Mesaros v. United States

In July 1985, the United States Congress passed the Statue of Liberty-Ellis Island Commemorative Coin Act that authorized the United States Mint (Mint) (defendant) to produce 500,000 limited edition commemorative coins. The coins were to be sold to raise money to restore the Statue of Liberty and Ellis Island in New York, New York. The Mint mailed out materials advertising the sale of the coins and authorizing payment by check, cash, or credit card. The Mint used an outside bank to process credit card orders, but had significant problems processing credit card payments. As a result, many credit card orders for coins were unfulfilled. Mary and Anthony Mesaros (plaintiffs) received the materials from the Mint and placed a credit card order in November 1985 for $1,675 worth of commemorative coins. The Mesaros’ bank approved their credit card transaction, but the Mint was unable to process their credit card orders. Mr. and Mrs. Mesaros later ordered 18 additional coins via check. All of their check orders were successfully processed. On May 23, 1986, Mr. and Mrs. Mesaros filed a class action suit in federal district court against the United States Government (defendant) and the Mint alleging breach of contract. Mr. and Mrs. Mesaros alleged that the materials sent to them by the Mint constituted an offer which they accepted, thus forming a binding contract. The district court granted summary judgment for the United States, and Mr. and Mrs. Mesaros appealed.

Plaintiffs filed a class action lawsuit and thirty-three other named individuals in the United States District Court for the Southern District of Georgia, Savannah Division against the United States, et al. The plaintiffs sought mandamus relief for the delivery of the coins and also filed a motion for certification of the class. The defendants filed a motion to dismiss or in the alternative for summary judgment. The court granted judgment for the defendants on their motion in its entirety. The plaintiffs appealed in the Eleventh Circuit. The defendant filed a motion to transfer the case to the Federal Circuit, which was granted.

Does an advertisement soliciting an order for goods at a certain price constitute an offer, the acceptance of which forms a binding contract?

The advertisement of coins for sale by the Mint does not constitute an offer, and thus no binding contract was formed when Mr. and Mrs. Mesaros placed an order for coins. An advertisement of goods for sale at a certain price is not an offer but is merely an invitation to enter into a bargain. Thus, no contract is formed by a statement of an intending purchaser that he will take a specified quantity of the goods at that price.

The decision of the district court was affirmed

A basic rule of contracts holds that whether an offer has been made depends on the objective reasonableness of the alleged offeree’s belief that an advertisement or solicitation was intended as an offer. Generally, however, it is considered unreasonable for a person to believe that advertisements and solicitations are offers that bind the advertiser. Otherwise, the advertiser could be bound by an excessive number of contracts requiring delivery of goods far in excess of the advertiser’s available supply. This justification applies particularly when the advertiser’s supply is limited by some outside force, such as an Act of Congress as in the present case. The Mint sent out numerous materials advertising the sale of commemorative coins at a specified price. The Mint’s sales were ultimately limited by Congress, however, to 500,000 total coins. The court held that the advertisement was an offer because of the way it was worded; that it stated the merchandise would be available if the customer showed up first, which Lefkowitz did. The Mint’s advertisement contained no such statement about a first-come, first-served basis. Since the coins could be paid for with checks, credit cards or money orders, it would have been impossible to process the orders on such a basis. Thus, the Mint’s advertisements did not constitute definite offers to sell coins to any purchaser. The order by Mr. and Mrs. Mesaros constituted an offer that the Mint was free to reject. The Mesaros (P) relied on Lefkowitz v. Great Minneapolis Surplus Store, 251 Minn. 188, 86 N.W.2d 689 (1957). The situation in Lefkowitz was so different that it is of no help to Mesaros (P). Therefore, the Mint advertisement materials were not an offer of sale of the coins that could be accepted by Mesaros (P) to create a contract. In other words, no binding contract was formed between the Mint and Mr. and Mrs. Mesaros. Thus, the decision of the district court holding that the advertisement of the Mint was not an offer, but merely an invitation to make a bargain.

AN ADVERTISEMENT TO SELL GOODS AT A CERTAIN PRICE IS GENERALLY NOT AN OFFER

The reasonable person test is used to resolve cases of first impression that are then used as precedents in later cases and eventually refined into hard and fast legal rules. In this case, the rule goes against Mesaros (P), who may or may not have been justified in thinking a contract had been formed. Most non-lawyers don’t know that advertisements are almost exclusively held to be invitations to deal rather than offers. This may lead to abuse of the rule by unscrupulous merchants looking to exploit the average consumer’s ignorance of contract law. But then again, most non-lawyers don’t even know what the terms “offer” and “acceptance” are or how a binding contract is formed. Right or wrong, it has been established that advertisements like the one in this case are not offers. One possible justification for this rule is that a contrary rule would deter merchants from publishing what may be valuable market information, something that greatly aids consumers in deciding what to purchase. In 17 the instant case, there were elements of the coin advertisement that would lead a reasonable person to believe that once the money was sent in, the deal was done. As the court pointed out, however, there were also elements that would lead to the conclusion.