This was one of my favorite cases in law school. The facts are a somewhat glamorous way to teach us about the first element of an enforceable contract, the offer.
In Lefkowitz, the defendant, the Great Minneapolis Surplus Store, published a newspaper advertisement that the next morning at 9am, it would sell “three fur coats worth up to $100.00, first come, first served $1 each.” Lefkowitz was the first to arrive with a dollar in hand. He was turned away and told that according to the store’s “house rules,” the offer was available to women only. These house rules were not mentioned in the published newspaper ad. A similar interaction occurred the following Saturday. The store published another ad, this time for a fur stole, reading, “1 Black Lapin Stole, worth $139.50, first come, first served.” Lefkowitz showed up again on Saturday morning with a dollar ready to purchase. He was refused because of the same house rule. The Court tackled two legal issues here. First, when can an advertisement constitute an offer as opposed to simply an invitation to make an offer? Second, assuming the ad was an offer, when can the terms of such offer be modified? Let’s address these questions separately:
As for the first question, the court held that if an advertisement is clear, definite, explicit and leaves nothing for negotiation, it constitutes an offer, the acceptance of which creates an enforceable contract. In other words, the "offer" needs to be specific enough that a person knows what they will be accepting. Applied here, the first advertisement, while it did state the necessary actions to purchase the coat (show up first, with $1), it did not adequately convey the coats’ worth, it just said that the coats were worth “up to $100.00.” The Court said that this ambiguity made the first ad a mere invitation to make an offer. The second advertisement, however, was sufficiently explicit and was therefore an offer. Like the first ad, it specified what needed to be done to get the stole/ accept the offer (show up first on Saturday morning with a dollar). Unlike the fur coat ad, the second ad was more specific about the stole’s worth, it said that the stole was worth $139.50 instead of “up to” $139.50. Therefore, because the ad for the stole was an offer (and the other elements of a contract not covered in this post were present), there was a contract and the store breached its obligation by refusing to sell the stole to Lefkowitz for $1. I want to be clear about applying the court's analysis to other contexts. The above discussion does not mean that an advertisement’s inclusion of a product’s specific worth guarantees an offer. You have to look at the facts on your exam in their entirety to see if enough details are present to make the terms of the offer sufficiently definite.
So now that we know the second stole advertisement was an offer, what about the house rule that Lefkowitz could not purchase the stole because he was not female? The Court held that while the advertiser can change the terms of an offer prior to acceptance, it cannot impose new or arbitrary conditions that were not published in the original offer. Here, Lefkowitz accepted the offer to buy the stole by showing up first with $1 ready and willing to purchase the stole. The defendant only told Lefkowitz about the house rule after he accepted (i.e. complied with the terms of the offer; showed up first with a dollar).
From a policy perspective, you may have been thinking there is a strong argument that the second time Lefkowitz arrived at the store, he was on notice of the house rule because the store refused him on those grounds when he wanted to buy the coat. The court probably ignored this point because it sniffed out that the store was engaging in deceptive advertising practices by getting customers excited about the deal and then demanding a higher price once upon their customers' arrival.
Here are some points to add to your outline:
· The holdings: First, for an advertisement to be an offer (and not just an invitation to make an offer), the terms of the advertisement need to be sufficiently definite and leave nothing open for negotiation. As mentioned above, this will be a case-by-case analysis. Second, an offeror cannot add arbitrary or new terms to an offer after acceptance.
· Be on the lookout for shady practices on the advertiser’s part similar to the bait and switch practices that the court recognized here.
· Think about what could shake up the court’s conclusion here. What if the store put a sign in the window saying that only women could collect on their offers before they opened its doors?
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