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Elements of a contract, objective theory, advertisements

What are the four elements of a valid contract?

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

Why do you think the court held that there was not a valid agreement here?

Are advertisements generally considered offers? Why or why not?

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

Reference: Seattle man loses in battle with Pepsi for Harrier-jet prize. (1999, August). Wall Street Journal.

Solution Preview

Every professor may vary the terminology a bit, but the four elements of a valid contract are usually:

1) proposal and acceptance (agreement)

2) consideration

3) free consent (capacity or competence of parties to contract)

4) legal purpose (actions agreed upon must be lawful)

The objective theory of contracts requires manifestation of intent to be interpreted reasonably (according to the reasonable expectations of the parties). Courts today define reasonableness within the entire context of a transaction, often taking into account the consideration of subjective elements. For a definition of objective theory of contracts go here: http://www.businessdictionary.com/definition/objective-theory-of-contract.html

In the Leonard v. Pepsico case, the court found that it was not reasonable for somebody to consider their response to be the ...

Solution Summary

The solution describes the four elements of a valid contract, the objective theory of contracts, advertisements as offers, and the Leonard v. Pepsico case.

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