Did the Lexus dealer’s mistake entitle it to rescind the contract?

Brian Donovan was in the market for a used car. As he scanned the Costa Mesa Daily Pilot, he came upon a “Pre-Owned Coup-A-Rama Sale!” at Lexus of Westminster. Of the 16 cars listed in the ad (with vehicle identification numbers), one was a sapphire-blue Jaguar XJ6 Vanden Plas, priced at $25,995.
Brian drove to a Jaguar dealership to do some comparison shopping. Jaguars of the same year and mileage cost about $8,000 to $10,000 more than the auto at the Lexus agency. The next day, Brian and his wife hurried over to the Coup-A-Rama event, spotted the Jaguar (which had the correct VIN) and asked a salesperson if they might test-drive it. Pleased with the ride, Brian said to the salesman, “O.K. We will take it at your price, $26,000.” This figure startled the sales representative, who glanced at the newspaper ad Brian showed him, and responded, “That’s a mistake.”
As indeed it was. The Lexus agency had paid $35,000 for the Jaguar and intended to sell it for about $37,000. Brian was adamant. “No, I want to buy it at your advertised price, and I will write you a check right now.” The sales manager was called in, and he refused to sell the car for less than $37,000.
It turned out that the Daily Pilot’s typographical and proofreading errors had caused the mistake, although the Lexus dealership had failed to review the proof sheet, which would have revealed the error before the ad wentto press.
Brian sued. The trial court found that unilateral mistake prevented enforcement of the contract. The appellate court reversed, and Donovan appealed to the state’s highest court.
The state supreme court first ruled that there was in fact a contract between the parties. (Generally, a newspaper advertisement is merely a solicitation for an offer, but a California statute generally holds automobile dealers to the terms of their offers.) The court then went on to examine the mistake.