Question

On September 1st, Facebook sent a message to all of its users saying that all registered users as of September 5th will be entered into a contest, to be selected at random, to win an all-expense-paid two-week vacation to Fiji. Teresa is a registered Facebook user-- she received and read the message. A week later, Facebook notified Teresa that she won the trip. That night, Teresa celebrated her good fortune by buying ten of her friends a round of drinks at the local bar.

The next day, Teresa went shopping. Because Teresa had never flown on a plane, she needed to buy luggage. When her employer refused to give her the two weeks unpaid leave so she could go to Fiji, she quit her job, assuming she could look for a new one when she returned from Fiji.

After Teresa submitted her formal letter of resignation to her employer, Facebook advised her that it no longer had the funds to award the free trip to Fiji that it had promised.

Was there an enforceable contract? Why or why not? Would a court enforce Facebook's promise under a theory of promissory estoppel? Why or why not? If Teresa was not a registered user of Facebook as of September 1st, but she then registered and agreed to Facebook's terms of use after hearing about the trip giveaway, would there then be an enforceable contract? Why or why not?

Answer 1

There is no enforceable contract. An enforceable contract should include agreement, consideration, capacity, and legality. The agreement should include both offer and acceptance. Here when Face-book offered the trip to Fiji, there is no acceptance shown from Teresa and hence no valid agreement present here. The contract also lacks consideration. Teresa has not promised anything of legally sufficient value in return for the promise to provide a trip and there is no bargained-for exchange. Hence consideration is absent in this promise and it is considered as a motive to provide a gift.

But a court would enforce the promise made by Face-book under the theory of promissory estoppel. Promissory estoppel allows parties to recover on promises even without consideration. The conditions to be satisfied are a clear and definite promise made by the promisor, the promisee must have justifiably relied on the promise, the reliance was definite and led to the substantial detriment and the enforcement of the promise is necessary to avoid injustice. Here the promise made by Face-book was clear and definite when they promised an all-expense-paid two-week vacation to Fiji for the registered users who win the contest. Teresa has justifiably relied on the promise as she bought new luggage, gave a party to friends and also quit her job for leaves. This led to a substantial detriment as she lost her job and money. The enforcement of promise is necessary to avoid injustice to her as she has made all efforts based on the promise. Hence all elements of promissory estoppel are satisfied here for the court to enforce the promise.

Yes, there will be an enforceable contract if Teresa has registered and agreed to Facebook's terms of use after hearing about the trip giveaway. The agreements entered online, where the acceptance is shown by clicking in ‘agree’ button is called click-on agreement. When Teresa clicked on the agree button and agreed to the terms of use, a binding contract is created and hence there would be an enforceable contract.