Writing Valid Contracts

The four most important things to include in a contract are the parties’ names, the contract subject, the timeframe, and the price cost. A contract is a mutual agreement between the two parties included in the contract. An offer in contract law is expressing the desire to enter into a contract. It must be made with the intentions that the offer will become binding as soon as the offer is accepted. An offer can be revoked anytime before it is accepted as long as the revocation is communicated to the offeree. A contract cannot be revoked if it was in an option contract. The offer should contain all circumstances for the proposal being made. The offeree should have a present intent to contract so it can be made clear that the offeree is serious. Once the offer is made, the offeree cannot change any of the terms of the contract. It must be exactly the same. The offeror can set a deadline as to how long the offeree has to accept the offer. The offeror can also demand a certain method of acceptance to be used. Consideration is essential to a contract.

An acceptance is a response to the offeree that indicated that they approve of the terms of the offer. Once an offer is accepted, a legally binding contract is created. An acceptance must be intentionally made. The offeree must communicate to the offeror that they agree with the terms of the proposed contract. Both parties must be mentally competent for a contract to be legally binding. The contract also cannot contain anything unlawful; otherwise it is also not considered a valid contract. The communication of the acceptance of an offer can be bilateral or unilateral. In a bilateral contract, both sides are making a promise. In the acceptance process of bilateral contracts, the offeree communicates to the offeror that they are promising to do what has been requested of them. In a unilateral contract, the offeree shows that they are accepting the terms of the contract by doing what was requested in the offer. Had this been a valid offer, Leonard would have needed to let PepsiCo know that he was accepting entrance into the contract and making a promise because it is a bilateral situation. Leonard v. PepsiCo differs from reward situations because Leonard did not perform. Leonard was promising something just as PepsiCo was promising something.

The objective theory of contracts says that an offer can be considered valid if a reasonable person that is in the position of the offeree would believe that the offeror was serious in the offering on contract. This theory applies to Leonard v. PepsiCo because the court based there judgment on it. The court decided that any reasonable person would have realized that the commercial was meant to be a joke and wouldn’t have taken it seriously; therefore the commercial was not considered an offer of contract. No reasonable person would believe that PepsiCo would give a 23 million dollars jet in exchange for 700 thousand dollars.

The internet has been very helpful with connecting businesses to their customers. Marketing and advertising over the internet has become increasingly popular over the last several years. As a result, the Federal Trade Commission has to enforce tons of laws everyday on internet marketing and advertising. The Federal Trade Commission Act was passed to prevent deceptive and unfair practices against consumers. Claiming to auction Anytown on EBay would be deceptive and hoping they will come tour Anytown when you have no intentions of selling in unfair. Section 5 of the Acts defines deceptive practices as anything misleading as well as anything that would have an affect on the consumers’ decision about the service or product (Federal Trade Commission).

The Federal Trade Commission Act states that all claims made in advertisements must be substantiated. When it involves matters that concern safety, health or performance, it is even more important that the claims are valid.  The Federal Trade Commission Act assures that consumers are told the truth and aren’t misleading in any type of advertisements that they are sent over the internet. They hold all sellers responsible for all claims that they make about their products. The act says that all disclaimers and disclosures must be clear and concise, and that the consumer can notice, read, hear, and understand them. Advertising is usually considered an invitation to treat and not an offer.  

References

Federal Trade Commission. (2011). GUIDES FOR THE USE OF ENVIRONMENTAL MARKETING CLAIMS. Retrieved from http://www.ftc.gov/bcp/grnrule/guides980427.htm on February 25, 2011.