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False Advertising

Legal Factors in the Scenario
The case revolves around distinct elements of a contract. One of the legal elements in the
contract is offer and acceptance of the contract. The offer made by the company and the
acceptance by the customer is a major point of consideration. The validity of the contract stated
by the soft drink company is also a major issue of consideration. The company made a
commercial ad that stated that individuals who would obtain 7 million company point would be
given a Harrier Jet. An individual took the advertisement seriously and acted on it by purchasing
the 7 million company points required. He wrote a letter claiming the prize having fulfilled all
the requirements. The question thus is whether the company made a valid offer that was validly
accepted by the customer and whether or not the company has contractual obligations arising
from the advertisement.
Elements of a Valid Contract
A valid contract must fulfil certain basic elements. The first element is offer and
acceptance. An offer is made by one party that has a valuable item that they wish to exchange
with another party for another thing that they perceive to be valuable. The offer states the terms
of the contract. Acceptance is the action of one party to accept the offer made. Offer and
acceptance are closely linked (Peel & Treitel, 2007). The second element is a consideration.
Consideration is set to benefit both parties. In many instances, consideration has to be something
that has monetary value. Consideration can be in the form of money. Consideration ensures that
all parties are motivated to join the contract. The third important element is mutuality. The
parties must be willing to create a legally binding contract (Peel & Treitel, 2007). The fourth

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element is the legality. Valid contracts must be legal for them to be enforced by the law.
Unlawful promises or considerations cannot be used to create a legally binding contract. The
final element is the capacity (Peel & Treitel, 2007). The parties involved must have the capacity
to get into legally binding contracts.
Objective Theory in Contracts
The objective theory in contracts states that a contract is distinct from an agreement.
Contractual obligations arise if an unbiased third party could judge the behavior of parties in a
contract to amount to an agreement (Peel & Treitel, 2007). The unbiased party acts as the judge
to guarantee fairness. A contract must also have the key elements, especially offer and
acceptance.
Application of the Objective Theory
The case presents a scenario where a soft drink company created an advertisement that
loyal customers would be rewarded. The rewards included a Harrier Jet for consumers who
would garner 7 million company points. The company gave individuals the option of purchasing
company points. An individual managed to collect the 7 million company points and decided to
claim the prize of a Harrier Jet. The customer then sued the soft drink company for failing to
meet their contractual agreements. An unbiased judge was then put in charge of the case and had
to determine whether the parties behaved in a way, suggesting that there was a valid legal
contract. The unbiased judge stated that the price of the jet was too high and no reasonable
individual would believe that there exists a binding contract. The terms of the contract were also
not certain, and therefore no valid contract arose from the case.
Reasons Why the Court Held no Valid Contract Arose

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The court’s ruling was fair and grounded on reason. The soft drink company did not
make an offer to the public that expressly stated the contractual terms that had to be met.
Individuals who got 7 million points did not necessarily qualify to get a Harrier Jet. The jet was
an extravagant reward that the company would not benefit from. The company created a
humorous advertisement and did not mean to state that any individual who would garner 7
million points would be entitled to a claim of a Harrier Jet. Both parties in the contract did not
meet the mutuality requirement for a valid legal contract. Uncertainties regarding the intentions
should have been put in writing. The parties did not put the contract in writing and were not
willing to be enjoined in a valid contract. The customer should have sought clarification
regarding the contractual obligations of the soft drink company. The customer should also have
researched on the circumstances surrounding the contract before purchasing the points.
Advertisements as Offers
Advertisements are generally not considered to be offers. Instead, advertisements are
generally considered to be invitations to make deals (Peel & Treitel, 2007). Advertisers are under
no legal obligation to fulfil any contractual obligations that may arise from adverts. Adverts fail
to sufficiently define terms. They are also communicated to the general public as opposed to
specific people. The circumstances surrounding the publication of an advertisement show that
the advertisers have no intention of creating valid contracts. Advertisers use enticing language
that aims to attract consumers. They do not have legal obligations to fulfill the premises
suggested in an advertisement.
Differences Between the Case and Unilateral Contracts

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Unilateral contracts are contracts involving one party, making a promise and undertakes
performance without agreeing with the second party (Peel & Treitel, 2007). Unilateral contracts
are typically one-sided. If the offeree takes actions based on the offeror’s promise, the result is a
valid contract with valid contractual obligations. However, then offeree is under no legal
obligation to act on an offer made. Unilateral contracts are important in the business world
because they allow actions to be taken by a single individual or a group. Unilateral contracts
differ from bilateral contracts in that bilateral contracts involve a party exchanging mutual
promises. Unilateral and bilateral contracts can be breached. A reward situation is created where
one side makes a promise to make payments in return for a service. The soft drink company
made an advertisement that it would give its customers a reward of a jet for gathering 7 million
points. The advertisement required actions from both parties, and this means that it fails to meet
the qualifications of a unilateral contract.
Recommendations
Companies must seek to ensure that they minimize the possibility of legal suites. To this
end, one recommendation is that they should not sufficiently define the terms of the contract if
they are not willing to be bound by legal, contractual obligations that arise from the
advertisements. Having clearly defined contractual terms can result in clients raising lawsuits
against the company. The second recommendation is that the intent of the advertisement should
be clearly communicated. Courts generally consider the advertiser’s intent. As of such a clear
intent would help avoid legal cases.

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References

Peel, E., & Treitel, G. H. (2007). The law of contract (pp. 1-2). London: Sweet & Maxwell.