Donovan v. IRL Corp.

26 Cal. 4th 261, 109 Cal. Rptr. 2d 807, 27 P.3d 702 (2001)



An essential element of any contract is the consent of the parties, or mutual assent. Cal. Civ. Code §§ 1550 (2)1565 (2). Mutual assent usually is manifested by an offer communicated to the offeree and an acceptance communicated to the offeror. 


Defendant car dealer's advertisement listed a price for a used automobile that was significantly less than intended because of typographical and proofreading errors made by a local newspaper. Plaintiff consumer attempted to purchase it by tendering the advertised price. Defendant refused to sell the automobile to plaintiff at that price. Plaintiff filed suit, and the municipal court entered judgment for defendant on the ground that the mistake in the advertisement precluded the existence of a contract. The appellate court reversed, relying in part upon Cal. Veh. Code § 11713.1 (e), which made it unlawful for a car dealer not to sell a motor vehicle at the advertised price. The state supreme court reviewed the matter and reversed judgment of the appellate court.


Did defendant satisfy the requirements or rescission of the contract?




A contract satisfying the statute of frauds arose from the car dealer's advertisement and consumer's tender of the advertised price, but that the car dealer's unilateral mistake of fact provided a basis for rescinding the contract. The erroneous price in the advertisement was the result of a good faith mistake.

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