There Are Four Elements to a Valid Contract

There are four elements to a valid contract. 1. At least two separate parties entering into an agreement: The agreement can be between two people, or one person and a company or between two companies. 2. The parties are qualified to agree to the terms and conditions in the contract: The parties must be of legal age and have an understanding of what the contract is and details it outlines. 3. Both parties are receiving consideration or value from the agreement: This is most commonly money in exchange for a good or service, but there are other methods of consideration, especially in the business arena. 4. The contract is created for legal activities: Contract are not binding or considered legally valid when they propose illegal activities or violate existing laws in anyway. (What are the four elements of a contract, 2010). The Objective theory of contracts is a principle in U.S. law that the existence of a contract is determined by the legal significance of the external acts of a party to purported agreement, rather than by the actual intent of the parties. (Objective theory of contract, 2010). This theory applies in this case because in this case it was stated they could win a Harrier-Jet if they collected the Pepsi points, but in actuality it was never their intent to give one away.

The Court held there wasn’t a valid agreement here, because one party (Pepsi-co) made an agreement, but never signed a contract with the other party (John D.R. Leonard). As expensive as that jet was, a commercial ad couldn’t have actually offered the consumers the jet. (Unilateral Contract, 2010). Some advertisements are considered offers because if they advertise something and you have to pay for it that is money exchanged for a good or service. This case differs, because Leonard fulfilled his end by coming up with the points, but didn’t actually receive his reward upon the completed act.

References
Objective theory of contract; Retrieved from,

References: Objective theory of contract; Retrieved from, http://www.encyclopedia.com/doc/1G2-3437703138.html Unilateral contract; Retrieved from, http://www.legal-dictionary.thefreedictionary.com/Unilateral+contract What are the Four Elements of a Valid Contract? 123; Retrieved from, http://www.life123.com/career-money/business-law/contracts/what-are-the-four-elments -of-a-valid-contract.shtml