Commercial Transactions (Contracts)

Essay by MaiwynCollege, UndergraduateA+, September 2009

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1. What are the four elements of a valid contract?The four elements of a contract are agreement where one party makes an offer and the other party accepts the offer. Consideration is a promise to the other party that services and/or payment will be carries out according to the agreement. Contractual capacity which means both parties must be completely able to make reasonable decisions without any under lying medical problems that may impair judgment. Lawful object being the last of the four contract elements is making sure the terms within a contract are not illegal For example, two people can sign and agree to the terms in their contract, but if those terms within the contract break the law, then the contract is void.

2. Describe the objective theory of contracts. How does that theory apply to this case?"The Objective Theory of Contracts holds that the intent to enter into an express or implied-in-fact contract is judged by the reasonable person standard" (Cheeseman, 2006).

When determining if a contract exists the court reviews said agreements and decides if any reasonable person would conclude that the intent of said agreements were true. If the said agreements appear to be within reasonable standards then the court may determine that a contract is in fact present and that both parties may be bound by the terms of such contract.

With the Leonard vs. Pepsi case objective theory of contracts does apply because it seems unreasonable that Leonard would believe Pepsi was offering a fighter jet for an exchange of Pepsi points. Plus when Leonard went to fill out his order form to order his fighter jet for his Pepsi points and money, there wasn't any spot on the form that mentioned anything about the fighter jet. A reasonable person would be at...