Contracts the Seattle Man Who in 1999

Contracts

The Seattle man who in 1999 attempted to cash in points from a soft drink maker for a Harrier jet had his court case rejected because the advertisement concerning the jet was not considered to be a valid contract to which the company was bound. This calls into question the nature of contracts and advertisements. This paper will discuss contract law both in general terms and in terms of how it pertains to advertisements.

Nature of Contracts & Objective Theory of Contract

There are four elements of a valid contract: mutual consent ("meeting of the minds"), offer and acceptance, consideration, and good faith. In addition, the contract must be legal in order to be enforceable (Larson, 2003). The Harrier jet case fell apart on the issue of offer and acceptance as pertains to advertising, but there are other legal issues at work as well. One of these other issues is the objective theory of contract. The theory is a principle in law that "the existence of a contract is determined by the legal significance of the external acts of a party to a purported agreement, rather by the actual intent of the parties" (Farlex, 2011). The objective theory of a contract, therefore, relies on the believability of a purported offer for its legal worth. With respect to the Harrier jet, the soda company's claim that no valid offer was tendered rests on the objective theory of a contract. Since the advertisement's claims about the cost of the jet resulted in a theoretical purchase price around $700,000. It was ruled that this was clearly not a serious offer because the actual price of a Harrier jet was $23 million. The plaintiff should have reasonably known that the advertisement was not serious.

Opinion

I believe that the court upheld that there was not a valid agreement here because the court understood that the soda company had no intent of offering a Harrier jet for the equivalent of $700,000. This would result in a staggering loss for the company. While companies do occasionally take losses on sales, this would not be a reasonable loss, to sell a fighter jet at far less than cost. Additionally, the soda company is not in the business of selling fighter jets, a fact of which the plaintiff must have been aware. Under either the objective or subjective theory of a contract, there was no evidence of a bona fide contract in this situation.

Additionally, it must be considered whether the advertisement and subsequent agreement to purchase the jet by the plaintiff constitutes a valid contract. Typically, an advertisement does not constitute an offer, but is rather an "invitation to treat." The normal interpretation of a sale contract is that the customer makes the offer to purchase the product and then the company agrees to sell the product at the price for which it had been advertised. This is not the situation that occurred with the Harrier -- the company made an invitation to treat, but at no point did the company accept the offer from the plaintiff. The company rejected his offer and did not even provide him with the points needed to acquire the jet. Without the elements of a valid contract in place, the judge was right to reject the plaintiff's complaint.

Advertisements

Advertisements are not typically considered to be offers. They are considered in contract law to be invitations to treat. The advertisement is nothing more than a means of informing the consumer of a potential deal. A sale contract is formed when the consumer offers to purchase a good or service, and then the company accepts that offer. There are few circumstances in which an advertisement would be considered an offer. In this situation, the promotion was not even a legitimate invitation to treat, as there are no reasonable conditions under which a soda company would sell a Harrier jet for $700,000. But even if there was a legitimate invitation to treat, the soda company is under no obligation to accept the offer. The transaction does not fit the criteria of a reward contract, which would be unilateral in nature.

There may be a reward situation in which a unilateral contract is formed upon completion of that act. A reward situation with an advertisement is a different issue. For example, a lost dog poster offering a reward would be enforceable if somebody saw the poster, saw the dog and returned it to the owner. Under this situation, the poster constitutes an offer. The person claiming the reward needs to have known about the offer prior to undertaking any part of fulfilling it. In the Harrier situation, the advertisement did not constitute a reward. The Harrier jet was -- in theory -- for sale. As such, the advertisement did not fall into the category of a reward, wherein the plaintiff may have been able to claim entitlement to jet for having fulfilled the "offer."