Contracts I, Pages 293–306

Leonard v. PepsiCo

United States District Court for the Southern District of New York, 1999

Facts:

Pepsi aired a commercial advertising a new rewards program they were offering—"Pepsi Points." They showed several items and their point costs: a t-shirt; a leather jacket; sunglasses; and, most notably, a Harrier jet. In the actual magazine, the jet did not appear. The magazine said that any reward could be ordered as long as the orderer had at least 15 points, as remaining points could be purchased for 10¢ apiece.

Plaintiff raised $700,000 from acquaintances and gathered 15 Pepsi points. He then submitted Order Form for "1 Harrier Jet"; 15 Pepsi points; and a check for $700,008.50, to cover the remaining points and the standard $10 shipping. Defendant rejected plaintiff's submission however and returned his check. They explained that it is not in the catalogue and that its inclusion in the commercial was solely for entertainment purposes. Plaintiff responded, demanding his jet and threatening a lawsuit. Pepsi forwarded this to the advertising company who said it was clearly a joke. Plaintiff again sent a similar letter. Defendant then filed a suit seeking a declaratory judgment, and plaintiff filed this suit in response.

Issue:

Did the advertisement constitute an offer?

Rules:

  • Advertisements do not constitute an offer unless the advertisement is "clear, definite, and explicit, and leaves nothing open for negotiation."

  • Whether an offer has been made depends on the object reasonableness of the alleged offeree's belief that the advertisement or solicitation was intended as an offer. An obvious joke would not give rise to a contract.

Reasoning:

  • The commercial made no mention of the steps required to accept its alleged offer, instead relying on the physical catalogue to provide those details. It did not then, constitute an offer. The commercial did not seek to induce a specific action. It merely sought a reciprocal promise in compliance with the terms of the order form, which does not mention any attack aircraft.

  • In addition, no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier Jet. It was an obvious joke of "zany humor":

    1. It showed exaggerated claims that a reasonable viewer would understand as mere puffery
    2. It is improbable a highschooler would fly the Marine Corps's prize aircraft without a helmet, instrument checking, or consideration of danger
    3. Other parts of the commercial are exaggerated, such as blowing a teacher's clothes off. A school also would not condone the disruption the jet's use would cause or provide landing space for such a vehicle.
    4. The Harrier Jet's primary mission, according to the United States Marine Corps, is to "attack and destroy surface target under day and night visual conditions." It is designed to carry considerable armaments including 9,200 pounds of bombs and missiles. Using one as school transportation is not a serious idea, even if one can acquire one "in a form that eliminates [its] potential for military use."
    5. To acquire the requisite 7,000,000 Pepsi Points, one would have to drink 190 Pepsis per day for a hundred years, an impossible amount, or buy the ~$700,000 of Pepsi Points. The cost of a Harrier Jet is roughly $23,000,000. Such a deal is likely too good to be true.

Holding:

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First, the commercial was merely an advertisement, not a[n] . . . offer. Second, the tongue-in-cheek attitude of the commercial would not cause a reasonable person to conclude that a soft drink company would be giving away fighter planes as part of a promotion.

Judgment:

Defendant's motion for summary judgment granted.

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