There are four elements of a valid contract. First, there must be an intention on the part of each party to create a legal relationship. However, promises made In social conversation or among family members does not qualify under this contract element. Second, there must be an offer made by the seller and a corresponding agreement to all the terms of the offer done. Likewise, if the acceptance by the buyer creates a variance from the original buyer's offer, the acceptance is deemed as a counter offer. It is now up to the seller to accept the counter offer. Thus, no contract is consummated unless the seller accepts the counter offer of the prospective buyer. Third, all parties must have the legal capacity to enter into contracts. Generally, minors and insane persons cannot enter into contracts. Lastly, the purpose of the contract is to legal. Contracts that violate moral, legislative and other laws of the land cannot be enforced by the parties (F Steingold 185).
Objective theory of contracts.
The objective theory of contracts is the manifestation of mutual consent by both parties. This is what is termed as meeting of the minds – actual agreement of what is to be done, or undone, This protects the rights of the person from being victims of fraud -based offers and bids (Sweet 34).
Applying the elements and objective of contract, there is not valid contract if the a person makes a bid after reading the eBay website where the city planners' work largely involves shooting down the mayor's "creative" ideas to boost tourism; The auction process is only an advertising program to increase tourist travel into the state of Bigtown.
Consequently, the court held that there was not a valid agreement because advertisements are only invitations to enter into business. Advertisements are not offers. Thus, there cannot be an acceptance (person buying the plane) without an offer. A valid contract must have the offer elements to be legally binding to all parties concerned. The confusion regarding advertisements can be resolved by applying the objective theory of contracts. Bigtown and other companies advertising their products do not have the intention to comply with the offer elements to pursue a valid contract. Thus, there is no meeting of the minds between the company advertising and the readers /viewers of the advertisement.
In a reward situation, there is a unilateral contract is formed upon completion of the requested act. The reward giver intends to comply with the offer element of the contract. In turn, compliance with the reward giver's instructions is an acceptance of the offer. There is a clear meeting of minds in the reward situation (Armstrong 429).