<< <i>PS. This is not about right or wrong to me, this was a mistake. No one was "harmed" and as a laywer I would like to think that you know that.
Of course I may be writing to the wrong crowd because heaven knows that very few members on this board have ever made an "honest" mistake before.
I am one of the old-timers and I can tell you the way people think today that they are "entitiled" to something because someone else made a mistake is disgusting.
Joe. >>
Joe it must be a generational thing, you and I are on the same page. Guy perhaps rips a coin on ebay that seller mistakenly listed for sale. He refuses to be satisfied with a refund, calls them out with a negative rating on the worlds largest auction site, gets retaliated by the seller who attempt to replace the coin but not at an unreasonable price and then goes public here. I see a trend, not surprised at all the guy is a lawyer. I would not sell to him nor hire him. In my opinion there are times when you accept someone made an honest mistake and you (as they say in Joisey) fohgettaboutit.
Of course if you have never made a mistake in your life I guess you can continue to push this issue, but good luck.
<<3. Why did you find it necessary in your correspodence to trumpet that you are an attorney?>>
This is the main reason if I was Superior or anyone else, I would NEVER do business with this guy ever again. Typical attorney, fluffing his feathers because he has a law degree. And over a measly $153 coin. Sheesh.
I didnt even waste time reading anymore threads then that. Beepy can spend his days writing his sue-happy briefs over what I feel was an honest not-too-costly mistake. Get over it, and spend your time enjoying your life. If you ARE a typical lawyer, you've spend over $1000 of your time complaining about a little Jefferson that you didnt get.
I do not do much selling on ebay, but I have blocked beepy all the same. I would hate for a minor misunderstanding to result in threatening letters, lawsuits, etc. I have enough stress and aggravation in the workplace that I do not need it in my hobby.
<< <i>Amazing how many think sellers owe nothing - i.e. have zero responsibility for their business practices. >>
No, what's amazing is how many people are misinterpreting "they made a mistake" as "they shouldn't have to do anything to make it right." Or misinterpreting criticism of the OP's tactics as an approval of SG's handling of the situation.
I agree with the "must be a generational thing" theory, at least in large part. As a long-time lurker and (obviously) infrequent poster, I should say that I have been a coin collector longer than most of you have been alive. I have been cheated, bamboozled, scammed, and generally screwed over in every possible way over the years by dealers and other collectors ( I think there is probably a new scam in town, which will be the subject of a new topic later). I bought my first beautifully whizzed walkers in 1967 in the dim interior light of a small coin show in Ponca City; they were lovely beyond belief and the price was just downright cheap. Couldn't resist. Studied Brown and Dunn until I was really somewhat expert, resolved that I was in every way on my own and reponsible for my own mistakes. Never passed on a buying error without being totally honest about what the coin really was, rather than what it might appear to be. Old ethics; there is such a thing as right and wrong, and we all have choices to make. The value of our life is determined in large part by such choices.
Superior had a contract. They chose to place a value (won't spend more than $150 to make this right) on how much they would spend to make a customer happy and to be ethical. (This is almost too incredible to believe, that they would actually admit that they wanted to make the deal right, but only if it met their price limit.) There is no reasonable discussion of right and wrong here; Superior was flat out wrong. Their response was legally and ethically wrong. It also represented such a poor business decision as to be almost incomprehensible.
However, what I have learned is that situational ethics has a large suscriber base, and I must presume that it is somewhat generational. (There can't be that many serious dealers here, can there?) Based on what the majority of responses have been, I, as a buyer, should be perfectly free to decide that I have overspent for a purchase and be able to back out with no penalty or even annoyance on the part of the seller. For example: In good faith, I bid on a coin and win it for $2000, even though afterwards I have severe buyer's regret for getting very carried away in the heat of the auction. Just then my wife walks in and says "You know those diamond earrings that I have been wanting for years to get? I just gave in and bought them. They were $2000, but I know we have the bucks, so I just went ahead and did it." So I can then call the seller and say "I'm sorry, but by bid was in error. I have just checked my cash inventory, and I made a mistake and do not have the necessary money in inventory. Please keep the coin. This should make us even."
If this situation came to this board from the seller, I would presume that the seller would be told to not complain, that the buyer had made the deal right, so just calm down and get on with their life. Situation ethics does require consistency, doesn't it? This is the same situation, isn't it? I do wish I could have employed this reasoning on a couple of bids I made where I screwed up. But I can't. And I am not, nor have I ever been a lawyer.
Slightly related to the topic of Superior and other large outfits making mistakes---several years ago I ordered and received a fairly expensive book from a really big dealer. But wait, there's more!--they sent me two copies and billed me for one! Being old and foolish, I sent the extra copy back with a letter explaining their error (thinking, "Ah! I'll be rewarded for my good deed)------zip, nada, not even a reply or postage reimbursement! I'll bet everyone is surprised.
Being a large operation is not an excuse for having sloppy business practices---nor is failing to get a rip a reason to go ballistic and then disappear from the ensuing fray. I think both parties are at fault. I also predict that this thread will hit 300. Perhaps we should start a pool.
<< <i>Based on what the majority of responses have been, I, as a buyer, should be perfectly free to decide that I have overspent for a purchase and be able to back out with no penalty or even annoyance on the part of the seller. For example: In good faith, I bid on a coin and win it for $2000, even though afterwards I have severe buyer's regret for getting very carried away in the heat of the auction >>
Xokie, this must be some thread to get you to double your post count!
I don't think that is an on point/fair analogy. It would have been such had you said that you bid on the wrong coin, the wrong amount through key-punch error, etc. You are speaking of a change of heart, not an honest, albeit sloppy mistake.
<< <i>Situation ethics does require consistency, doesn't it? >>
It certainly should. On that topic, did you see the post to this thread which noted Superior had allowed a bidder/buyer (who had made an honest mistake) out of his "contractual obligation"?
<< <i>Frankly, my biggest disappointment with Superior in this whole fiasco is their clear use of retaliatory negative feedback. That was bush league
>>
I think the retalitory neg was justified.
First off, I am not big fan of Superior either, I have never done business with them, and likely will not in the foreseeable future.
However, it appears that Superior was making a good faith effort to find a replacement coin. "Beepy" insisted that Superior purchase a replacement coin at double FMV, and $350 above the winning bid. When Superior disclosed that they were limiting the cost to $300, "Beepy" escalated this into the proverbial "mountain out of a molehill". The request was unreasonable, the negative feedback from "Beepy" was unwarranted, and the relaliltory neg was justifiable given that Superior was making a good faith effort to replace the coin, but refused to cave in to Beepy's extortion.
Finally, I am disturbed that many posters think Superior should have paid $500 or more to make this go away, because of the "negative potential impact on Superior's reputation". So, just because Superior is a larger organization, they should pay more to make up for a mistake than, say, a "vest pocket" dealer?
It's funny that this "honest mistake" has been made at least 4 different times to people in this thread alone, and always when the bid is significantly under market value. Once or twice I can understand, but 4 different examples of the same "mistake" in just this thread make me think maybe there is a pattern ? It seems the dealer has a difficult time consumating the deal when they are on the losing end. The fact that Beepy is a lawyer, or took an aggressive approach is irrelevent. It appears that Superior has it's own special form of reserve on some auctions.......
Xokie - Welcome in from the shadows! I believe you need to reread the original post.
Superior has not yet failed to deliver a coin. They have only failed to deliver a coin immediately. As there's no reason to think that time is of the essence in this transaction, I think most of us would agree that Superior should be allowed to search for a replacement at a fair price.
I can see why Beep would want them to replace the coin with the first one he could find - it's easy to spend someone else's money - but it's not reasonable to demand it. The bottom line is that if it's worth Superior's time to hunt down a better deal, I would hope that Beep would let them try.
Superior wrote:
Just a quick note to tell you that I continue to look for a replacement coin. I'm sorry, but this process takes time. Your order is being treated with urgency, concern and respect. I want to assure you that every avenue is being explored and I'll keep you updated.
Beep wrote:
A replacement coin remains available for purchase from the eBay seller known as "acar*." This seller informed me yesterday that the reserve price for the coin is $500. Subtracting my purchase price of $153.29 from that amount means that Superior Galleries can fulfill its contract with me for $346.71, not including S/H/I.
Superior wrote:
That coin is not an option. We will continue or efforts to fulfill this order.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Ashmead's Axiom: Perspective is everything, no matter how you look at it."
I do try to construct my analagies properly:
Buyer's situation part 1: bid more than he really wanted to.
Seller's situation part 1: sold for a lot less than market value.
Buyer's situation part 2: thought he had the money in inventory, was wrong due to inventory management issues.
Seller's situation, part 2: though he had the coin in inventory; was wrong due to inventory management issues.
The fact that the coin sold for less than wholesale was a big part of the discussion and motivated the dollar value that the Superior manager was willing to spend in order to remedy the legal and ethical difficulties presented by what (best case assumption) an inventory management issue. It is not a side issue in the total picture of the exchanges, but consituted a major part of the game theory being invoked by the Superior side.
1. The coin was sold at auction on E-Bay by Superior Galleries. 2. The coin was won by “Beepy” at a winning bid. Which E-Bay calls a contract between both parties. 3. “Beepy” sent payment for the coin. 4. SG did not deliver auction coin.
1. The coin was sold at auction on E-Bay by Superior Galleries. 2. The coin was won by “Beepy” at a winning bid. Which E-Bay calls a contract between both parties. 3. “Beepy” sent payment for the coin. 4. SG did not deliver auction coin...
5. ...yet.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>1. The coin was sold at auction on E-Bay by Superior Galleries. 2. The coin was won by “Beepy” at a winning bid. Which E-Bay calls a contract between both parties. 3. “Beepy” sent payment for the coin. 4. SG did not deliver auction coin...
5. ...yet. >>
What about the 3 other people in this thread alone that had the exact same thing happen......you think Superior is getting right on finding them a new coin ?
What about the 3 other people in this thread alone that had the exact same thing happen......you think Superior is getting right on finding them a new coin ?
I don't know. Do you?
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
The fact that the party involved is a lawyer is the main reason this situation has gotten out of hand. Lawyers tend to be so analytical that they forget to use common sense sometimes and go simply by the letter of the law, which is either black or white. This situation is one of many that falls in the gray area, and lawyers often get so caught up in the black or white that they forget that there is a human element here. Superior clearly made a human mistake and tried to correct it by humanly means. I hope the party involved will soon understand that the true coin collecting community (not the coin investing community) are eccentric, but basically good people who enjoy their hobby and the thrill of the hunt. I personally had virtually the same thing happen to me three months ago, when I ordered a coin from a major online website for less than a third of retail. I knew it was a steal and probably a mistake on their part, and when the company called me the next day to tell me the coin's price was an error and the coin had sold already for $500 instead of the $160 that I had ordered it for, I felt slightly embarrassed for trying to get something for nothing, not disappointed or angry. I could have blown my stack and threatened them with lawsuits, but I didn't because I realized that humans make mistakes sometimes and this was an obvious one, just like in this attorney's case. He may very well win his nominal award if he keeps screaming and threatening, but he won't win much else thereafter in the small world of true coin collectors.
<< <i>What about the 3 other people in this thread alone that had the exact same thing happen......you think Superior is getting right on finding them a new coin ?
I don't know. Do you? >>
Not for sure, but looking back on the thread, at least one of the instances of this "mistake" happening was several months ago and the buyer said he dropped it, so I don't think they are burning the midnight oil looking for one. It seems like they play a game when a coin gets sold for less than they think it's worth, and if the buyer complains enough they try to do something about it. I'm sorry but I think it's maybe time to stop the e-bay auctions until you can get your "software problem" ironed out. But since it has been going on for months, it doesn't seem like much of a priority, does it ? It's funny that you don't hear any stories about paying way too much for a coin, and all of a sudden they can't find it, only when the bid is under market value. I wish I could make "mistakes" like that !!
"But - PAUL SONG IS HEAD OF AUCTIONS OVER THERE NOW. I have no doubt that Paul (again, a total class act) would have compensated this bidder with the full "benefit of his bargain" had he simply pointed out that he was losing the $97 difference between what he won the coin for and what the coin was actualy worth at full retail. "
That is not the proper measure of damages for breech of contract. The replacement value at the time of the breech minus what Plaintiff paid plus any reasonably incurred incidental and consequential damages if plaintiff "covers" IIRC. Here, the defendants have precluded consequentials and incidentals by contractual "agreement" but the proximate damages (benefit of the bargain) are still recoverable.
It is no defense to the breech of K action that "Superior lets others slide when they make a mistake."
Nor is it any defense that plaintiff signed "attorney at law" on his email. That amounts to: "I know I owe him the money your Honor, but I didn't like the way he asked for it."
Ever have anyone make you go through heck to even ask to be paid only to have the person say: "I would have paid, but you had to be a pest and ask me to pay you, so I am not paying."? Normally, the person who is trying to duck paying is the guy making that argument. Here, others are making that specious argument for the defendant...
It is not any valid mitigation that Superior is looking for a replacement when they are not willing to pay the market price for the coin. That is not "good faith" because they are not willing to bid what it takes to deliver the coin; they have a spending limit.
FMV is meaningless. Estimates are not favored in law. Estimates, like price guides, amount to inadmissable hearsay as [sarchasm] the opinion of an expert whose statement of value of the item is so absolutely beyond impeachment that the maker of the statement need not show up in court to be crossexamined. [/sarcchasm]
IOW, good luck using FMV in court over plaintiff's showing that a replacement was immediately available and Superior refused. That is not good faith, IMHO.
Superior may or may not win the poll, but in court they will lose.
Wow, quite a read. I did like the comment on the irony of Superior paying for people to read this thread by having the banner add on top.
Seems like there are a number of ways that Superior could have cured the situation but didn't. Just send him a check for the difference of the $300 they wanted to spend and the refund. Hell, I'd take that. Let's hope things get worked out amicably.
<< <i>It is not any valid mitigation that Superior is looking for a replacement when they are not willing to pay the market price for the coin >>
It has NOT been established that they wont pay FMV, only that they wouldn't pay over FMV in one particular instance and within the time schedule demanded by the buyer .
<< <i>.. but the proximate damages (benefit of the bargain) are still recoverable. >>
That would amount to very little in this case.
<< <i>FMV is meaningless. Estimates are not favored in law. Estimates, like price guides, amount to inadmissable hearsay as [sarchasm] the opinion of an expert whose statement of value of the item is so absolutely beyond impeachment that the maker of the statement need not show up in court to be crossexamined. [/sarcchasm] >>
Even when it is relatively quick and easy to determine FMV?
<< <i>IOW, good luck using FMV in court over plaintiff's showing that a replacement was immediately available and Superior refused. That is not good faith, IMHO >>
The fact that they wouldn't jump at the first one pointed out to them is not, in itself, a lack of good faith. They were given very little time by the buyer to attempt to acquire one at FMV. Still, they were in the process of trying to obtain one at FMV, and thus exhibiting good faith.
There was and is no need to escalate this with all the legal/contract arguments.
Edited to add: Who was the moron that predicted this thread would hit 250 replies?
From now on, the only people allowed to criticize Superior are ones that have never made a mistake.
I do not believe that many of the critics are dealers. They know that mistakes are made.
Collectors: Lighten up. There are no damages here. Just a lost opportunity. If anyone thinks that Superior is not completing the transaction because the price was too low, you may also continue to criticize, but state that fact in your post.
On another thread there is a poll about whether you would deal with Superior. I voted yes and would urge all purchasers to continue to think of Superior as an honest coin dealer and auctioneer.
Please let this thread die.
PNG member, numismatic dealer since 1965. Operates a retail store, also has exhibited at over 1000 shows. I firmly believe in numismatics as the world's greatest hobby, but recognize that this is a luxury and without collectors, we can all spend/melt our collections/inventories.
<< It is not any valid mitigation that Superior is looking for a replacement when they are not willing to pay the market price for the coin >>
"It has NOT been established that they wont pay FMV, only that they wouldn't pay over FMV in one particular instance and within the time schedule demanded by the buyer ."
Is has been established that they refused to buy an acceptable replacement, not because the coin did not conform, but soley because the price was more than they were willing to part with. I do not see that as a valid defense. Do you conselor?
Where someone else's assessment of FMV came into being with the power to force ANY judge to judically recognize it is the question. Anyone's opinion of FMV fails over the price paid at auction for a replacement by the buyer (cover) to be "in the place he would have occupied, absent the breech."
As to which party should bear the loss for the mistake, IMHO, the party at fault should bear the loss... The whole loss. Here, it would appear to be entirely SG's fault and there is no evidence that the buyer knew of the unilateral mistake.
<< .. but the proximate damages (benefit of the bargain) are still recoverable. >>
"That would amount to very little in this case."
I dunno. Until the buyer gets a coin substantially conforming to the terms of the K, we don't know what the damages are. At this point, the coin can be had for $500 or so, but he has a K for about $150.
Looks like $3 hundred-fiddy dollars to me.
<< FMV is meaningless. Estimates are not favored in law. Estimates, like price guides, amount to inadmissable hearsay as [sarchasm] the opinion of an expert whose statement of value of the item is so absolutely beyond impeachment that the maker of the statement need not show up in court to be crossexamined. [/sarcchasm] >>
"Even when it is relatively quick and easy to determine FMV?"
Ever go to court with an estimate for a car repair? For some reason, jurists ALWAYS seem to favor a receipt for the actual repair.
I guess that is because a receipt is a verbal act and an ex-parte estimate of value is hearsay...
I am saying that SG will have to pay the replacement value irrespective of FMV as determined by a price guide or past auctions.
When you want to find out what something is worth, you can check a price guide, get an appraisal, look at past sales, etc., but the absolute BEST indicator of value is what buyer actually pays to replace. (Of course, absent fraud in procuring the cover)
<< IOW, good luck using FMV in court over plaintiff's showing that a replacement was immediately available and Superior refused. That is not good faith, IMHO >>
"The fact that they wouldn't jump at the first one pointed out to them is not, in itself, a lack of good faith. They were given very little time by the buyer to attempt to acquire one at FMV. "
The buyer would appear to have the right to cover. If he does that, then the seller gets no time what-so-ever to find a replacement. How much time does the law give SG to find a replacement?
Reasonable time... Unless buyer covers, which he is planning to do... According to him. If so, good luck SG.
The coin is overdue. Suppose that the FMV goes to $5000 next month. Should SG then pay that amount?
"Still, they were in the process of trying to obtain one at FMV, and thus exhibiting good faith."
FMV is in the eye of the ostensible buyer and seller. Here, maybe the FMV is lagging.
"There was and is no need to escalate this with all the legal/contract arguments."
He made a formal demand. He must do that to allege that he is not in breech and that SG is in breech. Bringing a K action without a demand letter is a quick way to get a FRCP Rule 12(b)(6) motion or a demurrer filed against plaintiff.
Why not stick to facts or law Mark? FMV is an opinion, not fact nor law. Good faith is finding a coin NOW, not next week or next month.
<< <i>Coinguy1 I wished you practiced law here in Michigan I could use an attorney with good ol common sense. >>
Well here's a little "food for thought" on how a Californian Court might decide this case if Beepy decided to sue Superior. The first thing that everyone (both lawyer and layman alike need to know is that there are defenses to enforcing contracts. (Note, I DO practice law in Michigan, not California).
BTW this thread did reach 250 posts and I believe it did accomplish Beepy's intent which was to "get even" because he didn't get his "Pound of Flesh"
What are the defenses to a claimed breach of contract? There are many valid defenses that can be raised to a claim of breach of a contract. One of those defenses can be summarized as follows:
Something happened, through no fault of either side, making the duties under the contract impossible to perform and the “contract” can be rescinded and performance excused with no liability to the party making the mistake.
Here’s a recent California case that ruled exactly that - by substituting the fact that the item which Beepy had previously been sold to another (as we know from another link from a forum member who actually bought the coin that Beeby bid on), that is the item was no longer in stock and available for sale, a California court could easily rule in Superior’s favor that there was NO breach of Contract because Superior had the right to rescind the contract based on a mistake of fact material to the transaction. The basis for that right of recision would be a factual finding that superior “did not neglect any legal duty . . . or breach any duty of good faith and fair dealing in the steps leading to the formation of the contract.” and that Beepy “refused [Superior’s] offer to compensate him for his actual losses in responding to the [auction]. "The law does not penalize for negligence beyond requiring compensation for the loss it has caused."
Note, here is some commentary at the end of the case which mirrors what I tried to express in my earlier posts to this thread:
“Editorial note: In quest of $10,000 savings on the purchase of the Jaguar, how much in attorney's fees do you think the plaintiff spent through the hearing by the California Supreme Court? Too bad that he couldn't claim those fees as a tax deductible charitable contribution to the education of law students.”
I would also suggest that those who think that Beepy has the absolute right to insist on “strict performance” of the “Contract” read Shakespear’s “Merchant of Venice” and take note of what happens when Shylock is found to have a valid and enforceable contract to receive “A Pound of Flesh” based upon a Contract if a debt owed him is not timely paid. Insisting on a “Pound of Flesh” because you have an enforceable right is a dangerous proposition. JMHO
Here’s an abbreviated version of that California decision and for those who think, in the immortal words of George Tenant, that Beeby’s case is a “Slam Dunk” if he chooses to sue Superior. The following case is the actual text of the California Court and is very informative as to how the Courts will treat someone who makes a mistake: Unfortunately, it is long and if you're a bottom line person just go directly to the last couple of paragraphs which would indicate that Beepy would lose and Superior would win.
Donovan v. RRL Corporation 26 Cal. 4th 261 (Cal. 2001)
George, C.J.
Defendant RRL Corporation is an automobile dealer doing business under the name Lexus of Westminster. Because of typographical and proofreading errors made by a local newspaper, defendant's advertisement listed a price for a used automobile that was significantly less than the intended sales price. Plaintiff Brian J. Donovan read the advertisement and, after examining the vehicle, attempted to purchase it by tendering the advertised price. Defendant refused to sell the automobile to plaintiff at that price, and plaintiff brought this action against defendant for breach of contract. The municipal court entered judgment for defendant on the ground that the mistake in the advertisement precluded the existence of a contract. The appellate department of the superior court and the Court of Appeal reversed, relying in part upon Vehicle Code section 11713.1, subdivision (e), which makes it unlawful for an automobile dealer not to sell a motor vehicle at the advertised price while the vehicle remains unsold and before the advertisement expires.
We conclude that a contract satisfying the statute of frauds arose from defendant's advertisement and plaintiff's tender of the advertised price, but that defendant's unilateral mistake of fact provides a basis for rescinding the contract. Although Vehicle Code section 11713.1, subdivision (e), justifies a reasonable expectation on the part of consumers that an automobile dealer intends that such an advertisement constitute an offer, and that the offer can be accepted by paying the advertised price, this statute does not supplant governing common law principles authorizing rescission of a contract on the ground of mistake. As we shall explain, rescission is warranted here because the evidence establishes that defendant's unilateral mistake of fact was made in good faith, defendant did not bear the risk of the mistake, and enforcement of the contract with the erroneous price would be unconscionable. Accordingly, we shall reverse the judgment of the Court of Appeal.
* * *
IV
Having concluded that defendant's advertisement for the sale of the Jaguar automobile constituted an offer that was accepted by plaintiff's tender of the advertised price, and that the resulting contract satisfied the statute of frauds, we next consider whether defendant can avoid enforcement of the contract on the ground of mistake.
A party may rescind a contract if his or her consent was given by mistake. (Civ. Code, § 1689, subd. (b)(1).) A factual mistake by one party to a contract, or unilateral mistake, affords a ground for rescission in some circumstances. Civil Code section 1577 states in relevant part: "Mistake of fact is a mistake, not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting in: 1. An unconscious ignorance or forgetfulness of a fact past or present, material to the contract . . . ."
The Court of Appeal determined that defendant's error did not constitute a mistake of fact within the meaning of Civil Code section 1577. In support of this determination, the court relied upon the following principle: "[A] unilateral misinterpretation of contractual terms, without knowledge by the other party at the time of contract, does not constitute a mistake under either Civil Code section 1577 [mistake of fact] or 1578 [mistake of law]." (Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal. App. 4th 1410, 1422 (Hedging Concepts).)
The foregoing principle has no application to the present case. In Hedging Concepts, the plaintiff believed that he would fulfill his contractual obligations by introducing potential business prospects to the defendant. The contract, however, required the plaintiff to procure a completed business arrangement. The Court of Appeal held that the plaintiff's subjective misinterpretation of the terms of the contract constituted, at most, a mistake of law. Because the defendant was unaware of the plaintiff's misunderstanding at the time of the contract, the court held that rescission was not a proper remedy. Defendant's mistake in the present case, in contrast, did not consist of a subjective misinterpretation of a contract term, but rather resulted from an unconscious ignorance that the Daily Pilot advertisement set forth an incorrect price for the automobile. Defendant's lack of knowledge regarding the typographical error in the advertised price of the vehicle cannot be considered a mistake of law. Defendant's error constituted a mistake of fact, and the Court of Appeal erred in concluding otherwise. As we shall explain, the Court of Appeal also erred to the extent it suggested that a unilateral mistake of fact affords a ground for rescission only where the other party is aware of the mistake.
. . .
. . . [T]he Restatement Second of Contracts authorizes rescission for a unilateral mistake of fact where "the effect of the mistake is such that enforcement of the contract would be unconscionable." n6 The comment following this section recognizes "a growing willingness to allow avoidance where the consequences of the mistake are so grave that enforcement of the contract would be unconscionable." (Id., com. a, p. 394.) . . . Although the most common types of mistakes falling within this category occur in bids on construction contracts, section 153 of the Restatement Second of Contracts is not limited to such cases. (Rest.2d Contracts, § 153, com. b, p. 395.)
Because the rule in section 153, subdivision (a), of the Restatement Second of Contracts, authorizing rescission for unilateral mistake of fact where enforcement would be unconscionable, is consistent with our previous decisions, we adopt the rule as California law. As the author of one treatise recognized more than 40 years ago, the decisions that are inconsistent with the traditional rule "are too numerous and too appealing to the sense of justice to be disregarded." (3 Corbin, Contracts (1960) § 608, p. 675, fn. omitted.) We reject plaintiff's contention and the Court of Appeal's conclusion that, because plaintiff was unaware of defendant's unilateral mistake, the mistake does not provide a ground to avoid enforcement of the contract.
Having concluded that a contract properly may be rescinded on the ground of unilateral mistake of fact as set forth in section 153, subdivision (a), of the Restatement Second of Contracts, we next consider whether the requirements of that provision, construed in light of our previous decisions, are satisfied in the present case. Where the plaintiff has no reason to know of and does not cause the defendant's unilateral mistake of fact, the defendant must establish the following facts to obtain rescission of the contract: (1) the defendant made a mistake regarding a basic assumption upon which the defendant made the contract; (2) the mistake has a material effect upon the agreed exchange of performances that is adverse to the defendant; (3) the defendant does not bear the risk of the mistake; and (4) the effect of the mistake is such that enforcement of the contract would be unconscionable. We shall consider each of these requirements below.
A significant error in the price term of a contract constitutes a mistake regarding a basic assumption upon which the contract is made, and such a mistake ordinarily has a material effect adverse to the mistaken party. (See, e.g., Elsinore, supra, 54 Cal. 2d at p. 389 [7 percent error in contract price]; Lemoge Electric v. County of San Mateo (1956) 46 Cal. 2d 659, 661-662, 297 P.2d 638 [6 percent error]; Kemper, supra, 37 Cal. 2d at p. 702 [28 percent error]; Brunzell Const. Co. v. G. J. Weisbrod, Inc. (1955) 134 Cal. App. 2d 278, 286, 285 P.2d 989 [20 percent error]; Rest.2d Contracts, § 152, com. b, illus. 3, p. 387 [27 percent error].) In establishing a material mistake regarding a basic assumption of the contract, the defendant must show that the resulting imbalance in the agreed exchange is so severe that it would be unfair to require the defendant to perform. (Rest.2d Contracts, § 152, com. c, p. 388.) Ordinarily, a defendant can satisfy this requirement by showing that the exchange not only is less desirable for the defendant, but also is more advantageous to the other party. (Ibid.) Measured against this standard, defendant's mistake in the contract for the sale of the Jaguar automobile constitutes a material mistake regarding a basic assumption upon which it made the contract. Enforcing the contract with the mistaken price of $25,995 would require defendant to sell the vehicle to plaintiff for $12,000 less than the intended advertised price of $37,995 -- an error amounting to 32 percent of the price defendant intended. The exchange of performances would be substantially less desirable for defendant and more desirable for plaintiff. Plaintiff implicitly concedes that defendant's mistake was material.
The parties and amici curiae vigorously dispute, however, whether defendant should bear the risk of its mistake. Section 154 of the Restatement Second of Contracts states: "A party bears the risk of a mistake when (a) the risk is allocated to him by agreement of the parties, or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so." Neither of the first two factors applies here. Thus, we must determine whether it is reasonable under the circumstances to allocate to defendant the risk of the mistake in the advertisement.
[Editorial note: I have omitted here a lengthy portion of the opinion that reaches the following conclusions:
It would be appropriate to allocate the risk of mistake to the defendant if the defendant's mistake resulted from its "neglect of a legal duty," as that phrase has been construed by prior California common law; But, defendant's mistake did not result from a "neglect of a legal duty" even though the mistake resulted in part from the defendant's negligence in not reviewing the ad prior to publication, and even though a failure to sell a car at an advertised price is a violation of the Vehicle Code. I pick up with some of the court's discussion of this last point.] . . . f we were to accept plaintiff's position that section 11713.1(e), by requiring a dealer to sell a vehicle at the advertised price, necessarily precludes relief for mistake, and that the dealer always must be held to the strict terms of a contract arising from an advertisement, we would be holding that the dealer intended to assume the risk of all typographical errors in advertisements, no matter how serious the error and regardless of the circumstances in which the error was made. For example, if an automobile dealer proofread an advertisement but, through carelessness, failed to detect a typographical error listing a $75,000 automobile for sale at $75, the defense of mistake would be unavailable to the dealer.
Giving such an effect to section 11713.1(e), however, "is contrary to common sense and ordinary business understanding and would result in the loss of heretofore well-established equitable rights to relief from certain types of mistake." (Kemper, supra, 37 Cal. 2d at p. 704.) Although this statute obviously reflects an important public policy of protecting consumers from injury caused by unscrupulous dealers who publish deceptive advertisements, and establishes that automobile dealers that violate the statute can suffer the suspension or revocation of their licenses, there is no indication in the statutory scheme that the Legislature intended to impose such an absolute contractual obligation upon automobile dealers who make an honest mistake. Therefore, absent evidence of bad faith, the violation of any obligation imposed by this statute does not constitute the neglect of a legal duty that precludes rescission for unilateral mistake of fact. The municipal court made an express finding of fact that "the mistake on the part of [defendant] was made in good faith[;] it was an honest mistake, not intended to deceive the public . . . ." The Court of Appeal correctly recognized that "we must, of course, accept the trial court's finding that there was a 'good faith' mistake that caused the error in the advertisement." The evidence presented at trial compellingly supports this finding.
Defendant regularly advertises in five local newspapers. Defendant's advertising manager, Crystal Wadsworth, testified that ordinarily she meets with Kristen Berman, a representative of the Daily Pilot, on Tuesdays, Wednesdays, and Thursdays to review proof sheets of the advertisement that will appear in the newspaper the following weekend. When Wadsworth met with Berman on Wednesday, April 23, 1997, defendant's proposed advertisement listed a 1995 Jaguar XJ6 Vanden Plas without specifying a price, as it had the preceding week. On Thursday, April 24, a sales manager instructed Wadsworth to substitute a 1994 Jaguar XJ6 with a price of $25,995. The same day, Wadsworth met with Berman and conveyed to her this new information. Wadsworth did not expect to see another proof sheet reflecting this change, however, because she does not work on Friday, and the Daily Pilot goes to press on Friday and the edition in question came out on Saturday, April 26.
Berman testified that the revised advertisement was prepared by the composing department of the Daily Pilot. Berman proofread the advertisement, as she does all advertisements for which she is responsible, but Berman did not notice that it listed the 1995 Jaguar XJ6 Vanden Plas for sale at $25,995, instead of listing the 1994 Jaguar at that price. Both Berman and Wadsworth first learned of the mistake on Monday, April 28, 1997. Defendant's sales manager first became aware of the mistake after plaintiff attempted to purchase the automobile on Sunday, April 27. Berman confirmed in a letter of retraction that Berman's proofreading error had led to the mistake in the advertisement.
Defendant's erroneous advertisement in the Daily Pilot listed 16 used automobiles for sale. Each of the advertisements prepared for several newspapers in late April 1997, except for the one in the Daily Pilot, correctly identified the 1994 Jaguar XJ6 for sale at a price of $25,995. In May 1997, defendant's advertisements in several newspapers listed the 1995 Jaguar XJ6 Vanden Plas for sale at $37,995, and defendant subsequently sold the automobile for $38,399. Defendant had paid $35,000 for the vehicle.
Evidence at trial established that defendant adheres to the following procedures when an incorrect advertisement is discovered. Defendant immediately contacts the newspaper and requests a letter of retraction. Copies of any erroneous advertisements are provided to the sales staff, the error is explained to them, and the mistake is circled in red and posted on a bulletin board at the dealership. The sales staff informs customers of any advertising errors of which they are aware.
No evidence presented at trial suggested that defendant knew of the mistake before plaintiff attempted to purchase the automobile, that defendant intended to mislead customers, or that it had adopted a practice of deliberate indifference regarding errors in advertisements. Wadsworth regularly reviews proof sheets for the numerous advertisements placed by defendant, and representatives of the newspapers, including the Daily Pilot, also proofread defendant's advertisements to ensure they are accurate. Defendant follows procedures for notifying its sales staff and customers of errors of which it becomes aware. The uncontradicted evidence established that the Daily Pilot made the proofreading error resulting in defendant's mistake. Defendant's fault consisted of failing to review a proof sheet reflecting the change made on Thursday, April 24, 1997, and/or the actual advertisement appearing in the April 26 edition of the Daily Pilot -- choosing instead to rely upon the Daily Pilot's advertising staff to proofread the revised version. Although, as the Court of Appeal found, such an omission might constitute negligence, it does not involve a breach of defendant's duty of good faith and fair dealing that should preclude equitable relief for mistake. In these circumstances, it would not be reasonable for this court to allocate the risk of the mistake to defendant.
As indicated above, the Restatement Second of Contracts provides that during the negotiation stage of a contract "each party is held to a degree of responsibility appropriate to the justifiable expectations of the other." (Rest.2d Contracts, § 157, com. a, p. 417.) No consumer reasonably can expect 100 percent accuracy in each and every price appearing in countless automobile advertisements listing numerous vehicles for sale. The degree of responsibility plaintiff asks this court to impose upon automobile dealers would amount to strict contract liability for any typographical error in the price of an advertised automobile, no matter how serious the error or how blameless the dealer. We are unaware of any other situation in which an individual or business is held to such a standard under the law of contracts. Defendant's good faith, isolated mistake does not constitute the type of extreme case in which its fault constitutes the neglect of a legal duty that bars equitable relief. Therefore, whether or not defendant's failure to sell the automobile to plaintiff could amount to a violation of section 11713.1(e) -- an issue that is not before us -- defendant's conduct in the present case does not preclude rescission.
The final factor defendant must establish before obtaining rescission based upon mistake is that enforcement of the contract for the sale of the 1995 Jaguar XJ6 Vanden Plas at $25,995 would be unconscionable. Although the standards of unconscionability warranting rescission for mistake are similar to those for unconscionability justifying a court's refusal to enforce a contract or term, the general rule governing the latter situation (Civ. Code, § 1670.5) is inapplicable here, because unconscionability resulting from mistake does not appear at the time the contract is made. (Rest.2d Contracts, § 153, com. c, p. 395; 1 Witkin, supra, Contracts, § 370, pp. 337-338.)
An unconscionable contract ordinarily involves both a procedural and a substantive element: (1) oppression or surprise due to unequal bargaining power, and (2) overly harsh or one-sided results. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, 114.) Nevertheless, " 'a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.' [Citations.]" (Ibid.) For example, the Restatement Second of Contracts states that "inadequacy of consideration does not of itself invalidate a bargain, but gross disparity in the values exchanged may be an important factor in a determination that a contract is unconscionable and may be sufficient ground, without more, for denying specific performance." (Rest.2d Contracts, § 208, com. c, p. 108.) In ascertaining whether rescission is warranted for a unilateral mistake of fact, substantive unconscionability often will constitute the determinative factor, because the oppression and surprise ordinarily results from the mistake -- not from inequality in bargaining power. Accordingly, even though defendant is not the weaker party to the contract and its mistake did not result from unequal bargaining power, defendant was surprised by the mistake, and in these circumstances overly harsh or one-sided results are sufficient to establish unconscionability entitling defendant to rescission.
Our previous cases support this approach. In Kemper, supra, 37 Cal. 2d 696, we held that enforcement of the city's option to accept a construction company's bid, which was 28 percent less than the intended bid, would be unconscionable. Our decision reasoned that (1) the plaintiff gave prompt notice upon discovering the facts entitling it to rescind, (2) the city therefore was aware of the clerical error before it exercised the option, (3) the city already had awarded the contract to the next lowest bidder, (4) the company had received nothing of value it was required to restore to the city, and (5) "the city will not be heard to complain that it cannot be placed in statu quo because it will not have the benefit of an inequitable bargain." (Id. at p. 703.) Therefore, "under all the circumstances, it appears that it would be unjust and unfair to permit the city to take advantage of the company's mistake." (Id. at pp. 702-703.) Nothing in our decision in Kemper suggested that the mistake resulted from surprise related to inequality in the bargaining process. . . .
In the present case, enforcing the contract with the mistaken price of $25,995 would require defendant to sell the vehicle to plaintiff for $12,000 less than the intended advertised price of $37,995 -- an error amounting to 32 percent of the price defendant intended. Defendant subsequently sold the automobile for slightly more than the intended advertised price, suggesting that that price reflected its actual market value. Defendant had paid $35,000 for the 1995 Jaguar and incurred costs in advertising, preparing, displaying, and attempting to sell the vehicle. Therefore, defendant would lose more than $9,000 of its original investment in the automobile. Plaintiff, on the other hand, would obtain a $12,000 windfall if the contract were enforced, simply because he traveled to the dealership and stated that he was prepared to pay the advertised price.
These circumstances are comparable to those in our prior decisions authorizing rescission on the ground that enforcing a contract with a mistaken price term would be unconscionable. Defendant's 32 percent error in the price exceeds the amount of the errors in cases such as Kemper and Elsinore. For example, in Elsinore, supra, 54 Cal. 2d at page 389, we authorized rescission for a $6,500 error in a bid that was intended to be $96,494 -- a mistake of approximately 7 percent in the intended contract price. As in the foregoing cases, plaintiff was informed of the mistake as soon as defendant discovered it. Defendant's sales manager, when he first learned of the mistake in the advertisement, explained the error to plaintiff, apologized, and offered to pay for plaintiff's fuel, time, and effort expended in traveling to the dealership to examine the automobile. Plaintiff refused this offer to be restored to the status quo and did not seek in this action to recover damages for the incidental costs he incurred because of the erroneous advertisement. Like the public agencies in Kemper and Elsinore, plaintiff should not be permitted to take advantage of defendant's honest mistake that resulted in an unfair, one-sided contract. (Cf. Drennan v. Star Paving Co. (1958) 51 Cal. 2d 409, 415-416, 333 P.2d 757 [no rescission of mistaken bid where other party detrimentally altered his position in reasonable reliance upon the bid and could not be restored to the status quo].)
The circumstance that section 11713.1(e) makes it unlawful for a dealer not to sell a vehicle at the advertised price does not preclude a finding that enforcing an automobile sales contract containing a mistaken price would be unconscionable. Just as the statute does not eliminate the defense of mistake, as established above, the statute also does not dictate that enforcing a contract with an erroneous advertised price necessarily must be considered equitable and fair for purposes of deciding whether the dealer is entitled to rescission on the ground of mistake. In Kemper, supra, 37 Cal. 2d 696, we concluded that it would be unconscionable to bar rescission of a bid pursuant to a city charter provision prohibiting the withdrawal of bids, where "it appeared that it would be unjust and unfair to permit the city to take advantage of the company's mistake." ( Id. at p. 703.) Thus, notwithstanding the public interest underlying the charter provision, our decision in Kemper precluded the city from relying upon that provision to impose absolute contractual liability upon the contractor. ( Id. at p. 704.)
Accordingly, section 11713.1(e) does not undermine our determination that, under the circumstances, enforcement of the contract for the sale of the 1995 Jaguar XJ6 Vanden Plas at the $25,995 mistaken price would be unconscionable. The other requirements for rescission on the ground of unilateral mistake have been established. Defendant entered into the contract because of its mistake regarding a basic assumption, the price. The $12,000 loss that would result from enforcement of the contract has a material effect upon the agreed exchange of performances that is adverse to defendant. Furthermore, defendant did not neglect any legal duty within the meaning of Civil Code section 1577 or breach any duty of good faith and fair dealing in the steps leading to the formation of the contract. Plaintiff refused defendant's offer to compensate him for his actual losses in responding to the advertisement. "The law does not penalize for negligence beyond requiring compensation for the loss it has caused." (3 Corbin, Contracts, supra, § 609, p. 684.) In this situation, it would not be reasonable for this court to allocate the risk of the mistake to defendant.
Having determined that defendant satisfied the requirements for rescission of the contract on the ground of unilateral mistake of fact, we conclude that the municipal court correctly entered judgment in defendant's favor. [In the hypothetical Beepy v Superior case, the winner Defendant would be Superior]
[Editorial note: In quest of $10,000 savings on the purchase of the Jaguar, how much in attorney's fees do you think the plaintiff spent through the hearing by the California Supreme Court? Too bad that he couldn't claim those fees as a tax deductible charitable contribution to the education of law students.]
Collecting eye-appealing Proof and MS Indian Head Cents, 1858 Flying Eagle and IHC patterns and beautiful toned coins.
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” Mark Twain Newmismatist
<< <i>Anyone's opinion of FMV fails over the price paid at auction for a replacement by the buyer (cover) to be "in the place he would have occupied, absent the breech >>
A dealer who is very familiar with what these coins have realized, posted the results. The range of prices was lower than the one which the buyer tried to get Superior to pounce on. In case you missed it, here is his quote:
<< <i>Baseball: I guess (9) separate auction records alone this year in 2005 with a hammer price of a low of $140 and a high of $240 on each and every sale is not enough information for me to form an opinion that the coin has a value of around $250 (not to mention a 10th auction sale right before those (9) where I was the high bider at $220 hammer, but had to stop buying that particular issue because there was no money to be made IMHO paying $220 hammer)? >>
<< <i>Is has been established that they refused to buy an acceptable replacement, not because the coin did not conform, but soley because the price was more than they were willing to part with. I do not see that as a valid defense. Do you conselor? >>
Again, I see that they were making reasonable efforts to obtain a replacement and were acting in good faith, despite the fact that they did not see fit to over-pay. If a reasonable amount of time had passed and they were unable to obtain one at FMV, then I would be all for their having to over-pay - the buyer was apparently not willing to allow a reasonable time period, however.
<< <i>As to which party should bear the loss for the mistake, IMHO, the party at fault should bear the loss... The whole loss. Here, it would appear to be entirely SG's fault and there is no evidence that the buyer knew of the unilateral mistake. >>
I haven't seen anyone argue otherwise, though, due to the length of the thread I might have missed it if they had.
<< <i>Ever go to court with an estimate for a car repair? For some reason, jurists ALWAYS seem to favor a receipt for the actual repair >>
I think that is a poor analogy - that involves work, time, hourly rates, etc. and differs greatly from actual prices realized for the same coin of the same grade.
<< <i>He made a formal demand. He must do that to allege that he is not in breech and that SG is in breech. Bringing a K action without a demand letter is a quick way to get a FRCP Rule 12(b)(6) motion or a demurrer filed against plaintiff >>
It was obvious HE was not in breach. There was no need whatsoever to file a formal demand. Again, that is making way too much of the situation.
<< <i>Good faith is finding a coin NOW, not next week or next month. >>
"NOW" is not a realistic, necessary or reasonable time period. There is no fear of irreparable harm to the possible replacements out there, or to the buyer.
I second all of that stuff that Newmismatist (Ron) posted.
As for the legal tactics, sometimes even lawyers use common sense. My wife was recently hired as a managing general counsel for a $10 billion public company, in charge of dispensing and overseeing many millions of dollars of legal work in her area to private law firms. The first thing she has done is systematically fired the lawyers who like to "fight the fight" and are not looking to compromise. She feels that not only do they run up unnecessary bills for the company, but they also establish an adverserial environment for future negotiations and actions. This thread reminded me of this recent discussion that I had with her.
It's obvious the coin was sold to someone else for higher bid and their reply is just a lame excuse to soften the blow. They darn well had that coin but didn't want to let it go at that bid amount.
Accordingly, section 11713.1(e) does not undermine our determination that, under the circumstances, enforcement of the contract for the sale of the 1995 Jaguar XJ6 Vanden Plas at the $25,995 mistaken price would be unconscionable.
Do you seriously think that any court is going to say that this is unenforceable due to unconscionability?
How much money will it cost SG to defend against a Pro Se attorney?
I guess $75,000.
Likelihood of winning on unconscionablity? Zilch.
I have yet ot hear a definate settlement offer has been made.
"We will try to get a replacement" leaves smoethings to be desired.
Like: When will buyer receive the coin?
And: What happens if you cannot get the coin by the date above?
So, without an bone fide offer to refuse, buyer need not worry about not accepting a settlement offer for his actual damages.
I gotta say, fault and breech of contract do not seem to be in doubt. Damages are the only issue, IMHO.
It's obvious the coin was sold to someone else for higher bid and their reply is just a lame excuse to soften the blow. They darn well had that coin but didn't want to let it go at that bid amount.
Actually, it has already been proven that the coin has been sold for substantially less to a forum member.
So my girlfriend chimes in on this and sais...How come companies/businesses these days expect us the consumer to find their faults. Beepy initated contact. Had he not, he'd still be waiting. When companys put the burden on a consumer to right the wrongs they have created, is not only annoying, but it just show the apathy and incompetence a partcular company exhibits. The mission statements, custromer service statements mean nothing. When you don't honor your word, what does that say about you or the busainess.
I still stand by that if I were to bid on a coin in error using esnipe, they would not except a I'm sorry -and that they would try to squeeze me for my mistake.
They made trheir bed, now let them lie in it.
Of course it is only 145$ and my laziness to pursue would exceed my ambitrion to to do the workd right on this particular matter.
As this thread has a life of its own I could not resit to keep it going....
<< <i>It's obvious the coin was sold to someone else for higher bid and their reply is just a lame excuse to soften the blow. They darn well had that coin but didn't want to let it go at that bid amount. >>
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Comments
Amazing how many think sellers owe nothing - i.e. have zero responsibility for their business practices.
<< <i>PS. This is not about right or wrong to me, this was a mistake. No one was "harmed" and as a laywer I would like to think that you know that.
Of course I may be writing to the wrong crowd because heaven knows that very few members on this board have ever made an "honest" mistake before.
I am one of the old-timers and I can tell you the way people think today that they are "entitiled" to something because someone else made a mistake is disgusting.
Joe. >>
Joe it must be a generational thing, you and I are on the same page. Guy perhaps rips a coin on ebay that seller mistakenly listed for sale. He refuses to be satisfied with a refund, calls them out with a negative rating on the worlds largest auction site, gets retaliated by the seller who attempt to replace the coin but not at an unreasonable price and then goes public here. I see a trend, not surprised at all the guy is a lawyer. I would not sell to him nor hire him. In my opinion there are times when you accept someone made an honest mistake and you (as they say in Joisey) fohgettaboutit.
Of course if you have never made a mistake in your life I guess you can continue to push this issue, but good luck.
This is the main reason if I was Superior or anyone else, I would NEVER do business with this guy ever again. Typical attorney, fluffing his feathers because he has a law degree. And over a measly $153 coin. Sheesh.
I didnt even waste time reading anymore threads then that. Beepy can spend his days writing his sue-happy briefs over what I feel was an honest not-too-costly mistake. Get over it, and spend your time enjoying your life. If you ARE a typical lawyer, you've spend over $1000 of your time complaining about a little Jefferson that you didnt get.
<< <i>Amazing how many think sellers owe nothing - i.e. have zero responsibility for their business practices. >>
No, what's amazing is how many people are misinterpreting "they made a mistake" as "they shouldn't have to do anything to make it right." Or misinterpreting criticism of the OP's tactics as an approval of SG's handling of the situation.
Superior had a contract. They chose to place a value (won't spend more than $150 to make this right) on how much they would spend to make a customer happy and to be ethical. (This is almost too incredible to believe, that they would actually admit that they wanted to make the deal right, but only if it met their price limit.) There is no reasonable discussion of right and wrong here; Superior was flat out wrong. Their response was legally and ethically wrong. It also represented such a poor business decision as to be almost incomprehensible.
However, what I have learned is that situational ethics has a large suscriber base, and I must presume that it is somewhat generational. (There can't be that many serious dealers here, can there?) Based on what the majority of responses have been, I, as a buyer, should be perfectly free to decide that I have overspent for a purchase and be able to back out with no penalty or even annoyance on the part of the seller. For example: In good faith, I bid on a coin and win it for $2000, even though afterwards I have severe buyer's regret for getting very carried away in the heat of the auction. Just then my wife walks in and says "You know those diamond earrings that I have been wanting for years to get? I just gave in and bought them. They were $2000, but I know we have the bucks, so I just went ahead and did it." So I can then call the seller and say "I'm sorry, but by bid was in error. I have just checked my cash inventory, and I made a mistake and do not have the necessary money in inventory. Please keep the coin. This should make us even."
If this situation came to this board from the seller, I would presume that the seller would be told to not complain, that the buyer had made the deal right, so just calm down and get on with their life. Situation ethics does require consistency, doesn't it? This is the same situation, isn't it? I do wish I could have employed this reasoning on a couple of bids I made where I screwed up. But I can't. And I am not, nor have I ever been a lawyer.
Being a large operation is not an excuse for having sloppy business practices---nor is failing to get a rip a reason to go ballistic and then disappear from the ensuing fray. I think both parties are at fault. I also predict that this thread will hit 300. Perhaps we should start a pool.
<< <i>However, what I have learned is that situational ethics has a large suscriber base, and I must presume that it is somewhat generational. >>
alrighty then, on to SITUATIONAL ETHICS everyone...
this oughta be good for another hundred.
<< <i>Based on what the majority of responses have been, I, as a buyer, should be perfectly free to decide that I have overspent for a purchase and be able to back out with no penalty or even annoyance on the part of the seller. For example: In good faith, I bid on a coin and win it for $2000, even though afterwards I have severe buyer's regret for getting very carried away in the heat of the auction >>
Xokie, this must be some thread to get you to double your post count!
I don't think that is an on point/fair analogy. It would have been such had you said that you bid on the wrong coin, the wrong amount through key-punch error, etc. You are speaking of a change of heart, not an honest, albeit sloppy mistake.
<< <i>Situation ethics does require consistency, doesn't it? >>
It certainly should. On that topic, did you see the post to this thread which noted Superior had allowed a bidder/buyer (who had made an honest mistake) out of his "contractual obligation"?
<< <i>Frankly, my biggest disappointment with Superior in this whole fiasco is their clear use of retaliatory negative feedback. That was bush league
I think the retalitory neg was justified.
First off, I am not big fan of Superior either, I have never done business with them, and likely will not in the foreseeable future.
However, it appears that Superior was making a good faith effort to find a replacement coin. "Beepy" insisted that Superior purchase a replacement coin at double FMV, and $350 above the winning bid. When Superior disclosed that they were limiting the cost to $300, "Beepy" escalated this into the proverbial "mountain out of a molehill". The request was unreasonable, the negative feedback from "Beepy" was unwarranted, and the relaliltory neg was justifiable given that Superior was making a good faith effort to replace the coin, but refused to cave in to Beepy's extortion.
Finally, I am disturbed that many posters think Superior should have paid $500 or more to make this go away, because of the "negative potential impact on Superior's reputation". So, just because Superior is a larger organization, they should pay more to make up for a mistake than, say, a "vest pocket" dealer?
Superior has not yet failed to deliver a coin. They have only failed to deliver a coin immediately. As there's no reason to think that time is of the essence in this transaction, I think most of us would agree that Superior should be allowed to search for a replacement at a fair price.
I can see why Beep would want them to replace the coin with the first one he could find - it's easy to spend someone else's money - but it's not reasonable to demand it. The bottom line is that if it's worth Superior's time to hunt down a better deal, I would hope that Beep would let them try.
Superior wrote:
Just a quick note to tell you that I continue to look for a replacement coin. I'm sorry, but this process takes time. Your order is being treated with urgency, concern and respect. I want to assure you that every avenue is being explored and I'll keep you updated.
Beep wrote:
A replacement coin remains available for purchase from the eBay seller known as "acar*." This seller informed me yesterday that the reserve price for the coin is $500. Subtracting my purchase price of $153.29 from that amount means that Superior Galleries can fulfill its contract with me for $346.71, not including S/H/I.
Superior wrote:
That coin is not an option. We will continue or efforts to fulfill this order.
Doggedly collecting coins of the Central American Republic.
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Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I do try to construct my analagies properly:
Buyer's situation part 1: bid more than he really wanted to.
Seller's situation part 1: sold for a lot less than market value.
Buyer's situation part 2: thought he had the money in inventory, was wrong due to inventory management issues.
Seller's situation, part 2: though he had the coin in inventory; was wrong due to inventory management issues.
The fact that the coin sold for less than wholesale was a big part of the discussion and motivated the dollar value that the Superior manager was willing to spend in order to remedy the legal and ethical difficulties presented by what (best case assumption) an inventory management issue. It is not a side issue in the total picture of the exchanges, but consituted a major part of the game theory being invoked by the Superior side.
FWIW.
1. The coin was sold at auction on E-Bay by Superior Galleries.
2. The coin was won by “Beepy” at a winning bid. Which E-Bay calls a contract between both parties.
3. “Beepy” sent payment for the coin.
4. SG did not deliver auction coin.
2. The coin was won by “Beepy” at a winning bid. Which E-Bay calls a contract between both parties.
3. “Beepy” sent payment for the coin.
4. SG did not deliver auction coin...
5. ...yet.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>1. The coin was sold at auction on E-Bay by Superior Galleries.
2. The coin was won by “Beepy” at a winning bid. Which E-Bay calls a contract between both parties.
3. “Beepy” sent payment for the coin.
4. SG did not deliver auction coin...
5. ...yet. >>
What about the 3 other people in this thread alone that had the exact same thing happen......you think Superior is getting right on finding them a new coin ?
I don't know. Do you?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I personally had virtually the same thing happen to me three months ago, when I ordered a coin from a major online website for less than a third of retail. I knew it was a steal and probably a mistake on their part, and when the company called me the next day to tell me the coin's price was an error and the coin had sold already for $500 instead of the $160 that I had ordered it for, I felt slightly embarrassed for trying to get something for nothing, not disappointed or angry. I could have blown my stack and threatened them with lawsuits, but I didn't because I realized that humans make mistakes sometimes and this was an obvious one, just like in this attorney's case. He may very well win his nominal award if he keeps screaming and threatening, but he won't win much else thereafter in the small world of true coin collectors.
<< <i>What about the 3 other people in this thread alone that had the exact same thing happen......you think Superior is getting right on finding them a new coin ?
I don't know. Do you? >>
Not for sure, but looking back on the thread, at least one of the instances of this "mistake" happening was several months ago and the buyer said he dropped it, so I don't think they are burning the midnight oil looking for one. It seems like they play a game when a coin gets sold for less than they think it's worth, and if the buyer complains enough they try to do something about it. I'm sorry but I think it's maybe time to stop the e-bay auctions until you can get your "software problem" ironed out. But since it has been going on for months, it doesn't seem like much of a priority, does it ? It's funny that you don't hear any stories about paying way too much for a coin, and all of a sudden they can't find it, only when the bid is under market value. I wish I could make "mistakes" like that !!
How do you kill a lawyer when he's drinking?...
....Slam the toilet seat on his head...
That is not the proper measure of damages for breech of contract. The replacement value at the time of the breech minus what Plaintiff paid plus any reasonably incurred incidental and consequential damages if plaintiff "covers" IIRC. Here, the defendants have precluded consequentials and incidentals by contractual "agreement" but the proximate damages (benefit of the bargain) are still recoverable.
It is no defense to the breech of K action that "Superior lets others slide when they make a mistake."
Nor is it any defense that plaintiff signed "attorney at law" on his email. That amounts to: "I know I owe him the money your Honor, but I didn't like the way he asked for it."
Ever have anyone make you go through heck to even ask to be paid only to have the person say: "I would have paid, but you had to be a pest and ask me to pay you, so I am not paying."?
Normally, the person who is trying to duck paying is the guy making that argument. Here, others are making that specious argument for the defendant...
It is not any valid mitigation that Superior is looking for a replacement when they are not willing to pay the market price for the coin. That is not "good faith" because they are not willing to bid what it takes to deliver the coin; they have a spending limit.
FMV is meaningless. Estimates are not favored in law. Estimates, like price guides, amount to inadmissable hearsay as [sarchasm] the opinion of an expert whose statement of value of the item is so absolutely beyond impeachment that the maker of the statement need not show up in court to be crossexamined. [/sarcchasm]
IOW, good luck using FMV in court over plaintiff's showing that a replacement was immediately available and Superior refused. That is not good faith, IMHO.
Superior may or may not win the poll, but in court they will lose.
<< <i>It seems like they play a game when a coin gets sold for less than they think it's worth >>
That assertion has already been debunked. Read the the thread that Coinguy1 linked. They delivered this same coin for $52.50.
Russ, NCNE
Seems like there are a number of ways that Superior could have cured the situation but didn't. Just send him a check for the difference of the $300 they wanted to spend and the refund. Hell, I'd take that. Let's hope things get worked out amicably.
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
<< <i>It is not any valid mitigation that Superior is looking for a replacement when they are not willing to pay the market price for the coin >>
It has NOT been established that they wont pay FMV, only that they wouldn't pay over FMV in one particular instance and within the time schedule demanded by the buyer .
<< <i>.. but the proximate damages (benefit of the bargain) are still recoverable. >>
That would amount to very little in this case.
<< <i>FMV is meaningless. Estimates are not favored in law. Estimates, like price guides, amount to inadmissable hearsay as [sarchasm] the opinion of an expert whose statement of value of the item is so absolutely beyond impeachment that the maker of the statement need not show up in court to be crossexamined. [/sarcchasm] >>
Even when it is relatively quick and easy to determine FMV?
<< <i>IOW, good luck using FMV in court over plaintiff's showing that a replacement was immediately available and Superior refused. That is not good faith, IMHO >>
The fact that they wouldn't jump at the first one pointed out to them is not, in itself, a lack of good faith. They were given very little time by the buyer to attempt to acquire one at FMV. Still, they were in the process of trying to obtain one at FMV, and thus exhibiting good faith.
There was and is no need to escalate this with all the legal/contract arguments.
Edited to add: Who was the moron that predicted this thread would hit 250 replies?
<< <i>This thread has got to be a record for a first time post. >>
Might be. How many posts did MajorBigDoofus's first thread hit?
Russ, NCNE
edited to add: That one went on for days.
I do not believe that many of the critics are dealers. They know that mistakes are made.
Collectors: Lighten up. There are no damages here. Just a lost opportunity. If anyone thinks that Superior is not completing the transaction because the price was too low, you may also continue to criticize, but state that fact in your post.
On another thread there is a poll about whether you would deal with Superior. I voted yes and would urge all purchasers to continue to think of Superior as an honest coin dealer and auctioneer.
Please let this thread die.
I firmly believe in numismatics as the world's greatest hobby, but recognize that this is a luxury and without collectors, we can all spend/melt our collections/inventories.
eBaystore
Might be. How many posts did MajorBigDoofus's first thread hit?
I thought his first thread brought almost 1,000 posts...... or was that his second thread??
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
"It has NOT been established that they wont pay FMV, only that they wouldn't pay over FMV in one particular instance and within the time schedule demanded by the buyer ."
Is has been established that they refused to buy an acceptable replacement, not because the coin did not conform, but soley because the price was more than they were willing to part with. I do not see that as a valid defense. Do you conselor?
Where someone else's assessment of FMV came into being with the power to force ANY judge to judically recognize it is the question. Anyone's opinion of FMV fails over the price paid at auction for a replacement by the buyer (cover) to be "in the place he would have occupied, absent the breech."
As to which party should bear the loss for the mistake, IMHO, the party at fault should bear the loss... The whole loss. Here, it would appear to be entirely SG's fault and there is no evidence that the buyer knew of the unilateral mistake.
<< .. but the proximate damages (benefit of the bargain) are still recoverable. >>
"That would amount to very little in this case."
I dunno. Until the buyer gets a coin substantially conforming to the terms of the K, we don't know what the damages are. At this point, the coin can be had for $500 or so, but he has a K for about $150.
Looks like $3 hundred-fiddy dollars to me.
<< FMV is meaningless. Estimates are not favored in law. Estimates, like price guides, amount to inadmissable hearsay as [sarchasm] the opinion of an expert whose statement of value of the item is so absolutely beyond impeachment that the maker of the statement need not show up in court to be crossexamined. [/sarcchasm] >>
"Even when it is relatively quick and easy to determine FMV?"
Ever go to court with an estimate for a car repair? For some reason, jurists ALWAYS seem to favor a receipt for the actual repair.
I guess that is because a receipt is a verbal act and an ex-parte estimate of value is hearsay...
I am saying that SG will have to pay the replacement value irrespective of FMV as determined by a price guide or past auctions.
When you want to find out what something is worth, you can check a price guide, get an appraisal, look at past sales, etc., but the absolute BEST indicator of value is what buyer actually pays to replace. (Of course, absent fraud in procuring the cover)
<< IOW, good luck using FMV in court over plaintiff's showing that a replacement was immediately available and Superior refused. That is not good faith, IMHO >>
"The fact that they wouldn't jump at the first one pointed out to them is not, in itself, a lack of good faith. They were given very little time by the buyer to attempt to acquire one at FMV. "
The buyer would appear to have the right to cover. If he does that, then the seller gets no time what-so-ever to find a replacement. How much time does the law give SG to find a replacement?
Reasonable time... Unless buyer covers, which he is planning to do... According to him. If so, good luck SG.
The coin is overdue. Suppose that the FMV goes to $5000 next month. Should SG then pay that amount?
"Still, they were in the process of trying to obtain one at FMV, and thus exhibiting good faith."
FMV is in the eye of the ostensible buyer and seller. Here, maybe the FMV is lagging.
"There was and is no need to escalate this with all the legal/contract arguments."
He made a formal demand. He must do that to allege that he is not in breech and that SG is in breech. Bringing a K action without a demand letter is a quick way to get a FRCP Rule 12(b)(6) motion or a demurrer filed against plaintiff.
Why not stick to facts or law Mark? FMV is an opinion, not fact nor law. Good faith is finding a coin NOW, not next week or next month.
<< <i>250 is mine! >>
I predict 300 by 6:00 PM PDT
Actually, it was FatMan, and to his credit, he did nothing to stoke the fire.
<< <i>Coinguy1 I wished you practiced law here in Michigan I could use an attorney with good ol common sense. >>
Well here's a little "food for thought" on how a Californian Court might decide this case if Beepy decided to sue Superior. The first thing that everyone (both lawyer and layman alike need to know is that there are defenses to enforcing contracts. (Note, I DO practice law in Michigan, not California).
BTW this thread did reach 250 posts and I believe it did accomplish Beepy's intent which was to "get even" because he didn't get his "Pound of Flesh"
What are the defenses to a claimed breach of contract? There are many valid defenses that can be raised to a claim of breach of a contract.
One of those defenses can be summarized as follows:
Something happened, through no fault of either side, making the duties under the contract impossible to perform and the “contract” can be rescinded and performance excused with no liability to the party making the mistake.
Here’s a recent California case that ruled exactly that - by substituting the fact that the item which Beepy had previously been sold to another (as we know from another link from a forum member who actually bought the coin that Beeby bid on), that is the item was no longer in stock and available for sale, a California court could easily rule in Superior’s favor that there was NO breach of Contract because Superior had the right to rescind the contract based on a mistake of fact material to the transaction. The basis for that right of recision would be a factual finding that superior “did not neglect any legal duty . . . or breach any duty of good faith and fair dealing in the steps leading to the formation of the contract.” and that Beepy “refused [Superior’s] offer to compensate him for his actual losses in responding to the [auction]. "The law does not penalize for negligence beyond requiring compensation for the loss it has caused."
Note, here is some commentary at the end of the case which mirrors what I tried to express in my earlier posts to this thread:
“Editorial note: In quest of $10,000 savings on the purchase of the Jaguar, how much in attorney's fees do you think the plaintiff spent through the hearing by the California Supreme Court? Too bad that he couldn't claim those fees as a tax deductible charitable contribution to the education of law students.”
I would also suggest that those who think that Beepy has the absolute right to insist on “strict performance” of the “Contract” read Shakespear’s “Merchant of Venice” and take note of what happens when Shylock is found to have a valid and enforceable contract to receive “A Pound of Flesh” based upon a Contract if a debt owed him is not timely paid. Insisting on a “Pound of Flesh” because you have an enforceable right is a dangerous proposition. JMHO
Here’s an abbreviated version of that California decision and for those who think, in the immortal words of George Tenant, that Beeby’s case is a “Slam Dunk” if he chooses to sue Superior. The following case is the actual text of the California Court and is very informative as to how the Courts will treat someone who makes a mistake: Unfortunately, it is long and if you're a bottom line person just go directly to the last couple of paragraphs which would indicate that Beepy would lose and Superior would win.
Donovan v. RRL Corporation
26 Cal. 4th 261 (Cal. 2001)
George, C.J.
Defendant RRL Corporation is an automobile dealer doing business under the name Lexus of Westminster. Because of typographical and proofreading errors made by a local newspaper, defendant's advertisement listed a price for a used automobile that was significantly less than the intended sales price. Plaintiff Brian J. Donovan read the advertisement and, after examining the vehicle, attempted to purchase it by tendering the advertised price. Defendant refused to sell the automobile to plaintiff at that price, and plaintiff brought this action against defendant for breach of contract. The municipal court entered judgment for defendant on the ground that the mistake in the advertisement precluded the existence of a contract. The appellate department of the superior court and the Court of Appeal reversed, relying in part upon Vehicle Code section 11713.1, subdivision (e), which makes it unlawful for an automobile dealer not to sell a motor vehicle at the advertised price while the vehicle remains unsold and before the advertisement expires.
We conclude that a contract satisfying the statute of frauds arose from defendant's advertisement and plaintiff's tender of the advertised price, but that defendant's unilateral mistake of fact provides a basis for rescinding the contract. Although Vehicle Code section 11713.1, subdivision (e), justifies a reasonable expectation on the part of consumers that an automobile dealer intends that such an advertisement constitute an offer, and that the offer can be accepted by paying the advertised price, this statute does not supplant governing common law principles authorizing rescission of a contract on the ground of mistake. As we shall explain, rescission is warranted here because the evidence establishes that defendant's unilateral mistake of fact was made in good faith, defendant did not bear the risk of the mistake, and enforcement of the contract with the erroneous price would be unconscionable. Accordingly, we shall reverse the judgment of the Court of Appeal.
* * *
IV
Having concluded that defendant's advertisement for the sale of the Jaguar automobile constituted an offer that was accepted by plaintiff's tender of the advertised price, and that the resulting contract satisfied the statute of frauds, we next consider whether defendant can avoid enforcement of the contract on the ground of mistake.
A party may rescind a contract if his or her consent was given by mistake. (Civ. Code, § 1689, subd. (b)(1).) A factual mistake by one party to a contract, or unilateral mistake, affords a ground for rescission in some circumstances. Civil Code section 1577 states in relevant part: "Mistake of fact is a mistake, not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting in: 1. An unconscious ignorance or forgetfulness of a fact past or present, material to the contract . . . ."
The Court of Appeal determined that defendant's error did not constitute a mistake of fact within the meaning of Civil Code section 1577. In support of this determination, the court relied upon the following principle: "[A] unilateral misinterpretation of contractual terms, without knowledge by the other party at the time of contract, does not constitute a mistake under either Civil Code section 1577 [mistake of fact] or 1578 [mistake of law]." (Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal. App. 4th 1410, 1422 (Hedging Concepts).)
The foregoing principle has no application to the present case. In Hedging Concepts, the plaintiff believed that he would fulfill his contractual obligations by introducing potential business prospects to the defendant. The contract, however, required the plaintiff to procure a completed business arrangement. The Court of Appeal held that the plaintiff's subjective misinterpretation of the terms of the contract constituted, at most, a mistake of law. Because the defendant was unaware of the plaintiff's misunderstanding at the time of the contract, the court held that rescission was not a proper remedy. Defendant's mistake in the present case, in contrast, did not consist of a subjective misinterpretation of a contract term, but rather resulted from an unconscious ignorance that the Daily Pilot advertisement set forth an incorrect price for the automobile. Defendant's lack of knowledge regarding the typographical error in the advertised price of the vehicle cannot be considered a mistake of law. Defendant's error constituted a mistake of fact, and the Court of Appeal erred in concluding otherwise. As we shall explain, the Court of Appeal also erred to the extent it suggested that a unilateral mistake of fact affords a ground for rescission only where the other party is aware of the mistake.
. . .
. . . [T]he Restatement Second of Contracts authorizes rescission for a unilateral mistake of fact where "the effect of the mistake is such that enforcement of the contract would be unconscionable." n6 The comment following this section recognizes "a growing willingness to allow avoidance where the consequences of the mistake are so grave that enforcement of the contract would be unconscionable." (Id., com. a, p. 394.) . . . Although the most common types of mistakes falling within this category occur in bids on construction contracts, section 153 of the Restatement Second of Contracts is not limited to such cases. (Rest.2d Contracts, § 153, com. b, p. 395.)
Because the rule in section 153, subdivision (a), of the Restatement Second of Contracts, authorizing rescission for unilateral mistake of fact where enforcement would be unconscionable, is consistent with our previous decisions, we adopt the rule as California law. As the author of one treatise recognized more than 40 years ago, the decisions that are inconsistent with the traditional rule "are too numerous and too appealing to the sense of justice to be disregarded." (3 Corbin, Contracts (1960) § 608, p. 675, fn. omitted.) We reject plaintiff's contention and the Court of Appeal's conclusion that, because plaintiff was unaware of defendant's unilateral mistake, the mistake does not provide a ground to avoid enforcement of the contract.
Having concluded that a contract properly may be rescinded on the ground of unilateral mistake of fact as set forth in section 153, subdivision (a), of the Restatement Second of Contracts, we next consider whether the requirements of that provision, construed in light of our previous decisions, are satisfied in the present case. Where the plaintiff has no reason to know of and does not cause the defendant's unilateral mistake of fact, the defendant must establish the following facts to obtain rescission of the contract: (1) the defendant made a mistake regarding a basic assumption upon which the defendant made the contract; (2) the mistake has a material effect upon the agreed exchange of performances that is adverse to the defendant; (3) the defendant does not bear the risk of the mistake; and (4) the effect of the mistake is such that enforcement of the contract would be unconscionable. We shall consider each of these requirements below.
A significant error in the price term of a contract constitutes a mistake regarding a basic assumption upon which the contract is made, and such a mistake ordinarily has a material effect adverse to the mistaken party. (See, e.g., Elsinore, supra, 54 Cal. 2d at p. 389 [7 percent error in contract price]; Lemoge Electric v. County of San Mateo (1956) 46 Cal. 2d 659, 661-662, 297 P.2d 638 [6 percent error]; Kemper, supra, 37 Cal. 2d at p. 702 [28 percent error]; Brunzell Const. Co. v. G. J. Weisbrod, Inc. (1955) 134 Cal. App. 2d 278, 286, 285 P.2d 989 [20 percent error]; Rest.2d Contracts, § 152, com. b, illus. 3, p. 387 [27 percent error].) In establishing a material mistake regarding a basic assumption of the contract, the defendant must show that the resulting imbalance in the agreed exchange is so severe that it would be unfair to require the defendant to perform. (Rest.2d Contracts, § 152, com. c, p. 388.) Ordinarily, a defendant can satisfy this requirement by showing that the exchange not only is less desirable for the defendant, but also is more advantageous to the other party. (Ibid.)
Measured against this standard, defendant's mistake in the contract for the sale of the Jaguar automobile constitutes a material mistake regarding a basic assumption upon which it made the contract. Enforcing the contract with the mistaken price of $25,995 would require defendant to sell the vehicle to plaintiff for $12,000 less than the intended advertised price of $37,995 -- an error amounting to 32 percent of the price defendant intended. The exchange of performances would be substantially less desirable for defendant and more desirable for plaintiff. Plaintiff implicitly concedes that defendant's mistake was material.
The parties and amici curiae vigorously dispute, however, whether defendant should bear the risk of its mistake. Section 154 of the Restatement Second of Contracts states: "A party bears the risk of a mistake when (a) the risk is allocated to him by agreement of the parties, or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so." Neither of the first two factors applies here. Thus, we must determine whether it is reasonable under the circumstances to allocate to defendant the risk of the mistake in the advertisement.
[Editorial note: I have omitted here a lengthy portion of the opinion that reaches the following conclusions:
It would be appropriate to allocate the risk of mistake to the defendant if the defendant's mistake resulted from its "neglect of a legal duty," as that phrase has been construed by prior California common law;
But, defendant's mistake did not result from a "neglect of a legal duty" even though the mistake resulted in part from the defendant's negligence in not reviewing the ad prior to publication, and even though a failure to sell a car at an advertised price is a violation of the Vehicle Code. I pick up with some of the court's discussion of this last point.]
. . . f we were to accept plaintiff's position that section 11713.1(e), by requiring a dealer to sell a vehicle at the advertised price, necessarily precludes relief for mistake, and that the dealer always must be held to the strict terms of a contract arising from an advertisement, we would be holding that the dealer intended to assume the risk of all typographical errors in advertisements, no matter how serious the error and regardless of the circumstances in which the error was made. For example, if an automobile dealer proofread an advertisement but, through carelessness, failed to detect a typographical error listing a $75,000 automobile for sale at $75, the defense of mistake would be unavailable to the dealer.
Giving such an effect to section 11713.1(e), however, "is contrary to common sense and ordinary business understanding and would result in the loss of heretofore well-established equitable rights to relief from certain types of mistake." (Kemper, supra, 37 Cal. 2d at p. 704.) Although this statute obviously reflects an important public policy of protecting consumers from injury caused by unscrupulous dealers who publish deceptive advertisements, and establishes that automobile dealers that violate the statute can suffer the suspension or revocation of their licenses, there is no indication in the statutory scheme that the Legislature intended to impose such an absolute contractual obligation upon automobile dealers who make an honest mistake. Therefore, absent evidence of bad faith, the violation of any obligation imposed by this statute does not constitute the neglect of a legal duty that precludes rescission for unilateral mistake of fact.
The municipal court made an express finding of fact that "the mistake on the part of [defendant] was made in good faith[;] it was an honest mistake, not intended to deceive the public . . . ." The Court of Appeal correctly recognized that "we must, of course, accept the trial court's finding that there was a 'good faith' mistake that caused the error in the advertisement." The evidence presented at trial compellingly supports this finding.
Defendant regularly advertises in five local newspapers. Defendant's advertising manager, Crystal Wadsworth, testified that ordinarily she meets with Kristen Berman, a representative of the Daily Pilot, on Tuesdays, Wednesdays, and Thursdays to review proof sheets of the advertisement that will appear in the newspaper the following weekend. When Wadsworth met with Berman on Wednesday, April 23, 1997, defendant's proposed advertisement listed a 1995 Jaguar XJ6 Vanden Plas without specifying a price, as it had the preceding week. On Thursday, April 24, a sales manager instructed Wadsworth to substitute a 1994 Jaguar XJ6 with a price of $25,995. The same day, Wadsworth met with Berman and conveyed to her this new information. Wadsworth did not expect to see another proof sheet reflecting this change, however, because she does not work on Friday, and the Daily Pilot goes to press on Friday and the edition in question came out on Saturday, April 26.
Berman testified that the revised advertisement was prepared by the composing department of the Daily Pilot. Berman proofread the advertisement, as she does all advertisements for which she is responsible, but Berman did not notice that it listed the 1995 Jaguar XJ6 Vanden Plas for sale at $25,995, instead of listing the 1994 Jaguar at that price. Both Berman and Wadsworth first learned of the mistake on Monday, April 28, 1997. Defendant's sales manager first became aware of the mistake after plaintiff attempted to purchase the automobile on Sunday, April 27. Berman confirmed in a letter of retraction that Berman's proofreading error had led to the mistake in the advertisement.
Defendant's erroneous advertisement in the Daily Pilot listed 16 used automobiles for sale. Each of the advertisements prepared for several newspapers in late April 1997, except for the one in the Daily Pilot, correctly identified the 1994 Jaguar XJ6 for sale at a price of $25,995. In May 1997, defendant's advertisements in several newspapers listed the 1995 Jaguar XJ6 Vanden Plas for sale at $37,995, and defendant subsequently sold the automobile for $38,399. Defendant had paid $35,000 for the vehicle.
Evidence at trial established that defendant adheres to the following procedures when an incorrect advertisement is discovered. Defendant immediately contacts the newspaper and requests a letter of retraction. Copies of any erroneous advertisements are provided to the sales staff, the error is explained to them, and the mistake is circled in red and posted on a bulletin board at the dealership. The sales staff informs customers of any advertising errors of which they are aware.
No evidence presented at trial suggested that defendant knew of the mistake before plaintiff attempted to purchase the automobile, that defendant intended to mislead customers, or that it had adopted a practice of deliberate indifference regarding errors in advertisements. Wadsworth regularly reviews proof sheets for the numerous advertisements placed by defendant, and representatives of the newspapers, including the Daily Pilot, also proofread defendant's advertisements to ensure they are accurate. Defendant follows procedures for notifying its sales staff and customers of errors of which it becomes aware. The uncontradicted evidence established that the Daily Pilot made the proofreading error resulting in defendant's mistake.
Defendant's fault consisted of failing to review a proof sheet reflecting the change made on Thursday, April 24, 1997, and/or the actual advertisement appearing in the April 26 edition of the Daily Pilot -- choosing instead to rely upon the Daily Pilot's advertising staff to proofread the revised version. Although, as the Court of Appeal found, such an omission might constitute negligence, it does not involve a breach of defendant's duty of good faith and fair dealing that should preclude equitable relief for mistake. In these circumstances, it would not be reasonable for this court to allocate the risk of the mistake to defendant.
As indicated above, the Restatement Second of Contracts provides that during the negotiation stage of a contract "each party is held to a degree of responsibility appropriate to the justifiable expectations of the other." (Rest.2d Contracts, § 157, com. a, p. 417.) No consumer reasonably can expect 100 percent accuracy in each and every price appearing in countless automobile advertisements listing numerous vehicles for sale. The degree of responsibility plaintiff asks this court to impose upon automobile dealers would amount to strict contract liability for any typographical error in the price of an advertised automobile, no matter how serious the error or how blameless the dealer. We are unaware of any other situation in which an individual or business is held to such a standard under the law of contracts. Defendant's good faith, isolated mistake does not constitute the type of extreme case in which its fault constitutes the neglect of a legal duty that bars equitable relief. Therefore, whether or not defendant's failure to sell the automobile to plaintiff could amount to a violation of section 11713.1(e) -- an issue that is not before us -- defendant's conduct in the present case does not preclude rescission.
The final factor defendant must establish before obtaining rescission based upon mistake is that enforcement of the contract for the sale of the 1995 Jaguar XJ6 Vanden Plas at $25,995 would be unconscionable. Although the standards of unconscionability warranting rescission for mistake are similar to those for unconscionability justifying a court's refusal to enforce a contract or term, the general rule governing the latter situation (Civ. Code, § 1670.5) is inapplicable here, because unconscionability resulting from mistake does not appear at the time the contract is made. (Rest.2d Contracts, § 153, com. c, p. 395; 1 Witkin, supra, Contracts, § 370, pp. 337-338.)
An unconscionable contract ordinarily involves both a procedural and a substantive element: (1) oppression or surprise due to unequal bargaining power, and (2) overly harsh or one-sided results. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, 114.) Nevertheless, " 'a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.' [Citations.]" (Ibid.) For example, the Restatement Second of Contracts states that "inadequacy of consideration does not of itself invalidate a bargain, but gross disparity in the values exchanged may be an important factor in a determination that a contract is unconscionable and may be sufficient ground, without more, for denying specific performance." (Rest.2d Contracts, § 208, com. c, p. 108.) In ascertaining whether rescission is warranted for a unilateral mistake of fact, substantive unconscionability often will constitute the determinative factor, because the oppression and surprise ordinarily results from the mistake -- not from inequality in bargaining power. Accordingly, even though defendant is not the weaker party to the contract and its mistake did not result from unequal bargaining power, defendant was surprised by the mistake, and in these circumstances overly harsh or one-sided results are sufficient to establish unconscionability entitling defendant to rescission.
Our previous cases support this approach. In Kemper, supra, 37 Cal. 2d 696, we held that enforcement of the city's option to accept a construction company's bid, which was 28 percent less than the intended bid, would be unconscionable. Our decision reasoned that (1) the plaintiff gave prompt notice upon discovering the facts entitling it to rescind, (2) the city therefore was aware of the clerical error before it exercised the option, (3) the city already had awarded the contract to the next lowest bidder, (4) the company had received nothing of value it was required to restore to the city, and (5) "the city will not be heard to complain that it cannot be placed in statu quo because it will not have the benefit of an inequitable bargain." (Id. at p. 703.) Therefore, "under all the circumstances, it appears that it would be unjust and unfair to permit the city to take advantage of the company's mistake." (Id. at pp. 702-703.) Nothing in our decision in Kemper suggested that the mistake resulted from surprise related to inequality in the bargaining process. . . .
In the present case, enforcing the contract with the mistaken price of $25,995 would require defendant to sell the vehicle to plaintiff for $12,000 less than the intended advertised price of $37,995 -- an error amounting to 32 percent of the price defendant intended. Defendant subsequently sold the automobile for slightly more than the intended advertised price, suggesting that that price reflected its actual market value. Defendant had paid $35,000 for the 1995 Jaguar and incurred costs in advertising, preparing, displaying, and attempting to sell the vehicle. Therefore, defendant would lose more than $9,000 of its original investment in the automobile. Plaintiff, on the other hand, would obtain a $12,000 windfall if the contract were enforced, simply because he traveled to the dealership and stated that he was prepared to pay the advertised price.
These circumstances are comparable to those in our prior decisions authorizing rescission on the ground that enforcing a contract with a mistaken price term would be unconscionable. Defendant's 32 percent error in the price exceeds the amount of the errors in cases such as Kemper and Elsinore. For example, in Elsinore, supra, 54 Cal. 2d at page 389, we authorized rescission for a $6,500 error in a bid that was intended to be $96,494 -- a mistake of approximately 7 percent in the intended contract price. As in the foregoing cases, plaintiff was informed of the mistake as soon as defendant discovered it. Defendant's sales manager, when he first learned of the mistake in the advertisement, explained the error to plaintiff, apologized, and offered to pay for plaintiff's fuel, time, and effort expended in traveling to the dealership to examine the automobile. Plaintiff refused this offer to be restored to the status quo and did not seek in this action to recover damages for the incidental costs he incurred because of the erroneous advertisement. Like the public agencies in Kemper and Elsinore, plaintiff should not be permitted to take advantage of defendant's honest mistake that resulted in an unfair, one-sided contract. (Cf. Drennan v. Star Paving Co. (1958) 51 Cal. 2d 409, 415-416, 333 P.2d 757 [no rescission of mistaken bid where other party detrimentally altered his position in reasonable reliance upon the bid and could not be restored to the status quo].)
The circumstance that section 11713.1(e) makes it unlawful for a dealer not to sell a vehicle at the advertised price does not preclude a finding that enforcing an automobile sales contract containing a mistaken price would be unconscionable. Just as the statute does not eliminate the defense of mistake, as established above, the statute also does not dictate that enforcing a contract with an erroneous advertised price necessarily must be considered equitable and fair for purposes of deciding whether the dealer is entitled to rescission on the ground of mistake. In Kemper, supra, 37 Cal. 2d 696, we concluded that it would be unconscionable to bar rescission of a bid pursuant to a city charter provision prohibiting the withdrawal of bids, where "it appeared that it would be unjust and unfair to permit the city to take advantage of the company's mistake." ( Id. at p. 703.) Thus, notwithstanding the public interest underlying the charter provision, our decision in Kemper precluded the city from relying upon that provision to impose absolute contractual liability upon the contractor. ( Id. at p. 704.)
Accordingly, section 11713.1(e) does not undermine our determination that, under the circumstances, enforcement of the contract for the sale of the 1995 Jaguar XJ6 Vanden Plas at the $25,995 mistaken price would be unconscionable. The other requirements for rescission on the ground of unilateral mistake have been established. Defendant entered into the contract because of its mistake regarding a basic assumption, the price. The $12,000 loss that would result from enforcement of the contract has a material effect upon the agreed exchange of performances that is adverse to defendant. Furthermore, defendant did not neglect any legal duty within the meaning of Civil Code section 1577 or breach any duty of good faith and fair dealing in the steps leading to the formation of the contract. Plaintiff refused defendant's offer to compensate him for his actual losses in responding to the advertisement. "The law does not penalize for negligence beyond requiring compensation for the loss it has caused." (3 Corbin, Contracts, supra, § 609, p. 684.) In this situation, it would not be reasonable for this court to allocate the risk of the mistake to defendant.
Having determined that defendant satisfied the requirements for rescission of the contract on the ground of unilateral mistake of fact, we conclude that the municipal court correctly entered judgment in defendant's favor. [In the hypothetical Beepy v Superior case, the winner Defendant would be Superior]
[Editorial note: In quest of $10,000 savings on the purchase of the Jaguar, how much in attorney's fees do you think the plaintiff spent through the hearing by the California Supreme Court? Too bad that he couldn't claim those fees as a tax deductible charitable contribution to the education of law students.]
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” Mark Twain
Newmismatist
<< <i>Anyone's opinion of FMV fails over the price paid at auction for a replacement by the buyer (cover) to be "in the place he would have occupied, absent the breech >>
A dealer who is very familiar with what these coins have realized, posted the results. The range of prices was lower than the one which the buyer tried to get Superior to pounce on. In case you missed it, here is his quote:
<< <i>Baseball: I guess (9) separate auction records alone this year in 2005 with a hammer price of a low of $140 and a high of $240 on each and every sale is not enough information for me to form an opinion that the coin has a value of around $250 (not to mention a 10th auction sale right before those (9) where I was the high bider at $220 hammer, but had to stop buying that particular issue because there was no money to be made IMHO paying $220 hammer)? >>
<< <i>Is has been established that they refused to buy an acceptable replacement, not because the coin did not conform, but soley because the price was more than they were willing to part with. I do not see that as a valid defense. Do you conselor? >>
Again, I see that they were making reasonable efforts to obtain a replacement and were acting in good faith, despite the fact that they did not see fit to over-pay. If a reasonable amount of time had passed and they were unable to obtain one at FMV, then I would be all for their having to over-pay - the buyer was apparently not willing to allow a reasonable time period, however.
<< <i>As to which party should bear the loss for the mistake, IMHO, the party at fault should bear the loss... The whole loss. Here, it would appear to be entirely SG's fault and there is no evidence that the buyer knew of the unilateral mistake. >>
I haven't seen anyone argue otherwise, though, due to the length of the thread I might have missed it if they had.
<< <i>Ever go to court with an estimate for a car repair? For some reason, jurists ALWAYS seem to favor a receipt for the actual repair >>
I think that is a poor analogy - that involves work, time, hourly rates, etc. and differs greatly from actual prices realized for the same coin of the same grade.
<< <i>He made a formal demand. He must do that to allege that he is not in breech and that SG is in breech. Bringing a K action without a demand letter is a quick way to get a FRCP Rule 12(b)(6) motion or a demurrer filed against plaintiff >>
It was obvious HE was not in breach. There was no need whatsoever to file a formal demand. Again, that is making way too much of the situation.
<< <i>Good faith is finding a coin NOW, not next week or next month. >>
"NOW" is not a realistic, necessary or reasonable time period. There is no fear of irreparable harm to the possible replacements out there, or to the buyer.
Relax.
As for the legal tactics, sometimes even lawyers use common sense. My wife was recently hired as a managing general counsel for a $10 billion public company, in charge of dispensing and overseeing many millions of dollars of legal work in her area to private law firms. The first thing she has done is systematically fired the lawyers who like to "fight the fight" and are not looking to compromise. She feels that not only do they run up unnecessary bills for the company, but they also establish an adverserial environment for future negotiations and actions. This thread reminded me of this recent discussion that I had with her.
<< <i>Ddink - disappointment doesn't constitute as "real" damage. >>
I'm sorry, I failed to realize that it's okay to break contractual agreements as long as (you believe) no real harm is done.
<< <i>From now on, the only people allowed to criticize Superior are ones that have never made a mistake. >>
To my knowledge I've never made the same mistake dozens of times.
Do you seriously think that any court is going to say that this is unenforceable due to unconscionability?
How much money will it cost SG to defend against a Pro Se attorney?
I guess $75,000.
Likelihood of winning on unconscionablity? Zilch.
I have yet ot hear a definate settlement offer has been made.
"We will try to get a replacement" leaves smoethings to be desired.
Like: When will buyer receive the coin?
And: What happens if you cannot get the coin by the date above?
So, without an bone fide offer to refuse, buyer need not worry about not accepting a settlement offer for his actual damages.
I gotta say, fault and breech of contract do not seem to be in doubt. Damages are the only issue, IMHO.
Actually, it has already been proven that the coin has been sold for substantially less to a forum member.
<< <i>It's obvious the coin was sold to someone else for higher bid and their reply is just a lame excuse to soften the blow. >>
Generally speaking it's a good idea to actually read the content of a thread prior to replying. The coin was sold for a lower bid, a much lower bid.
Russ, NCNE
I still stand by that if I were to bid on a coin in error using esnipe, they would not except a I'm sorry -and that they would try to squeeze me for my mistake.
They made trheir bed, now let them lie in it.
Of course it is only 145$ and my laziness to pursue would exceed my ambitrion to to do the workd right on this particular matter.
As this thread has a life of its own I could not resit to keep it going....
Skerke
<< <i>It's obvious the coin was sold to someone else for higher bid and their reply is just a lame excuse to soften the blow. They darn well had that coin but didn't want to let it go at that bid amount. >>
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire