Case Study Contract Law 2022

Running head: CONTRACT LAW
CONTRACT LAW
Name of the Student:
Name of the University:
Author Note:

CONTRACT LAW1
The key legal factors present in the recent scenario are offer, invitation to offer,
acceptance, unilateral contract, consideration and legal intention of the parties to the contract.
The four key elements of a contract comprise of an offer, acceptance, legal intention and
consideration of the contract. In the present scenario, a soft drink company makes an invitation
to the people at large be means of television commercials that a Harrier jet will be given as a
prize when any customer will be able to earn 7 million company points. This is not an offer yet
an invitation to offer. However this although refers to a unilateral promise as held in Carlill v
Carbolic Smoke Ball Co [1892] EWCA Civ 1, [1893] 2 QB 256 by the Court of Appeal of
England and Wales. However in the present case, it was a puff as the soft drinks company never
to award the fighter jet literally and no intention was there to result into a contract to be legally
bound. For that purpose only the condition behind such offer was near to impossible to perform.
Thus the condition of the case is almost impossible to fulfill by any reasonable person. Thus no
valid contract is created by the company.
The objective theory of contract refers to a doctrine that states that an agreement between
parties to a contract will be considered valid only when a reasonable person who is not the party
to the said contract has opinion that an offer has been made in the contract and it has been validly
accepted (Wilkinson-Ryan & Hoffman, 2015). This doctrine is used since 19th century to
determine the intention of the parties in relation to the agreement. This objective theory replaces
the previous theory called as the subjective theory of the contract called the meeting of the minds
that was applied in the early 1800s (Knapp, Crystal & Prince, 2019). Thus here importance is
given to the opinion of the third party who is not a party to the contract regarding the objective
and external activities of the parties together with the associated situations regarding whether an
offer is made and its acceptance. This theory was summarized by Judge LEARNED HAND of

CONTRACT LAW2
New York in a famous quote pertaining to a case decided in 1911 known as the Hotchkiss v.
National City Bank, 200 F. 287 [S.D.N.Y. 1911].
In the present case, if the objective theory is applied a third person will consider the
advertisement commercial made by the soft drink company and the conduct of the Seattle man
regarding the offer (Wilkinson-Ryan & Hoffman, 2015). From the commercial it is clear that the
offer was nothing but a puff. The advertisement stated that the commercial will offer a high tech
Harrier Jet that was used by the US marines in case any consumer is able to earn 7 million
points. It means that to claim it about 190 drinks are to be bought every day for about 100 years.
The consideration of the agreement is far from reality although the company has allowed people
to buy points for 10 cents. Any person can understand that the soft drinks company does not have
any legal intention to affect the contract. Thus if the objective theory is applied in the present
case, no valid offer was made by the company as it lacked legal intention to execute the contract
(Knapp, Crystal & Prince, 2019). Hence no acceptance can take place. No reasonable person will
find the advertisement realistic and believe it to be true in good faith. This type of observation
was made in John D.R. Leonard v. Pepsico, Inc. 88 F. Supp. 2d 116, (S.D.N.Y. 1999), aff'd 210
F.3d 88 (2d Cir. 2000), popularly regarded as the Pepsi Points Case.
The court in this case there was no valid agreement as it found the advertisement
unrealistic and unreal. In this case the court applied the objective theory of contract and found
that any reasonable person can understand that the soft drinks company does not have any legal
intention to affect the contract. Hence when the objective theory is applied in the present case, no
valid offer was made by the company as it lacked legal intention to execute the contract. Hence
no acceptance can take place. No reasonable person will find the advertisement realistic and
believe it to be true in good faith.