An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. The determination of whether a particular communication constitutes an operative offer, rather than an inoperative step in the preliminary negotiation of a contract, depends upon all the surrounding circumstances. The pertinent inquiry is whether the individual to whom the communication was made had reason to believe that it was intended as an offer.
R.J. Reynolds Tobacco Company (RJR) operated a customer rewards program, called Camel Cash, from 1991 to 2007. Under the terms of the program, RJR urged consumers to purchase Camel cigarettes, to save Camel Cash certificates included in packages of Camel cigarettes, to enroll in the program and, ultimately, to redeem their certificate for merchandise featured in catalogs distributed by RJR. Those who participated in RJR's certificate redemption program filed a case for breach of contract, promissory estoppel and violation of two California consumer protection laws. They alleged that, in reliance on RJR's actions, they purchased Camel cigarettes, enrolled in the program and saved their certificates for future redemption. They allege that in 2006 RJR abruptly ceased accepting certificates for redemption, making the plaintiffs' unredeemed certificates worthless. The district court dismissed the action for failure to state a claim and the case was appealed.
Did the certificates constitute an offer?
The Court held that the operative question under California law was whether the advertiser, in clear terms, promised to render performance in exchange for something requested by the advertiser, and whether the recipient of the advertisement reasonably might have concluded that by acting in accordance with the request a contract would be formed. Construing the complaint in the light most favorable to plaintiffs, and drawing all reasonable inferences in plaintiffs' favor, the court concluded that plaintiffs adequately alleged the existence of an offer to enter into a unilateral contract, whereby defendant promised to provide rewards to customers who purchased its product, saved the certificates and redeemed their certificates in accordance with the catalogs' terms. The court noted that if further proceedings showed that the contract claim failed for indefiniteness, the promissory estoppel claim would likely fail for the same reason.