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In 1999, a Seattle man took a popular soft-drink company seriously

Customer Question
when one of its commercials...
In 1999, a Seattle man took a popular soft-drink company seriously when one of its commercials made an offer of a Harrier jet, the famous high-tech jump jet used by the U.S. Marines. In a TV commercial that aired in 1995, the company jokingly included the Harrier as one of the prizes that could be received with a mere 7 million company points. Although that sounds like a lot of points to get from drinking the soft drink company's products (roughly 190 drinks a day for 100 years), the company also allowed customers to purchase points for 10 cents each.
The man did the math and discovered that the cost of the 7 million points needed for the jet was $700,000. He then put together a business plan, raised the $700,000 from friends and family, and submitted 15 points, the check, and an official order form along with a demand for the Harrier jet.

The company wrote back, stating that the Harrier jet in the commercial was simply used to create a humorous and entertaining advertisement. They apologized for any misunderstanding or confusion people may have experienced and enclosed some free product coupons.

The free coupons did not satisfy the man, who then took the soft drink company to court. Finally, a federal judge for the Southern District of New York held that the company was only joking when it implied in its ad that it was giving away fighter jets. The judge noted that because the jets sell for approximately $23 million, no one could have concluded that the commercial actually offered consumers a Harrier jet. Instead, this was a classic example of a deal that was too good to be true.



Write a 1–2-page paper that answers the following questions:

•What are the four elements of a valid contract?
•What is the objective theory of contracts?
•How does the objective theory of contracts apply to this case?
•In your own words, why do you think the court held that there was not a valid agreement here?
•Are advertisements generally considered offers? Explain.
•How does this case differ from a reward situation in which a unilateral contract is formed upon completion of the requested act?
Submitted: 7 years ago.Category: Business Law
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Answered in 29 minutes by:
8/2/2010
Business Lawyer: socrateaser, Attorney replied 7 years ago
socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 39,348
Experience: Retired (mostly)
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What are the four elements of a valid contract?

 

Under common law, the four elements of a valid contract are: (1) parties capable of contracting, (2) their consent, (3) a lawful object, and (4) sufficient cause or consideration. See e.g., Cal. Civil Code §1550.

 

What is the objective theory of contracts?

 

The objective theory of contracts holds that "The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties." Powerine Oil Co., Inc. v Superior Court (2005) 37 C4th 377, 390, as evidenced by the words in their agreement. Founding Members of Newport Beach Country Club v Newport Beach Country Club, Inc. (2003) 109 CA4th 944, 956.

 

How does the objective theory of contracts apply to this case?

 

In the case of the soft-drink advertisement, there was no "mutual intent," because the company created a tongue-in-cheek advertisement that no reasonable person would have believed was seriously intended to create a contract. Thus, without an objective meeting of the minds between the company and the public, there could be no contract.

 

In your own words, why do you think the court held that there was not a valid agreement here?

 

Simply put, there was no valid agreement because: (1) the commercial did not amount to an offer of goods; (2) no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier Jet; and (3) the alleged contract could not satisfy the New York statute of frauds. Leonard v. Pepsico, Inc., 210 F.3d 88 (2d Cir. 04/17/2000).

 

Are advertisements generally considered offers? Explain.

 

An advertisement of goods or services for sale is not considered a formal offer to sell, but rather as an invitation to the reader (or listener) to make an offer or to negotiate with the advertiser, unless it leaves nothing for negotiation and invites performance of a specific act without further communication. See Donovan v RRL Corp. (2001) 26 C4th 261, 271.

 

How does this case differ from a reward situation in which a unilateral contract is formed upon completion of the requested act?

 

In the case of the soft drink advertisement, even though all that was necessary to accept the offer of a reward and conclude the bargain with the advertiser was to perform the specified acts to enter the contest, it is nevertheless the case, that no reasonable person could have possibly concluded that a soft drink company was offering a state of the art military jet as part of a public promotion. The advertisement was not a legitimate offer, because it was absurd.

 

Finis.



Edited by socrateaser on 8/2/2010 at 7:42 AM EST
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Customer reply replied 7 years ago
I am reviewing your answer and will accept by this evening. Thanks so much
Business Lawyer: socrateaser, Attorney replied 7 years ago
Alrighty then....
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