Facts
- BC Tire Corporation (BC Tire) requested that GTE Directories Corporation (GTE) publish BC Tire’s advertisement in a local telephone directory and agreed to pay a monthly advertising fee.
- BC Tire completed and signed GTE’s printed “Application for Directory Advertising.”
- The application stated that publication of the requested advertisement in the directory would constitute acceptance of the application by both parties and that, otherwise, the application was not binding.
- The application also contained an exclusionary clause stating that GTE (and the telephone company) would not be liable to the applicant for damages resulting from a failure to include the requested advertising in the directory.
- GTE did not include BC Tire’s advertisement in the directory and did not bill BC Tire for the advertising.
- BC Tire sued GTE, asserting contract and tort theories based on GTE’s failure to publish the ad.
- GTE moved for summary judgment, arguing there was no contract because it never accepted the application, and, alternatively, any liability was barred or limited by the exclusionary clause.
- The trial court granted summary judgment for GTE and dismissed the action; BC Tire appealed.
Issues
- Whether BC Tire’s signed directory advertising application formed a binding contract when the application stated that acceptance would occur only upon publication, and GTE never published the advertisement.
- If a contract existed, whether the application’s exclusionary clause limiting liability for failure to publish was enforceable.
- Whether BC Tire could recover in negligence for GTE’s failure to publish the advertisement despite the absence of contract formation.
Decision
- The Washington Court of Appeals, Division One, affirmed summary judgment for GTE.
- The court held the signed application was an offer for a unilateral contract that could be accepted only by the performance specified in the document—publication of the advertisement.
- Because GTE never published the advertisement, GTE never accepted the offer and no contract was formed.
- With no contract, the court did not need to decide whether the exclusionary clause was unconscionable or otherwise unenforceable.
- The court rejected BC Tire’s negligence theory under these circumstances and left the dismissal in place.
Legal Principles
- Parties may define, in the offer itself, the exclusive manner of acceptance; when the offer states that acceptance occurs only by a stated performance, acceptance requires that performance.
- A unilateral contract is formed only when the offeree accepts by completing the requested performance; without that performance, there is no acceptance and no contract.
- Challenges to specific contractual terms (such as unconscionability) generally depend on the existence of a contract; if no contract is formed, courts need not rule on the validity of disputed terms.
- A plaintiff cannot obtain contract-like damages through a negligence claim when the alleged duty is tied to an undertaking that, by its own terms, never became binding.
Conclusion
BC Tire’s signed directory advertising “application” was treated as an offer that GTE could accept only by publishing the advertisement; because GTE did not publish, there was no acceptance and no contract, making disputes over the limitation clause unnecessary to reach and leaving BC Tire without recovery on either contract or negligence theories.