About Fundamental Fairness

It is about fundamental fairness. Truth in advertising. Keeping a promise. If I promise something, and then I don't keep my promise, there should be consequences. Sometimes a promise is broken because its impossible to keep, external events interfere. But, maybe there should still be consequences for a broken promise, even if the breaking of it was unavoidable. Or maybe the breaking of that promise should just be forgiven. But, making a promise with no intention of keeping it? Isn't that simply unfair, deceptive?

If I advertise a car for sale at a certain price. And someone comes along and says, ok, I'll give you the price you're asking -- I have cash; can I then turn around and say, no I want more money than that? Or can I say, no I'm going to think about it. Is it ethical to advertise a price for a thing when you have no intention of accepting that amount? Is it legal?

Can I, as a seller, say to the wannabe buyer that I want to hold out for more money?

Can I, as a seller, say to the wannabe buyer, I'll let you know later whether I'll sell it to you and for what amount. And when later comes, I tell the wannabe buyer that now there are others offering me more money for the same car. So, I say to the wannabe buyer, what is your highest and best price? Is this legal and ethical?

What if I never had any intention of selling the car for the advertised price? Is that bait and switch?

Probably not, since no other car was being switched. But is it deceptive? I think so, The following is from the FTC website:

"WHAT MAKES AN ADVERTISEMENT DECEPTIVE?

According to the FTC's Deception Policy Statement, an ad is deceptive if it contains a statement - or omits information - that:

• Is likely to mislead consumers acting reasonably under the circumstances; and
• Is "material" - that is, important to a consumer's decision to buy or use the product.

Certain elements undergird all deception cases.

First, there must be a representation, omission or practice that is likely to mislead the consumer. Practices that have been found misleading or deceptive in specific cases include false oral or written representations, misleading price claims, sales of hazardous or systematically defective products or services without adequate disclosures, failure to disclose information regarding pyramid sales, use of bait and switch techniques, failure to perform promised services, and failure to meet warranty obligations.

Second, we examine the practice from the perspective of a consumer acting reasonably in the circumstances. If the representation or practice affects or is directed primarily to a particular group, the Commission examines reasonableness from the perspective of that group.

Third, the representation, omission, or practice must be a "material" one. The basic question is whether the act or practice is likely to affect the consumer's conduct or decision with regard to a product or service. If so, the practice is material, and consumer injury is likely, because consumers are likely to have chosen differently but for the deception. In many instances, materiality, and hence injury, can be presumed from the nature of the practice. In other instances, evidence of materiality may be necessary.

Thus, the Commission will find deception if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detriment. 

The Commission also considers claims or omissions material if they significantly involve health, safety, or other areas with which the reasonable consumer would be concerned. Depending on the facts, information pertaining to the central characteristics of the product or service will be presumed material. Information has been found material where it concerns the purpose, safety, efficacy, or cost, of the product or service. Information is also likely to be material if it concerns durability, performance, warranties or quality. Information pertaining to a finding by another agency regarding the product may also be material."

I think that when a thing is offered for a certain price its a promise. Contract law is all about enforcing promises. I also think that offering a thing for sale at a certain price is a contract that can be enforced. Contract enforcement remedies include money damages and specific performance. And, contract law is surprisingly not as cut and dried as I thought. Many times, contract enforcement remedies are based on the intent of the parties and reasonableness.

I have always been mystified as to exactly how bidding wars for houses can happen. In general, a listing for a house for sale is treated as a request for offers. In general, people list a price for sale above what they are willing to accept and anticipate negotiations. But, if someone accepts the offer to sell without any attempt to negotiate the price or terms -- isn't the seller bound to honor their promise? Apparently not, at least in common practice in 2015. I maintain that legally, the offer to sell at a set price is just that - an offer. And a buyer's acceptance of that price and terms is acceptance.

All real estate contracts must be in writing, as per the Statute of Frauds. And, in my scenario, this is also the case. The first writing is the offer to sell, which is the MLS listing for sale at a certain price, the property and terms described with specificity. In my theory, this itself is a unilateral contract. So, if someone comes along when there is no other offer pending, and accepts the offer to sell; and agrees to price and terms; it then becomes a bilateral contract. And is enforceable.

I have had realtors, a real estate broker, a worker at Fannie Mae, and various individuals tell me that I am wrong. That my thinking is muddled, that I don't know how things work, and more or less that I'm an idiot. I also asked a real estate attorney, who, to his credit, said "I don't know". I keep asking the same question.

If someone offers a property for sale, and I say ok, I'll buy that property for that amount with cash and no contingencies -- doesn't the seller have to sell it to me for that amount and for those terms? After all, it was the seller's idea in the first place, not mine. He was the one offering (promising) to sell.

On three different occasions, what I thought should have been a contract has suddenly turned into a bidding war. On all three occasions, we offered full price with no contingencies. And, on all three occasions, the seller did not accept our "offer", but instead let us know that we should now submit our highest and best bid. I continue to maintain that this practice is unethical and probably illegal. I further believe that if I sued the seller, the suit would be based on breach of contract, and that as a remedy I would request specific performance. So that the court might then order the seller to sell us the house.

My detractors have told me, that there is no contract in my scenario. I beg to differ. A contract is a promise, the initial promise, the contract occurred when the seller offered the property for sale and I accepted the offer for sale.

The broker, in the most patronizing manner possible, told me that the seller is doing us a favor by allowing us to submit our highest and best offer. What????

And the entire Greek chorus of my detractors has told me that no one can make someone sell their property. Again, I beg to differ. I rely on a case that I expect is taught in law school - Lucy v Zehmer.

Lucy is a 1954 Virginia Supreme Court case in which Mr. and Mrs. Zehmer and Mr. and Mrs. Lucy were at a bar. The Zehmers told the Lucys that they would sell them their 400+ acre farm for $50,000. and proceeded to write the price and terms on a cocktail napkin.

Zehmer subsequently refused to go through with the sale, alternately claiming that he was drunk and that he was joking. Following is an excerpt from that case:

"If it be assumed, contrary to what we think the evidence shows, that Zehmer was jesting about selling his farm to Lucy and that the transaction was intended by him to be a joke, nevertheless the evidence shows that Lucy did not so understand it but considered it to be a serious business transaction and the contract to be binding on the Zehmers as well as on himself. The very next day he arranged with his brother to put up half the money and take a half interest in the land. The day after that he employed an attorney to examine the title. The next night, Tuesday, he was back at Zehmer's place and there Zehmer told him for the first time, Lucy said, that he wasn't going to sell and he told Zehmer "You know you sold that place fair and square." After receiving the report from his attorney that the title was good he wrote to Zehmer that he was ready to close the deal.

Not only did Lucy actually believe, but the evidence shows he was warranted in believing, that the contract represented a serious business transaction and a good faith sale and purchase of the farm."

Like Lucy, not only do I actually believe someone will sell a house for the promised price, I believe the promise is enforceable. The holding in Lucy was that the contract was enforced, and the farm was sold as agreed.