American an agreement in all vital conditions
American Intercontinental University BUSN310-10 Unit 3 Individual Project Deanna K.
Wadley October 23, 2011 ABTRACT This paper will attempt to identify and explain the four elements of a valid contract, explain what the objective theory of contracts is and define and explain how the objective theory of contracts applies to the Unit 3 IP. This paper will also explain why I think the court held that there was not a valid contract in the scenario of the unit 3 IP as well as explain why advertisements are generally considered not to be valid offers.The four elements of a valid contract are: * There must be an agreement in all vital conditions of the contract. * There must be a notion of consideration which means each party of the contract will have established their obligations to the other party.
* There must be a capacity or competence which will ensure that each party of the contract is legally and lawfully capable of agreeing to and fulfilling the contract. * A legal purpose of the contract has to be established (Goldchild, Herring & Milosevic, 2000).The objective theory of contracts is used as an approach to determine contractual intent which states that a party’s intent is deemed to be what a reasonable person in the position of the other party would think (Intent, n. d.
). In deciding for example; whether party A intended to make an offer to party B, the issue is whether party A’s conduct reasonably indicated to party B that party A is in fact making an offer and whether part B reasonably believed that party A was serious.The objective theory of contracts applies to the Unit 3 scenario in that party A, the soft drink company, intent was deemed by the judge to be made in jest and that party B, the man from Seattle could not have reasonably believed the offer.
The court held that there was not a valid agreement due to the fact that no reasonable person could have believed that the commercial by the soft drink company actually offered consumers a Harrier Jet for $700,000 when it was valued at $23 million.Advertisements are simply invitations to consider purchasing a product or service. In most cases of business law, advertisements are generally not considered offers. According to contract doctrine, an offer must direct their good or service to an identifiable consumer or offeree, as well as specify a specific price and place to accept the offer (How, 2011). This case differs from a unilateral contract in that in this type of contract in that the offerer does not make a promise but instead simply acts in response to the offerees completion of the offerers proposal.However, in this case no reasonable person could have possibly concluded that the company was offering the jet as part of the promotion or that it was a legitimist offer. In conclusion, most advertisements as stated above are simply invitations to consider purchasing.
In the end all four elements of the contract must be fulfilled in order for the contract to be lawful and binding. Adding to that Businesses and advertisers must be very careful of what they offer in their advertisements as they could very well be held responsible for complying with what their advertisements promote whether it was meant in jest or not.In this particular case the soft drink company was just very fortunate that the actual value of the jet overwhelmingly exceeded the actual amount the man invested to gain it. For example had the jet only worth $900,000 and not $23 million the judge would have considered the offer to be reasonable and the company would have had to comply with the offer they made in jest.
On the other hand businesses and advertisers should never make an offer in jest so that they do not find themselves in danger of being required to comply with the terms when they never intended to do possibly resulting in major financial difficulty or worse.In the end it is best to never make any kind of offer in jest no matter how outlandish it may seem as one never know and cannot predict who might think they are being serious. References Goldchild, A. , herring, C. and Milosevic. Z.
(2000). Business Contracts for B2B. Retrieved October 23, 2011 from. http://logic.
stanford. edu/classes/cs204/readings/goldchild2000. pdf. How Are Advertisements Used In Business Law. (2011).
Retrieved October 23, 2011 from. http://business. laws. com/business-ethics/advertisements. Intent to Contract.
(n. d. ). Retrieved October 23, 2011 from.
http://home. pon. net/jmt/ law/onel/contract/emancon1. html.