Harris v. Time, Inc.

Citation. 191 Cal. App. 3d 449 (1987)

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Citation191 Cal. App. 3d 449 (1987)

Brief Fact Summary.

Plaintiffs filed a class action suit against Defendant for breach of contract, unfair advertising, promissory estoppel, and fraud, seeking declaratory and injunctive relief and $15 million in punitive damages. The trial court granted Defendant’s motion for summary judgment and dismissed Plaintiffs’ complaint. Plaintiffs appealed.

Synopsis of Rule of Law.

An advertisement may constitute a unilateral offer if it calls for the performance of a specific act without further communication and leaves nothing for further negotiation.

Points of Law - Legal Principles in this Case for Law Students.

There can be no anticipatory breach of a unilateral contract.

View Full Point of Law

Joshua Gnaizda, a three-year-old boy (Plaintiff), received an envelope in the mail from Time, Inc. (Defendant), offering a free calculator watch “just for opening [the] envelope.” Joshua’s mother opened the envelope and learned that a subscription to Fortune magazine was required in order to receive the watch. After Defendant refused to provide the watch, Joshua’s father, a public interest attorney, filed a class-action suit along with Mark Harris and Richard Baker (Plaintiffs) against the company for breach of contract, unfair advertising, promissory estoppel and fraud. Plaintiffs sought declaratory and injunctive relief and $15 million in punitive damages. The trial court granted Defendant’s motion for summary judgment and dismissed the complaint after finding Plaintiffs’ claims to be “de minimis.” Plaintiffs appealed.

Issue.

Whether an advertisement may constitute a unilateral offer if it calls for the performance of a specific act without further communication and leaves nothing for further negotiation.

Held.

Yes. The trial court’s ruling is affirmed. An advertisement may constitute a unilateral offer if it calls for the performance of a specific act without further communication and leaves nothing for further negotiation.

Discussion.

Defendant argues that no contract existed because the text of the unopened mailer amounted to only an advertisement rather than an offer. While it is true that an advertisement is typically not an offer, but rather an invitation to bargain, there are occasions in which an advertisement can constitute an offer and form the basis of a unilateral contract. If the advertisement calls for performance of a specific act without further communication and leaves nothing for further negotiation, an offer may exist. See Lefkowitz v. Great Minneapolis Surplus Store, 86 N.W.2d 689, 691 (Minn.1957). Here, Defendant’s mailer was technically an offer to enter into a unilateral contract because it promised the giving of a watch in exchange for the recipient opening the envelope. Defendant additionally claims that there was no contract because the mere act of opening an envelope was valueless and thus did not constitute adequate consideration. However, courts frequently find that any bargained-for act will constitute adequate consideration for a unilateral contract. Here, Plaintiffs’ opening of the envelope had great value to Defendant. Defendant wanted customers to subscribe to Fortune magazine. The first step toward that goal was having the recipient open the envelope. Finally, Defendant argues that Plaintiffs’ claims are a waste of the court’s time. In dismissing the complaint, the trial court found Plaintiffs’ demands for $15 million in punitive damages for failure to provide an inexpensive watch a ludicrous overreaction. Plaintiffs’ real complaint is that they were tricked into opening a piece of junk mail, not that they were misled into buying something. Instead, Plaintiffs chose to burden an already overloaded court with a frivolous lawsuit.