Rights and Obligations
Legal factors in the case
The major legal factors in this scenario relate to contracts and involves whether the contract is valid or invalid. The advertisement ran by the soft drink company presented a deal to the public that promised a Harrier Jet reward for any person who would obtain the 7 million points. The Seattle man came up with a business plan that saw him manage to obtain points that had been requested. The man went ahead to claim the promise and was expected the company to fulfill its part of the contract. Another issue relates to whether the offer by the firm could be considered reasonably valid or was invalid or it was just an extravagant promise.
4 elements of a contract
- An offer: this means that one part in the promised to do or abstain from doing a certain action in future (Helewitz, 2010).
- Consideration – this means that in the contract, something valuable was promised to be exchanged with the specific action or refraining from the action. The consideration can be a substantial effort or spending of money, a promise to offer some effort or an agreement to carry out an action. It is the value that drives the parties to establish the contact (Helewitz, 2010).
- Intention to establish legal relations .This implies that the parties in the contract should intend to establish an agreement that legally binds them; and which there are enforceable obligations and rights. The issue in this case is whether these parties, in their negotiation, intended on creating legal relations. A bind agreement means that the persons understood the elementary substance of the contract and its terms (Helewitz, 2010).
- Acceptance – This means that an offer was unmistakably accepted. Its expression can be through deeds, words or even performance as highlighted in the contract. In general, the acceptance must reflect the terms described in the offer. Otherwise the acceptance is considered a rejection and thus, counteroffer (Helewitz, 2010).
In relation to the above case, there was not valid contract between the soft drink company and the public to whom the advertisement was directed. The basis of this argument is that whereas an offer was issued, there was no intention to establish legal relations by the company that would allow the meeting of minds between the parties and thus, make the contract binding.
Objective theory of contract
This is a legal concept implying that an agreement between two persons is binding if a reasonable person would deem that there has been making of an offer which has then been accepted. It is a concept through which mutual assent is determined through an evaluation of external. It implies that the establishment of a contract is not determined by the state of minds of involved parties but by their explicit acts conduct (Miller & Hollowell, 2018). The intention of a party would be considered to be what a reasonable individual in the position of the other person would understand the action to mean. This theory averts the interpretation of any contract law from being used to enforce outrageously exaggerated claims especially in the advertisements that would serves as a contract offer conduct (Miller & Hollowell, 2018).
In relation to the aforementioned case, the assumed offer made through the commercial amounting to $ 23million would not be expected by a reasonable person to actually be offered to the consumer. The establishment of this commercial to mean a contract would not be determined by what the state of the mind of the consumers was but by what was explicitly intended.
The Court rejected the claim by the Seattle man by concisely laying out the Objective Theory of Contracts. In the ruling the judge concluded that the contract law was not violated since an objective person could not believe in good faith that such an offer was serious. The commercial was of an outrageous nature, and the law of the contract was not violated. The contract law in this case is restricted by the reasonable person test. Would a reasonable person reviewing this contract determine that there existed some realistic terms of a contract? Apparently not. The issue in this case was whether the establishment of a contract was completed once the plaintiff filled out an Order Form so as to request for the Jet or once the defendant accepted the form.
Advertisement and contract law
The general rule that applies to the case is that an advertisement is not an offer. An advertisement of goods through any form including display and in this scenario television or not normally intended to be offers and hence , not understood to be offers for selling. However, it is possible for an offer to be made through advertisement which is intended for the general public but normally, there should be some commitment language or an invitation to act without communicating further. However, this is not customarily done and the advertisement appears to be requests for considering, examining and negotiating. They cannot reasonably be considered otherwise by any person unless situations are exceptional in that the words used are very precise and plain. The advertisements are regarded as just request that should be considered, examined and possibly negotiated. The Lovett v. Fredrick Loeser & Co., case can be referred to while illustrating that an advertisement is not regarded as an offer (Rosden & Rosden, 1973). The case adhered to the aforesaid general rule; where the court held that an advertisement is just but an invitation for negotiation. It does not indicate an offer that is likely to be turned into a contract by an individual who exaggerates his intention to buy part of the articles that had been mentioned in a commercial. In the case of The People of the State of New York v. Gimbel Bros Inc. (defendant), the later was accused of advertising on Sunday against the Penal Law section 2147 that prohibited any public offering to sale or selling of any property on that day (Rosenstock, 2005). The court held that an advertisement does not make up a sale’s offer but it merely invites the public – customers- to make a purchase offer. The defendant was found not guilty of making any property sale on Sunday (Rosenstock, 2005).
In addition, an expression by a potential offeree of their readiness to accept a certain offer by completing an order form does not transform an advertisement into an offer that can be enforced. The case of Mesaros v. United States, for instance, the United States Mint had been sued for failing to deliver the Statue of Liberty coins for the purpose of a commemoration, in the number that had been ordered (Beatty, Samuelson & Abril, 2018). After the coins demand exceeded the ones provided some people who had ordered them did not get them. The court applied the already established rule stating that order forms and advertisements are just notices for offers and they do not create power of acceptance within the recipients (Beatty, Samuelson & Abril, 2018). These cases and related rulings form the basis of the decision made by the court in declaring the Harrier Jet commercial offer as invalid.
Reward situation – unilateral contract
A unilateral contract involving a reward situation would be different from the case of the Harrier Jet commercial, in that if the commercial involved a promise to give the jet a person who obtains the 7 million points, it would have been enforceable. The legal issues include the validity of the offer and whether the offers honors he promise and gives the jet to the person who completes the collection of the points. In this case, the objective theory would not have applied.
Recommendations
While conducting marketing campaigns with high value give-away goods or items, the company should ensure that every advertisement has observes the rules or applicable law and that enough details are provided to describe the terms of engagement. The observance of the applicable laws will enable the form to avert any question or issue involving a legal challenge over the items involved in the commercial. This will ensure that the firm reduces as much as possible the risks of legal mitigations that may be brought against the company. The other recommendation involving detailed information will focus on fine tuning the advertisement that is displayed so that there is no misunderstanding of among the public.
References
Helewitz, J. A. (2010). Basic contract law for paralegals. Austin [Tex.: Wolters Kluwer Law & Business. 15-18
Miller, R. L. R., & Hollowell, W. E. (2018). Business law: Text & exercises. 99
Rosenstock, J. (2005). Transferring invention rights: Effective and enforceable contracts. New York: Aspen Pub.
Rosden, G. E., & Rosden, P. E. (1973). The law of advertising: A treatise. New York: M. Bender.
Beatty, J. F., Samuelson, S. S., & Abril, P. S. (2018). Business law and the legal environment. Cengage Learning. 304
