Business Law Problems
1. What are the four elements of a valid contract? A contract is an "agreement between parties, with terms and conditions that describe the agreement that constitutes a legal obligation" (All Business). A valid contract requires four elements and these are: a. Mutual agreement there must be a meeting of the minds between parties. There should be an offer and an acceptance. There should be an agreement to enter into the contract b. Consideration - meaning that "every party is conferring a benefit on the other party or himself sustaining a recognizable detriment, such as a reduction of the party's alternative courses of action where the party would otherwise be free to act with respect to the subject matter without any limitation" (Wikipedia). This simply means that there should be something given and something received. c. Legality - The good or service being exchanged must be legal d. Capacity both parties should be legally competent to enter into the agreement.
2. Describe the objective theory of contracts. How does that theory apply to this case? In layman's term, the objective theory of contracts simply means that "we look at whether a reasonable person to whom the statement was address would believe it to be an offer" (Lloyd). In the case of PepsiCo's advertisement and Leonard suit, it is obvious that there is no contract on the basis of the objective theory. As the judge ruled "an objective reasonable person would not have considered the commercial an offer" (John D.R. Leonard vs. PepsiCo). The commercial was supposed to be humorous and an objective person would look at it that way and not really an offer just like Leonard assumed it was.
3. Why do you think the court held that there was not a valid agreement here? The court held that that there is no valid agreement here because the commercial was evidently was made in jest. Also if we look at one of the four elements of a valid contract, there is no mutual agreement between PepsiCo and
2. Describe the objective theory of contracts. How does that theory apply to this case? In layman's term, the objective theory of contracts simply means that "we look at whether a reasonable person to whom the statement was address would believe it to be an offer" (Lloyd). In the case of PepsiCo's advertisement and Leonard suit, it is obvious that there is no contract on the basis of the objective theory. As the judge ruled "an objective reasonable person would not have considered the commercial an offer" (John D.R. Leonard vs. PepsiCo). The commercial was supposed to be humorous and an objective person would look at it that way and not really an offer just like Leonard assumed it was.
3. Why do you think the court held that there was not a valid agreement here? The court held that that there is no valid agreement here because the commercial was evidently was made in jest. Also if we look at one of the four elements of a valid contract, there is no mutual agreement between PepsiCo and
Bibliography: All Business. Legal Requirements for A Contract. Retrieved 25 October 2006 from http://www.allbusness.com ARL Website (1999) Legal Information Institute. United States Constitution. Retrieved 25 October 2006 from http://www.law.cornell.edu/constitution Lloyd, R.M (2003) Petrova. R. (2002). The Impact of E-Commerce on the Global Economy. London: International Association for Official Statistics Reid T., Priest L.L.P Pearson Education, publishing as Fact Monster. Retrieved 25 Oct. 2006 from . Trakman, L.E. (2003) From the Medieval Law Merchant to the E-Merchant Law. Toronto: University of Toronto Law Journal.