BUS 206 Chapter 14 Summary
Case I: The Difficult Promotion Customers were enticed by a Pepsi marketing to accumulate
"Pepsi points" and exchange them for goods. In an early advertisement for the program, three
young guys are sitting in front of a high school, one reading his Pepsi Stuff catalog while the
others drink. If they do not have exactly enough points for the reward they desire, they may
purchase more points for 10 cents apiece. Pepsio All gaze up in wonderment at a thing. A harrier
aircraft swings into view and settles next to the bikes on the side of the school building. A
teacher is stripped down to their underpants by the wind as many kids flee for protection.
"Now, the more Pepsi you drink, the more great stuff you're going to get," says the voice-over.
"An offer appears as 7,000,000 Pepsi points for Harrier Fighter. Leonard sent in 15 Pepsi points
and 700,000 for Pepsi points in order to obtain the jet. Pepsi said it was not available. He sued
them for breach of contract. The formation of the agreement begins when the party beginning the
contract, referred to as the offeror, makes an offer to another party, referred to as the offeree. The
offer and the acceptance make up the agreement, which is the initial element of a contract. A
serious offer has critical elements.
Intento is the first component of the offer. To be obligated by the offeree's acceptance, the offeror
must demonstrate its purpose. We apply an objective standard for interpreting contracts, which
means that the courts are only interested in the parties' external expressions of purpose and not
their interior thought processes. Preliminary Negotiations, an invitation to negotiate or an
expression of potential interest in an exchange is not an offer because it does not express any
willingness to be bound by the terms of the offer; instead, it is interpreted by the court as a
reasonable person would interpret the parties' words and actions. The court does not try to infer
what the parties may have been secretly thinking. When you are either attempting or making an
offer you should use extremely specific wording that states your objective clearly when starting
talks over a potential contract.
A further example of a request to make an offer. An advertisement may, under some situations,
be seen as an offer. The Case Nugget at the top of this page illustrates how the courts will
consider the advertisement as an offer if it is clear from the phrasing that the retailer did, in fact,
intend to make an offer. Sometimes, even if it wasn't what the advertising consciously intended,
the advertiser's aim does seem to be to enter into a contract. Some jurisdictions have consumer
protection laws requiring marketers to mention in their advertisements that quantities of the item
are restricted to the first X number of individuals or that rain checks will be available if there is a
bait-and-switch advertising that seems as an offer.
