The Honda car dealership places a full page ad in the newspaper with pictures an

Question

The Honda car dealership places a full page ad in the newspaper with pictures and prices for 3 models of Honda. Due to an error on the part of the newspaper, the price of the 2008 Honda Accord is listed as
$200 instead of $20,000. Bill sees the ad while drinking his morning coffee and rushes down to the
dealership and says to the first salesman he sees: "I accept your offer to sell a 2008 Honda Accord for the
advertised price of $200". Which of the following is true:

- Under the common law of contracts, the dealership is not legally obligated to sell Bill the car for
the advertised price because the advertisement is a solicitation of an offer; it is not an offer.

- A contract has been formed through offer and acceptance.

- If the error had been caused by the Honda dealership instead of by the newspaper, then a valid enforceable contract would have been formed.

- Because the error in the newspaper was a mutual mistake, the Honda dealership can not rescind the contract.

Explanation / Answer

Under the common law of contracts, the dealership is not legally obligated to sell Bill the car for
the advertised price because the advertisement is a solicitation of an offer; it is not an offer.

In this case Honda is not actually making an offer because an advertisment is not considered as an offer rather it is just a beginning of a negotiation. So in this case Bill cannot say that he accepts the offer because it is not a offer as conveyed.

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