A valid contract, in law is an agreement that creates an obligation binding upon the parties thereto. The essentials of a contract are as follows: (1) mutual assent; (2) a legal consideration, which in most instances need not be pecuniary; (3) parties who have legal capacity to make a contract; (4) absence of fraud or duress; and (5) a subject matter that is not illegal or against public policy.
In general, valid contracts may be either oral or written. Certain classes of contracts, however, in order to be enforceable, must be written and signed. These include contracts involving the sale and transfer of real estate; contracts to guarantee or to answer for the miscarriage, debt, or default of another person; and, in most states of the U.S., contracts for the sale of goods above a certain value.
Pepsi Case
Offer made in jest: an offer in which the contractor knows or should know it made in jest is not a valid offer. Even if it is accepted, no contract is created.
This case is an example of jest and how you shouldn’t act too quickly to construe an offer. Ads are generally not considered an offer and order form is not an acceptance.
Judge treated seriously distinctions in language and circumstances, e.g. the absence of words indicating the number of quantities, the humorous nature of the ad.
Harrier costs around $23,000,000. The court ruled it was obvious that it's a joke to offer Harrier jet for PEPSI-points worth only $700,000.
The notion of traveling to school in a Harrier Jet is an exaggerated adolescent fantasy. In this commercial, the fantasy is underscored by how the teenager's schoolmates gape in admiration, ignoring their physics lesson. The force of the wind generated by the Harrier Jet blows off one teacher's clothes, literally.....
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