International Legal and Ethical Issues in Business
Abstract
For an agreement to be considered a valid contract, it should have four vital elements that include an offer, acceptance, intention to be under legal consequences, and consideration. If any of the mentioned terms are missing from the contract, it is not legally binding. Objective theory of contracts is a legal notion that rejects the enforcement of thelaw that appears to be too good to be true. The contract, according to this theory, is binding only if a reasonable person from outside will judge objectively that the offer has been made, and it has been accepted. The soft drink company, in the given case study, made the claim for giving Jet Hairier in a humorous way, but the plaintiff sued the company because he thought the company did not comply with their offer.
The context in which the advert was made makes it too good to be true. Any reasonable outsider will consider the claim made in the advert as not a valid offer. Since, it was not a valid offer then there is no logic of being it accepted. If there is no acceptance and offer then the contract is void. Generally advertisements are not considered offers; instead they are an invitation to make deals that even allow the advertisers not to accept selling the item as per the advertised price. For any advertisements to be considered offers, it should be adequately definitive in its terms. It means it should explicitly mention the quality, price, quantity, and the description of the product or service. It should be communicated to a specific group of people and not to general masses. The way and circumstances in which the advert is shown should represent that the company intends to enter into a legal binding contract.
International Legal and Ethical Issues in Business
For an agreement to be considered valid a contract, it must meet the criteria shown below. If any of the mentioned terms are missing from the contract, it is not legally binding
Offer
The first element for a valid contract is the presence of an explicit offer to do something or to avoid doing something (Keenan & Riches, 2007). For instance: offer to lease, or a quotation given by sub-contractor to the chief contractor.
Acceptance
The second element for a valid contract is the acceptance to the offer. The offer must be accepted in its true essence without any conditions. If there are new or altered terms, this is termed as counter offers. The acceptance must be accordance with the method described in the offer.
Intention of Legal Consequences
The third vital element is the intention of the parties to enter into a binding that is legal and can be enforced by law. The parties need not to write or state the legal requirements and consequences, but it is presumed without its being written. In case, the parties intend not to make it legally binding, they must state that the contract is not legally enforceable.
Consideration
Consideration is the most important element of a contract. Consideration is a notion that one party promises to do something in return for a promise by another party to something of desired value. Consideration can be considered as an agreed price for the promise of someone. Normally, consideration is the monetary value but is not necessary.
What is the Objective Theory of Contracts?
Objective theory of contracts is a legal notion that rejects the enforcement of a law that appears to be too good to be true. The contract, according to this theory, is binding only if a reasonable person from outside will judge objectively that the offer has been made and it has been accepted (Boundy, 2010). This theory helps to reject outrageous or ridiculous claims from being considered legally enforceable.
For instance, “A” makes an offer to “B”, and “B” accepted the offer. “A” had in mind that he was just doing fun, but “B” sued him. In the court of justice, the offer produced by “A” will be evaluated with an objective approach that whether a reasonable person would consider it as a valid offer or not.
How does the Objective Theory of Contracts Apply to this Case?
Objective theory of the contracts is the major guiding force, which helped decide the fate of this case. The soft drink company made this offer in a humorous way, but the plaintiff sued the company because he thought the company did not comply with their offer. The context in which the advert was made makes it too good to be true. Any reasonable outsider will consider the claim made in the advert as not a valid offer. Since, it was not a valid offer then there is no logic of being it accepted. If there is no acceptance and offer then the contract is void.
In your own Words, Why do you think the Court held that there was not a Valid Agreement here?
The court held that the agreement was not valid due to the objective theory of contracts and the four vital elements of contracts. If the offer made by the soft drink company is evaluated by a rational individual who is not involved in the case, it will clearly show that the company was just adding an element of fun in the advert. As per the four significant elements of a contract, it needs to have an offer, agreement, intention to legally make it binding, and consideration. Since the first three elements of the contract were missing in the case; therefore, it is an invalid contract. Additionally, the advert referred people to the product catalog from which people could have their favorite stuff. Harrier Jet was missing from the product catalog as well that makes the position of the company stronger.
Are Advertisements Generally Considered Offers? Explain.
Generally, advertisements are not considered offers; instead they are an invitation to make deals that even allow the advertisers do not accept selling the item as per the advertised price. For any advertisements to be considered offers, it must meet the following criteria:
- It should be adequately definitive in its terms. It means, it must explicitly mention about the quality, price, quantity, and the description of the product or service
- It should be communicated to a specific group of people and not to general masses
- The way and circumstances in which the advert is shown represents that the company intends to enter into a legal binding contract (Kelly & Holmes, 2005).
If each of the above elements is there in the advertisement, it can be considered a valid offer and thus makes it a legal binding contract.
How does this Case differ from a Reward Situation in which a Unilateral Contract is formed upon Completion of the Requested Act?
The elucidation of the Carlill v Carbolic Smoke Ball Company Case represents how the mentioned case is different from a reward situation that shows that a unilateral contract is formed upon completion of the requested act.
Carbolic Smoke Ball Company produced a medical device that helped prevent influenza and cold related medical problems. The company gave a newspaper advert in which it claimed that if anyone uses Smoke Ball three times a day for two continuous weeks, and if he/she suffers from influenza and related problems, the company will give £100 to him/her as reward. To further convince the customers, the company wrote that they have already deposited £1000 in the Alliance Bank.
- The claim made by the company is considered a valid offer because the way the company expressed it does not make it a mere sales puff. The explicit sentences like “The company has already deposited £1000 at Alliance Bank” is an enough piece of information to show the intention of the company to enter into a legally binding contract
- The offeree accepts the offer by accepting to buy the product as per the described method.
References
Boundy, C. (2010). Business contracts handbook. Farnham, Surrey, England: Gower Pub..
Keenan, D. J., & Riches, S. (2007). Business law (8th ed.). Harlow: Pearson Longman.
Kelly, D., & Holmes, A. E. (2005). Business law (5th ed.). London: Cavendish.
Lawson, R. G. (1998). Business law. London: Pitman.
