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.
