What Is a Legally Binding Advertisement?

Generally, ads are not considered legally binding offers. Instead, ads are usually considered invitations to do business. The store or company placing the ad cannot be said to have made an official offer because advertisements are not directed to specific parties, and they do not contain the other material elements that are generally present in an offer. However, ads may have some legally binding elements, as many states have consumer financial protection laws.

An offer is an open expression to do business on a specific set of terms with the intention that if the offer is accepted, the persona making the offer will be bound by the contract. Companies placing ads do not typically express a willingness to be bound by an ad, as quantities and the availability of certain goods may be limited. This is why many ads use the language, "supplies may be limited" or "while supplies last."

In very specific instances, courts have considered ads to be legally binding. For example, in the case Carlill v. Carbolic Smoke Company, the Carbolic Smoke Company promised to pay $100 to any individual who used their product according to their specifications and later contracted the flu. The court found that because the ad induced consumers into purchasing a product through the offer of a specific reward, the ad was legally binding. Money-back guarantees are a type of ad that may also be considered legally binding in some circumstances.

Although it is often difficult to legally bind a company to the terms of an ad, it may be possible to pursue the company in court for false or misleading ad claims. Many states have laws that make it illegal for a company to advertise a product or service as having certain qualities or benefits that the product in fact does not possess. Your potential remedies will depend on your state of residence.

In addition to pursuing a claim for false advertising, there are other potential avenues to consider if you have encountered a less-than-truthful ad. You may consider looking to join a class in a class action lawsuit or contacting your state attorney general, the Better Business Bureau, the Federal Trade Commission or the Consumer Financial Protection Bureau. These organizations may be able to assist you in seeking to address your grievance.