Sara Williams and her fianc, Daniel Sanderson, went to Tiffany & Co to shop for an engagement ring.They settled on a flawless 5-carat diamond.Sanderson purchased the ring for $250,000.Tiffany's furnished Sanderson with an appraisal that valued the ring at $325,000.The appraisal was signed by a jewelry appraiser.Shortly thereafter, Williams and Sanderson called off their wedding and Williams returned the ring to Sanderson.

A year later Sanderson met Mary McCarthy and he gave her the engagement ring from Tiffany's and they were married six weeks later.Shortly before their third wedding anniversary the couple filed for divorce.When the divorce was final, McCarthy took her ring to be reappraised by New England Appraisers in Newton, MA.New England Appraisers told McCarthy that the diamond was not as valuable as Tiffany's had indicated and they valued the ring at only $125,000.

McCarthy sued Tiffany & Co. for breach of contract.Tiffany & Co. claimed it did not make a contract with McCarthy.