Four Basic Element of a Valid Contract

Topics: Contract, Contractual term, Common law Pages: 1 (413 words) Published: March 5, 2012
The four basic elements of a valid contract are agreement, consideration, contractual capacity, lawful object. Objective theory of contracts is intent to enter into a contract. An example of this would be going to a car lot and say I will give you 5,000 for this use car. This is a valid contract offer. I intend on purchasing the used car if the car lot is willing to sell the car for 5,000. In the case of Pepsi vs. John Leonard objective theory doesn’t apply. Pepsi wasn’t truly offering the Harriet Jet in return for 7 million points. This was merely an advertising campaign to sell more Pepsi. In order for this to be a legal binding contract the seller and buyer need to be in agreement with all the terms. The reason why Judge Wood’s decision was in favor of Pepsi was because if Pepsi was truly giving away a Harriet Jet, they would require more than 7 million points. 7 million points converted into about $700,000. Any company would be foolish to make this type of deal just to sell their product. The jet’s value is about 23 million. The company would suffer a severe loss. Advertising are not generally considered offers. Advertisements are another way to communicate with consumers and to let them know what products are on sale and for how long. Advertisements are not considered a legal contract because if the seller runs out of the product the store isn’t held responsible for breaching a contract. An exception to the rule would be if a car dealership is so serious about selling a particular car that if a consumer is ready to buy then the dealer would honor that price. Normally this happens when a car dealership wants to get rid of a vehicle that is hard to sell and the dealership is willing to give up some of their profit to sell the vehicle. A reward situation is different from this case because John Leonard didn’t recover any lost or stolen property and return it to the proper owner. John Leonard was actually collecting Pepsi points and also borrowing money...
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