A promotional campaign launched by PepsiCo (defendant) featured a variety of products and a Harrier Jet that came with the number of ‘Pepsi Points’ required to acquire the given item. Leonard (plaintiff) was willing to redeem the jet that was worth approximately $700,000 in Pepsi Points and $23 million in real-life money (Epstein, 2011). Even though Leonard was not able to collect all the required Pepsi Points, he decided to purchase the remaining points with monetary resources. PepsiCo rejected Leonard, stating that the company’s offer was a joke and could not be seen as an offer. The situation was resolved in court, with the plaintiff losing the case due to the lack of conditions that might turn PepsiCo’s advertising into an enforceable contract.
Could it be that an enforceable contract might get created under the circumstances of a person accepting the terms of unclear advertising that might also be distantly rendered as a joke?
The court’s decision does not overrun any of the existing laws since general advertising does not represent an offer. This is true even in the case where an item provided via advertising comes with a price therein (Morales et al., 2000). The required condition is that there should be an invitation or an evident commitment suggesting that further action could be taken. Accordingly, the motion for summary judgment attained by PepsiCo was completely legal. In the words of Morales (2000), the rule for the case was that ad advertisement could not be considered an offer unless it is completely clear and leaves no room for negotiation. In the case of Leonard v PepsiCo, the advertising was intended to be a joke, making it not sufficiently clear for the potential customers if the offer was real and accessible.
It may be safe to say that mere inclusion of an order form in the advertising does not instantly turn it into an offer. When nothing is open for negotiation and the advertising is explicit and clear enough, it may be considered an offer that also creates a contract (Cohen, 2000). It should also be considered that an offer can be made only in the case where an advertisement is described in rich detail. For PepsiCo, it was essential that the company utilized limiting words and evaded any definite conditions in its advertising, so there were no offers established with the Harrier Jet commercial (Epstein, 2011). Another important factor that has to be mentioned when reviewing Leonard v PepsiCo is that there should be a reasonable, objective person that would perceive the ad as an offer and not a playful backbone to marketing the intended product. Knowing that the initial advertising was meant as a joke, it should be noted that it does not turn advertising into an offer.
Within the framework of the current case, it may be stated that Leonard’s completion of the order form became not an acceptance of the offer but the first offer in this matter. PepsiCo did not make any offers through the interface of its commercial since it did not include any rich details about the possible offer (Morales et al., 2000). Even though the jet could have been contained within the catalog, it would not be perceived as anything except for the advertising due to the existence of limiting language. According to Cohen (2000), there were even more reasons to consider PepsiCo’s ad a mere joke since an approximately $20 million aircraft would never be sold for $700,000. Despite the lack of additional promotional materials and statements from PepsiCo, it was evident that the commercial was not an offer, including the jet joke.
In cases where the terms of an advertisement are litigated, the courts are most likely to find that advertising never represents an offer to sell. Therefore, there is no reasonable obligation that would force advertisers to provide the goods mentioned in their commercials. The Leonard v PepsiCo case paved the way for a difficult burden to be overcome since there has to be a decision made regarding the creation of a binding contract in accordance with the terms of an advertisement.
If I were the judge, in this case, I would have ruled the same way since it is irrational to believe that a $20 million-dollar jet would be sold by a large enterprise to a mere customer for $700,000. There was no explicit contract between the parties that could be considered a legal condition for an offer. Since no reward cases were introduced by the advertisement, it would be more than reasonable to perceive the latter as a surreal interpretation of inducing customers to purchase the company’s products. This case is significant because it created premises for many companies to be more careful in terms of how they portray their products and what strategies they utilize to appeal to the target segment. The issue of creating ads that look life offers became relevant after the Leonard v PepsiCo case and motivated many enterprises to look at their advertisements from several different perspectives ever since.
Cohen, L. E. (2000). The choice of a new generation: Can an advertisement create a binding contract. Missouri Law Review, 65, 553-569.
Epstein, D. G. (2011). Response to reasonable expectations in a sociocultural context. Wake Forest Law Review, 1, 54.
Morales, A. C. (2000). Pepsi’s Harrier Jet commercial was not a binding offer to contract. Journal of the Academy of Marketing Science, 28(2), 318.
Morales, A. C., Cava, A., Sacasas, R., & Burke, D. (2000). Marketing and the law. Journal of the Academy of Marketing Science, 28(2), 316-320.