant, appealed the judgment to the Court of Appeal of Louisiana, First Circuit. Leland H. Johnson is the appellee.
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Issue:
Does a newspaper advertisement containing specific terms and using the word 'offer' constitute a binding unilateral offer that a customer accepts by performing the specified act of purchasing a product?
Opinions:
Majority - Tate, Judge
Yes, a newspaper advertisement containing specific terms and using the word 'offer' constitutes a binding unilateral offer that a customer accepts by performing the specified act. The court reasoned that while advertisements are often mere invitations to negotiate, they can constitute binding offers if they are sufficiently clear, definite, and explicit, leaving nothing open for negotiation. In this case, the advertisement used the word 'offer,' provided specific terms for the exchange, and invited acceptance through the act of purchasing a 1954 Ford. This created a unilateral contract upon Johnson's performance. The burden was on the dealer, as the drafter of the offer, to communicate any modifications or conditions, not on the customer to inquire about them. The merger clause in the purchase contract for the 1954 Ford related only to that specific sale and did not negate the separate, collateral contract formed by Johnson's acceptance of the advertised offer.
Dissenting - Lottinger, Judge
No, the newspaper advertisement was merely an invitation to negotiate, not a binding offer. The dissent argued that the parol evidence rule should have barred the admission of the advertisement because the written sales contract contained a merger clause stating it was the 'entire agreement.' Allowing the ad as evidence would impermissibly add to the terms of the unambiguous written contract. Furthermore, a significant term like the 1955 Ford exchange would naturally and normally be included in the written agreement if it were part of the deal. The prevailing rule is that advertisements for the sale of goods are invitations to make an offer, not offers themselves, and this case did not present the exceptional circumstances required to overcome that presumption.
Analysis:
This case is significant for establishing that a commercial advertisement can rise to the level of a legally binding offer if its terms are sufficiently clear and definite. It moves beyond the traditional view of ads as mere invitations to treat, placing a greater responsibility on advertisers to be precise in their language. The decision demonstrates that a unilateral contract can be formed through performance in response to a public offer, even if the offer is not explicitly discussed during the final transaction. This precedent impacts contract law by holding businesses accountable for specific promises made in advertisements and limits their ability to later claim such ads were non-binding, especially when the ad uses promissory language like 'offer'.
