Is an Advertisement a Contract: Everything You Need to Know
Is an advertisement a contract? In most cases, advertisements do not count as offers to enter into a contract.3 min read
2. When Can Advertisements Be Offers?
3. Legally Enforcing an Advertisement Offer
Is an advertisement a contract? In most cases, advertisements do not count as offers to enter into a contract. That said, an advertisement can lead to the making of a contract upon completion of several additional steps.
Can an Advertisement Be a Contract?
Making an offer is the first step of forming a contract. While offers can come in many forms, an advertisement is usually not considered an offer to enter into a contract. Announcements, brochures, and catalogs also do not reach the level of an offer. Instead of counting as an offer, an advertisement is an invitation for a deal, meaning if the person who published the advertisement decides not to sell the item at the advertised price, this would not count as a breach of contract.
When Can Advertisements Be Offers?
While advertisements usually aren't legal offers, there are three elements that can make an advertisement an offer:
- The advertisement includes definite terms.
- The advertisement targets a specific person or a limited group.
- The circumstances of publication make it clear that the advertiser intended to offer a contract.
When determining if an offer was made, courts will check to see if the intent was to form a legal contract. Different courts will use different rules for determining if an advertiser made a valid offer, making this issue complicated.
In California, for instance, a valid contract requires four basic elements:
- A Meeting of the Minds
Advertisements are usually considered an invitation to begin negotiations between a buyer and a seller. Even a very detailed advertisement may not reach the level of an offer. There are some ways, however, that an advertisement can become an offer. For instance, if negotiation is not possible, or if performing an act is all that's needed for acceptance, an advertisement can qualify as an offer.
An advertisement can also constitute an offer if there are consumer protections that apply to the situation. In the California Vehicle Code, for instance, there is language that requires dealers to sell cars at or below the advertised price. Car dealers may not sell cars above the advertised price.
In addition to making sure their advertisements are not actually offers, businesses should be careful that they aren't creating warranties unintentionally. When a warranty exists, there is a contractual obligation to fulfill the terms of the warranty. Imagine, for example, that your business sells coats, and you advertised that a specific coat is thick and warm. In reality, the coat is thin and does not provide the wearer with much warmth.
Because your advertisement promised the warmth and thickness of the warmth, this could be considered a warranty, meaning you would be responsible for making sure the coat matches your description. Whether you are selling a good or offering a service, you are responsible for any statements that you make in your advertising. Fortunately, a representation doesn't automatically create a warranty.
Legally Enforcing an Advertisement Offer
Courts, when trying to determine if an advertisements offer is legally enforceable, will base their decision on reasonableness. If a reasonable person could view the advertisement and understand the advertisement was making an offer to enter a contract, then the offer is legally enforceable. The court can also take into account the circumstances surrounding the case.
For example, if you publish an advertisement to sell a cow for $50, where the advertisement was published will determine if you made an offer. Publishing this advertisement in a rural area might constitute an offer. In a city, this advertisement might not be an offer. Another factor that the court can consider is if the plaintiff in the case actually accepted the offer. A person can accept an offer through their actions. If you see an advertisement promising cash in exchange for used college textbooks, you could accept the offer by sending in your books to the person who published the advertisement.
Many offers, however, specify exactly how acceptance occurred. For instance, the advertisement described above could state that you can only receive money for your used textbooks if you first register with the company. In this circumstance, simply sending in your books would not count as acceptance.
If you need help deciding is an advertisement a contract, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.