Question

In 1999, a Seattle man took a popular soft-drink company seriously when one of its commercials made an offer of a Harrier jet, the famous high-tech jump jet used by the U.S. Marines. In a television commercial that aired in 1995, the company jokingly included the Harrier as one of the prizes that could be received with a mere 7 million company points. Although that sounds like a lot of points to get from drinking the soft drink company's products (roughly 190 drinks a day for 100 years), the company also allowed customers to purchase points for 10 cents each.

The man did the math and discovered that the cost of the 7 million points needed for the jet was $700,000. He then put together a business plan, raised the $700,000 from friends and family, and submitted 15 points, the check, and an official order form with a demand for the Harrier jet.

The company wrote back, stating that the Harrier jet in the commercial was simply used to create a humorous and entertaining advertisement. They apologized for any misunderstanding or confusion people may have experienced and enclosed some free product coupons.

The free coupons did not satisfy the man, who then took the soft drink company to court. Finally, a federal judge for the Southern District of New York held that the company was only joking when it implied in its ad that it was giving away fighter jets. The judge noted that because the jets sell for approximately $23 million, no one could have concluded that the commercial actually offered consumers a Harrier jet. Instead, this was a classic example of a deal that was too good to be true.

Write a paper of 4–6 body pages that answers the following questions, including an in-depth explanation of the supporting rationale:

• What are the key legal factors present in the scenario?
• What are the 4 elements of a valid contract? How do they relate to the scenario in question?
• What is the objective theory of contracts?
• How does the objective theory of contracts apply to this case?
• In your own words but based on research and analysis of relevant legal concepts and cases, why do you think the court held that there was not a valid agreement in this scenario? Provide support for your position.
• Are advertisements generally considered offers? Explain.
• How does this case differ from a reward situation in which a unilateral contract is formed upon completion of the requested act?
• What recommendations (at least 2) would you make for a company considering an aggressive marketing campaign with giveaways of high value items? Explain the rationale behind each recommendation.

Answer 1

1. The main legal factor that present in the scenario is the contract despite of the fact that it is valid or not. He soft drink company put a deal in front of customer in which they claimed that whoever, able to attain 7 million company points will be consider eligible for the Harrier jet. Sine, the customer somehow arranged and able to attain the requested points. Then customer remind the company about their promise and waited to see that soft drink company whether meet its end of bargain or not. Moreover, the issue is whether the suggestion of the company for an extravagant reward constitute a valid contract or not.

2. There are four elements that are needed to have a valid contract:

The first is the “Offer”, which means one side of the parties participating in the contract makes a promise to do or not to do a specific action. Another part to this element is called “Consideration”, something was promised in exchange for the above mentioned specific action or no action. The something promised can be a specific amount of money, the promise of a specific service, the agreement to follow through with the no action proposed. The consideration aspect of the elements is the motivation to enter the contract. This element sets a contract a part from a present or gift. A present or gift is given without expectations of reciprocation or payback, even if there is a promise of reciprocation there is no enforceable agreement because there is no consideration of the agreement or promise. The second is called “Acceptance”, the offered promise of action or no action is accepted by both parties with no arguments. Acceptance in a contract is the sign here portion, yet most use a handshake as well but always the signature of both parties and a witness.

The third is called “Legal Purpose”, this is to ensure that no illegal terms or actions are present in the contract. The fourth and last element is called “Mutuality”, is a get together or meeting to discuss the agreement in the contract, also known as meeting of the minds. This is where the parties in the contract ensure that both parties understand and agree to the terms of the contract. This element ensures that all participants are of sound mind and is in complete understanding, so if there is a contest to the contract on either side it is proven that everyone understood the terms of the contract and is on the same page. How these elements relate to the issue at hand is that there was not a signed contract between the soft drink company and the individual, who collected the company points, neither was there a meeting of the minds. In dealing with such a large promise of reward it would not stand up in court because of the lack of elements in this agreement, although there might be a suit for false advertising. This scenario is what most would call dishonest dealing from the company but there was no true contract between the two parties in this scenario.

3. The objective theory of contract states that an agreement between two parties exists if a reasonable person could judge the acts and behaviors of the parties enough to objectively construe agreement.

The objective theory of contracts holds that an agreement between parties is legally binding if, in the opinion of a reasonable person who is not a party to the contract, an offer has been made and accepted.

4. This theory applies to this case. The Seattle man believed that the harrier jet was one of the prizes he could receive if he met all the conditions as shown in the advertisement. The soft drink company stated that it was just a humorous and entertaining advertisement and assumed that everyone would laugh and not take it seriously. When the case was taken to the court, the judge held the responsibility of the reasonable person, because the article did not specify that there was a jury. He looked at the advertisement and agreed that the advertisement had no intent to mislead. The judge used his common sense and considered that no one would really offer a harrier jet worth 23 million dollar to give away and moreover no objective person could reasonably believe they were offering the harrier jet to consumers.

5. There was no legal contract made, any reasonable person would understand that the advertisement was made for mere promotion and entertainment purpose and the judge saw the humor in the harrier jet offer. A harrier jet which costs 23 million dollars cannot be given for 7,00,000 $ and moreover a harrier jet cannot be possessed by any normal citizen of the united states as it’s a military aircraft. So, logically, there was no offer made in this case.

6. Advertisements are usually not considered as offers because they are not sufficiently definite, they are not communicated to a specific person or crowd and the circumstances of publication indicate lack of contractual intent. Advertisements are usually considered to be “invitations to deal” that is invitations to the public to make offers to the advertisers.

7. A unilateral contract is defined as one in which only one party makes a promise while the other party delivers something based on this (Anson and Huff cut). A unilateral contract also has elements of an offer which the case in questions seems to lack. Also the company had no intent of honoring the pact something that is of great importance when it comes to such contracts.

8. First of all the companies should not make false advertisements as there can be legal consequences for lying to customers. The rights of consumers are protected by consumer protection agencies and companies can find themselves in hot water should their acts be considered deceitful. At the same time, the giveaways should happen if they are deserved again consumers have rights.   The other piece of advice is that companies should make exaggerations that any reasonable person can conclude to be so otherwise if they even the list bit achievable, the company may face legal action that would see it deliver. It would also help for companies to word their advertisements cleverly in and in a manner that does not constitute an offer because an offer can be legally binding.