Examples of Unilateral Contract Cases

Unilateral contracts, also known as one-sided contracts, are agreements in which one party promises to perform an action in exchange for the other party`s performance, but the second party is not obligated to fulfill any promises. In legal terms, a unilateral contract is an agreement in which one party makes an express offer to do something in exchange for the other party`s performance, and the offer is open for a specific period.

In the world of business, unilateral contracts are common, and there have been several cases where these types of contracts were enforced. Here are some examples of unilateral contract cases.

1. Carlill v. Carbolic Smoke Ball Company

In this famous case, the Carbolic Smoke Ball Company advertised that their product could protect people from influenza and other diseases. They offered a reward of £100 to anyone who contracted influenza after using their product as directed. Mrs. Carlill purchased the Smoke Ball and used it as directed but still contracted influenza. When she attempted to claim her reward, the company refused to pay, stating that the advertisement was not intended as a serious offer.

Mrs. Carlill sued the company, and the court ruled in her favor. The court found that the company`s advertisement was an offer, and Mrs. Carlill had accepted the offer by using the product as directed, thereby creating a unilateral contract. The court decided that the company was obligated to pay the reward as they had made a unilateral contract.

2. Leonard v. PepsiCo

In 1995, PepsiCo launched a promotion called “The Pepsi Stuff.” Participants collected points from Pepsi products and could redeem them for prizes such as T-shirts, hats, and even a Harrier jet. In an advertisement, Pepsi stated that a Harrier jet could be obtained for 7 million points. John Leonard, a 21-year-old student, collected 15,000,000 points and demanded his Harrier jet.

However, PepsiCo refused to provide the jet, stating that the advertisement was just a joke and not a serious offer. Leonard sued PepsiCo for breach of contract, and the court ruled in favor of PepsiCo, stating that no reasonable person could have taken the advertisement as a serious offer.

3. Guth v. Loft, Inc.

In this case, Guth, the majority shareholder of Loft, Inc., proposed that he would resign from his position in exchange for the company buying his shares at a designated price. The company accepted the proposal, and Guth subsequently resigned. However, the company refused to buy Guth`s shares at the agreed price, arguing that the agreement lacked consideration.

The court ruled in favor of Guth, stating that he had made a unilateral offer to the company, and they had accepted it by allowing him to resign from his position. The court concluded that the consideration for the contract was the relinquishment of Guth`s position, and thus it was a valid unilateral contract.

In conclusion, unilateral contracts can be enforced if they meet certain legal requirements. The offer must be clear and specific, and the terms must be unambiguous. The offeree must accept the offer by fulfilling the conditions set out in the offer, and there must be consideration for the contract. The above examples illustrate how unilateral contracts have been enforced in business cases.

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