Elements of a contract
A contract is a legally binding agreement made between two or even more parties which call for a valid contractual relationship - Contracts essay introduction. All valid contracts are obliged to specific contractual elements which make them to be binding.
Firstly, Consideration is entitled in creating a valid contract. This implies that both parties should exchange something, which defines the standards of the contract. Neither of the parties should go free of providing an object of exchanging for the contract.
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Elsewhere, the intention of the contract should be forming a legal relationship. Every contract should have the prescription of a legal suit and the parties should have the ability to defend their stands in the court.
Every contract should be bargained by the capacity of providing an offer and an acceptance. The parties into the contract should be at personal wills of engaging into the contract. No one should enter into a contract forcefully. However, their expressions should not always be in writing or in oral terms. However, it may be implied. Parties in the contract should be in capacity to enter in contracts. They should be of sound capacity and not infants. Any effects of incapacities invalidate such contractual relationships. (Posner, 2003)
Objective theory of contracts.
Generally, every valid contract should be in rich protest of the contractual objective theory. The theory states that every contract should be evident of an intention of going into a contract rather than any possible subjective contractual intention by the parties if judged/analyzed by a competent/reasonable judge. However, a mere offer does not imply a contract, the environment and the state of conduct allied to the parties should validate the contract.
In the case between Leonard and PepsiCo, the objective theory is compromised hence the contract is invalid. Ideally, this was a mere offer of PepsiCo, which was made by acts of undue excitement. To the company, the offer was a situation to increase its sales through a more excitement of its customers. It could not meet a reasonable judgment that a harrier yet jet worth $23 could be exchanged that cheap by $700,000
Court judgment of an invalid agreement
Generally, this was an offer formulated via an undue excitement. However, the intention was not to form a legal relationship. Since the contract did not elsewhere meet the implied requirements of the offer and acceptance, the offer by the company was not implied to been acceptable to Leonard. Again, both the conducts and the surrounding environment to the contract could not imply imposition of a valid contract since the existing environment was not within safeguarding any business expectations. (Slawson, 1996)
An advertisement is not an offer. Every offer should imply a bargain in which the other party should accept. An offer intends in meeting the wills of the parties. Contractual offers should have the evidence that they involved in an objective engagement in their activity. Assenting to the objective ratifies the formation of a contract. Either, the objective parameter provides that there is a positive impression of giving an offer by one party while accepting the same by the other party when judged by a person of a reasonable capacity. However, advertisements are merely tools of creating undue excitement to one party by the other and do not formalize the objective requirement of a contract. There is no implied relationship between the parties. (Charny, 1991)
Difference between the case and a reward.
A reward is an implied contractual relationship when one party offers to provide the other with a material object after completing a certain activity. In its implied capacity, one party will offer a reward while the other party chooses to accept such a reward under the prevailing contractual conditions.
Charny, D. (1991) Hypothetical Bargains: The normative Structure of Contract Interpretation. Michigan Law Review, Vol. 89
Posner, E. (2003) Economic Analysis of Contract Law After Three Decades: Success or Failure? Yale Law Journal Vol. 112
Slawson, W, (1996) Binding Promises: The late 20TH Century Reformation on Contract Law. Princeton, NJ: Princeton University Press