Leonard Vs. Pepsi in General, the Valid Essay

Excerpt from Essay :

LEONARD VS. PEPSI

In general, the valid elements of a valid and enforceable contract are (1) offer, (2) acceptance, (3) specificity, and (4) meeting of the minds. The Honorable Mayor's plan is extremely dangerous because it could very conceivably be interpreted as an enforceable contract to auction the town on Ebay. In principle, placing the town for auction on Ebay would satisfy all of the elements of a valid contract susceptible to a demand for specific performance in the event of a winning bid by a specific bidder who complies with the applicable rules established by Ebay.

That is because the objective theory of contracts holds that the validity of contractual agreements is not determined by what is actually (or subjectively) in the respective minds of the parties involved; rather, contractual validity is determined by the reasonable (i.e. objective) interpretation of the external circumstances, acts, and statements of the parties involved in negotiations. That doctrine applies directly to the Honorable Mayor's plan because the objective interpretation of actually following the procedures necessary to list anything (including a town) on Ebay are subject to reasonable objective interpretation by other parties that would be sufficient to justify their actual reliance on the apparent objectively reasonable interpretation of that act as creating an enforceable offer capable of being accepted according to the ordinary auction rules of Ebay.

Ordinarily, mere advertisements do not constitute valid offers that can be accepted by any person because advertisements are generally understood to be only offers to negotiate or to consider a purchase that might otherwise not have been considered by the entire population of those who may become aware of the advertisement. That is because it is understood that inventory is not necessarily unlimited and that advertisers may not be capable of satisfying…

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Ordinarily, mere advertisements do not constitute valid offers that can be accepted by any person because advertisements are generally understood to be only offers to negotiate or to consider a purchase that might otherwise not have been considered by the entire population of those who may become aware of the advertisement. That is because it is understood that inventory is not necessarily unlimited and that advertisers may not be capable of satisfying every person who responds to their advertisements. Nevertheless, even advertisements can become valid offers where they describe a specific (or one-of-a-kind) item, where they specify the number of units available, where they specify precise means of acceptance, or where they clearly indicate that the item described will actually be sold or transferred to a single person who wins a competition or an auction.

The Honorable Mayor suggests that the Ebay listing would be understood as a publicity stunt and that if anybody actually attempted to enforce the transaction, the 1999 Leonard v. Pepsi case provides a precedent upon which the town can rely. However, the Ebay situation is distinguishable from that case by virtue of several facts: (1) the Pepsi case was a symbolic humorous advertisement; (2) it did not specify a definite means of acceptance of the offer outside of the symbolic humor; (3) Ebay is not an advertising medium; and (4) Ebay listings are generally understood to create binding contracts pursuant to the explicit terms of use of Ebay.

Finally, the Honorable Mayor also suggests that the Ebay stunt would be safe because it is not the kind of unilateral contract (such as a posted reward for the finding and return of a lost wallet or a watch). However, His Honor misunderstands the relevance of that example. While it is true that the auction of a town on Ebay is distinguishable from the unilateral contract/reward situation, that distinction ignores the real risk in this case. There is no issue of unilateral contracts here: the issue is that Ebay listings create enforceable offers that are enforceable because they create a binding contract to deliver the item to a specific person (i.e. The winning bidder), provided only that the bidder complies with the explicit terms of the auction and the rules of Ebay.

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