One of the first cases we covered in my first-year contracts class involved an offer of a reward. As we discussed the concepts of offer and acceptance, the professor, who had a formidable reputation, used the following example: If he said to a group of students that he had a great set of annotated notes for the class that would really be useful for the final exam and one student exclaimed “I would pay a million dollars for that!”, it was clear that no reasonable person would understand the student’s remark to be an offer that could be accepted. This came to mind when I recently read about a reward case involving that same amount.
The genesis of Augstein v Leslie, decided in the U.S. District Court in the Southern District of New York, was the theft of musician Ryan Leslie’s laptop, external hard drive, and other belongings while he was on tour in Germany. The laptop and hard drive held valuable intellectual property that included music and videos related to Leslie’s recordings and performances. Leslie first stated that he was offering a $20,000 reward for the laptop’s return in a YouTube video in October 2010, implying that the lost property’s value far exceeded that amount. In the following month, Leslie appeared in another video that increased the reward for return of the laptop and hard drive to a million dollars. The increase was noted on the defendant’s Facebook and Twitter accounts, in news reports, and in an MTV interview. The plaintiff turned the laptop and hard drive over to the police in Germany, but the defendant refused to pay the reward, claiming that the intellectual property was not on the hard drive. Leslie alleged that he was unable to use the hard drive and that its manufacturer erased it after sending a replacement to the defendant.
The plaintiff moved for summary judgment on the issues of Leslie’s offer of the reward and the plaintiff’s acceptance and performance by returning the laptop to the police. He further alleged that the hard drive was erased after he sent correspondence to Leslie regarding the reward. Leslie’s response was that a reasonable person would not have understood the reward to be an offer of a unilateral contract. Instead, it was an advertisement or an invitation to negotiate. Leslie also alleged that the plaintiff returned the physical property but that the intellectual property was missing from the hard drive.
The district court judge held that Leslie’s videos and other activities could best be characterized as an offer for a reward. A reasonable person who saw the video would understand that Leslie wanted the return of his property and that the bargain would be concluded by its return, especially in light of the increase in the reward amount, the value of the property (including an unreleased album), and the news reports concerning the reward. The district court distinguished this case from the line of “invitation to negotiate” cases, including the venerable decision in Carlill v Carbolic Smoke Ball Co, 1 QB 256 (1892) (Eng). The district court also ruled that Leslie had at least been negligent in handling the hard drive and imposed a sanction of an adverse inference that the intellectual property was on the hard drive when the plaintiff returned it. A later jury trial zapped the defendant with a verdict of a million dollars for the plaintiff’s return of the laptop and hard drive.
This case would seem to be a good candidate for adding a contemporary flavor to what may seem like stale examples of contract-law principles. For further discussion of this decision, see Clara Flebus, How (Not) to Make a Contract on YouTube, New York State Bar Association Journal, July-Aug. 2014, at 42. For discussion of offers of reward in Michigan, see Michigan Contract Law §3.35.