Reference no: EM132574764

In 1999, a Seattle man took a popular soft-drink company seriously when one of its commercials made an offer of a Harrier jet, the famous high-tech jump jet used by the U.S. Marines. In a television commercial that aired in 1995, the company jokingly included the Harrier as one of the prizes that could be received with a mere 7 million company points. Although that sounds like a lot of points to get from drinking the soft drink company's products (roughly 190 drinks a day for 100 years), the company also allowed customers to purchase points for 10 cents each.

The man did the math and discovered that the cost of the 7 million points needed for the jet was $700,000. He then put together a business plan, raised the $700,000 from friends and family, and the check, and an official order form with a demand for the Harrier jet.

The company wrote back, stating that the Harrier jet in the commercial was simply used to create a humorous and entertaining advertisement. They apologized for any misunderstanding or confusion people may have experienced and enclosed some free product coupons.

The free coupons did not satisfy the man, who then took the soft drink company to court. Finally, a federal judge for the Southern District of New York held that the company was only joking when it implied in its ad that it was giving away fighter jets. The judge noted that because the jets sell for approximately $23 million, no one could have concluded that the commercial actually offered consumers a Harrier jet. Instead, this was a classic example of a deal that was too good to be true.

1. What are the key legal factors present in the scenario?

2. What are the 4 elements of a valid contract? How do they relate to the scenario in question?

3. What is the objective theory of contracts? 

4. How does the objective theory of contracts apply to this case?

5. In your own words but based on research and analysis of relevant legal concepts and cases, why do you think the court held that there was not a valid agreement in this scenario? Provide support for your position.

6. Are advertisements generally considered offers? Explain.

7. How does this case differ from a reward situation in which a unilateral contract is formed upon completion of the requested act?

8. What recommendations (at least 2) would you make for a company considering an aggressive marketing campaign with giveaways of high value items? Explain the rationale behind each recommendation.