The Appellate Court of Illinois, Second District, recently held that an erroneous advertisement that misstated the price of a vehicle did not constitute an offer that could be accepted to form a contract, and did not constitute a UDAP violation.
A copy of the opinion is available at: Link to Opinion
The plaintiff car buyer saw an advertising online for a vehicle and contacted the defendant car dealership to purchase the vehicle at the advertised price. The car dealer explained to her that the price of the vehicle was $36,991 and the price of $19,991 as shown in the advertisement was a mistake. The car dealer offered to sell the vehicle "at cost" but the plaintiff did not agree to that price.
The plaintiff filed suit alleging breach of contract for allegedly failing to honor the advertised .price, or in the alternative, that the car dealer's advertisement was deceptive in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2, et seq. ("ICFA").
As you may recall, to establish a breach of contract claim, the plaintiff must allege and prove "(1) the existence of a valid and enforceable contract; (2) performance by the plaintiff; (3) breach of contract by the defendant; and (4) resultant injury to the plaintiff." Henderson-Smith & Associates, Inc. v. Nahamani Family Service Center, Inc., 323 Ill. App. 3d 15, 27 (2001). "A valid and enforceable contract requires a manifestation of agreement or mutual assent by the parties to its terms, and the failure of the parties to agree upon or even discuss an essential term of a contract may indicate that the mutual assent required to make or modify a contract is lacking. Deacon Group., Inc. v. Northern Trust Corp., 187 Ill. App. 3d 635, 643 (1989).
The Appellate Court noted that "[a]n advertisement is not an offer to a contract but rather constitutes an invitation to deal on the terms described in the advertisement." Steinburg v. Chicago Medical School, 69 Ill. 2d 320, 330 (1977). See also O'Keefe v. Lee Calon Imports, Inc., 128 Ill. App. 2d 410, 413 (1970) (court held a newspaper advertisement which contains an erroneous purchase price through no fault of the defendant advertiser and which contains no other terms, is not an offer, but an invitation, and cannot be accepted so as to form a contract).
The Court disagreed with the plaintiff, ruling that no contract formed between the parties as there was no mutual assent. The plaintiff believed the purchase price was $19,991 and the car dealer believed the same car was being sold for $36,991.
Accordingly, the Appellate Court held that the advertisement on its own could not serve as the basis of a binding contract. The Court noted that the car dealer never intended to sell the vehicle at the advertised price. Therefore, the Court held that the advertised price was not an offer and plaintiff's acceptance did not establish a contract.
The Court also agreed with the car dealer that it had not violated the ICFA.
The trial court had held that there was no consumer fraud "because the defendant did not intend the plaintiff to rely on a deceptive practice in which the defendant never intended to engage."
As you may recall, "[t]o establish a claim under the [ICFA], a plaintiff must prove: (1) a deceptive act or practice by the defendant, (2) the defendant's intent that the plaintiff rely on the deception, (3) the occurrence of the deception in a course of conduct involving trade or commerce, and (4) actual damage to the plaintiff that is (5) a result of the deception." Martinez v. River Park Place, LLC, 2012 IL App (1st) 111478, ¶ 34. Recovery may be had under the ICFA for unfair as well as deceptive conduct. Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403, 417 (2002).
In addition, "[i]n a cause of action for fraudulent misrepresentation brought under the [ICFA], a plaintiff must prove that he or she was actually deceived by the misrepresentation in order to establish the elements of proximate causation." Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill. 2d 100, 199 (2005).
Here, the Appellate Court held that the plaintiff was unable to prove she suffered any damages. The plaintiff attempted to claim her damages were the difference between the price at which the car was advertised and the appraised value of the car. However, the plaintiff did not actually purchase the car.
The Court noted that only a person who suffers actual damages as a result of a violation of the ICFA may bring a private action. 815 ILCS 505/10a(a); Mulligan v. QVC, Inc., 382 Ill. App. 3d 620, 626-27 (2008). The failure to allege specific, actual damages precludes a claim brought under the ICFA. White, 368 Ill. App. 3d at 287. The purpose of awarding damages to a consumer fraud victim is not to punish the defendant or bestow a windfall upon the plaintiff, but rather to make the plaintiff whole. Mulligan, 382 Ill. App. 3d at 629.
Here, the Appellate Court held that the plaintiff was in the same position she was in before she saw the advertisement and suffered no damages.
The Court also rejected plaintiff's argument that the car dealer's advertising the vehicle at a price that it did not intend to honor was a "per se violation" of the ICFA that entitled her to relief.
The Appellate Court explained that the cases on which the plaintiff relied all involved deceptive "bait and switch" situations. The Court held that a "a 'bait and switch' occurs when a seller makes an alluring but insincere offer to sell a product or service, which the advertiser in truth does not intend or want to sell. Its purpose is to switch customers from buying the advertised merchandise to buying something else, usually at a higher price or on a basis more advantageous to the advertiser."
Here, the Court held, the car dealer "did not engage in any 'bait and switch,' as it did not try to induce the plaintiff to buy a vehicle other than the one that was advertised."
In addition, the Appellate Court noted that, "[a]lthough even negligent or innocent misrepresentations are actionable under the [ICFA], that still does not alleviate a plaintiff's obligation to prove her damages."
Accordingly, the Appellate Court affirmed the trial court's ruling in favor of the car dealer.
Ralph T. Wutscher
Maurice Wutscher LLP
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