Individual Project Course Section and Code Anytown\'s

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Course Section and Code

Anytown's mayor has suggested placing the town for sale on E-bay as a publicity stunt in order to promote tourism to the town. The concern is that a purchaser may actually believe that he can purchase the town. The results in the Pepsi Harrier Jet Case would suggest otherwise. In that case, PepsiCo ran an advertisement suggesting that consumers could purchase a Harrier Jet with sufficient Pepsi product points. The court determined that reasonable people could not have believed that they could actually win a Harrier Jet. Furthermore, advertisements do not generally constitute offers. There are differences however. E-bay's terms of usage may be sufficient to place this scenario outside of the circumstances of the Pepsi Harrier Jet Case.

Executive Summary: Pepsi Harrier Jet

Summary:

In the Pepsi Harrier Jet case, PepsiCo offered rewards based on points retrieved from products. Points could also be purchased for $.10. Part of the advertising campaign suggested that a person could get a Harrier Jet if they submitted 7 million points, a number that grossly exceeded the number of points on products that a household could consume in a lifetime, much less during the contest period. The claimant raised money to purchase points, hoping to redeem $700,000 for the Harrier Jet. Harrier Jets were fighter jets with a real value of over $30,000,000. Moreover, it was probably illegal for a civilian to own a Harrier Jet. When Pepsi refused to give him the Harrier Jet, the claimant sued for breach of contract. The court found in favor of Pepsi and determined that there was no contract.

Four elements of a valid contract:

The four elements of a valid contract include: an offer, acceptance, a meeting of the minds between the parties, and mutual consideration. Moreover, in order to seek enforcement of a contract, a party must perform its part of the contract (Larson, 2003).

The objective theory of contracts:

The objective theory of contracts imposes a reasonable person standard into contract formation. Would a reasonable and objective person, viewing the circumstances of the contracts and its formation, believe that a contract existed (West, 2008)?

In the Pepsi Harrier Jet case, the objective theory of contracts suggested that a reasonable person would not believe that a contract existed. First, the actual cost of the jet far exceeded the $700,000 in value that the purchaser attempted to redeem for the jet. The fairness of a contract does help establish whether or not a reasonable person would believe that a contract existed. However, more importantly, the jet in question was a fighter jet. It may not have been legal for an individual person to own that jet. More importantly, a reasonable person would not believe that a soft drink company could give away that type of weaponry in a promotion.

The validity of the agreement:

Looking at the four elements of a contract, it becomes clear that this scenario failed to meet any of the four basic elements. The offer of the Harrier Jet was not an offer. Advertisements are not generally considered offers, but, instead, are considered invitations to offer, because they lack sufficient detail to constitute an offer. There was certainly no meeting of the minds, because Pepsi was not seriously intending to offer the jet. Moreover, contracts are not valid if they violate public policy or laws. Because the Harrier Jet was a fighter jet, its ownership was almost certainly limited to military personnel.

Advertisements as offers:

Advertisements are not generally considered offers because they lack specificity. In order to have a contract, an offer must be sufficiently specific that, upon acceptance, it can be said that the parties have a meeting of the minds. Most advertisements are not sufficiently specific to create the requisite meeting of the minds upon acceptance.

Rewards and unilateral contracts:

In a reward situation, one party is paying the other party to perform a duty, but only the payor is under any obligation, because the acting party has no legal obligation to perform the duty (West's Encyclopedia of American Law). On the surface, this case would seem similar to a reward situation, but reward situations have traditionally been those that brought benefit to the payor. For example, before having to pay the reward, the payor might get information about a crime; get the return of a lost item, or something similar. In this scenario, Pepsi got no benefit from the man's actions.