Leonard v. Pepsico, 88 F.Supp.2d 116 (S.D.N.Y., 1999).
Facts:
Parties: John Leonard vs. Pepsico.
Pepsi was running a promotion for “Pepsi Points”, where you could accrue Pepsi Points and buy
items from a catalog. Points could be accrued either by drinking Pepsi or by buying them
outright.
Pepsi aired a commercial illustrating several things you could buy with Points, such as a t-shirt for
75 Points, as well as a Harrier jump jet for 7,000,000 points.
The jet was listed in the ad, not in the catalog.
Leonard saw the ad and wanted a Harrier jet, so he raised $700,000, the amount needed for
7,000,000 points, and sent it in to Pepsi as an order for a Harrier.
Pepsi refused to honor his order.
Leonard sued, claiming that the ad was an offer to sell the jet.
Pepsi also sued, seeking a declaratory judgment that they were under no obligation to give
Leonard the jet.
Issue: Whether ads are offers when they do not include clear terms or a place, time, or manner of
acceptance, or whether they are merely invitations to negotiate.
Rationale:
The court said that hear the Restatement Second of Contracts §26 and §29, which state that a
manifestation of willingness to enter a bargain does not equal an offer if the person making it
doesn’t intent to conclude the bargain until he’s assented again.
The court stated that the general rule is that “advertisements do not create any power of
acceptance”, the one exception being the exception described in .Lefkowitz
The court said that this ad failed to meet the standard, where ads = offers if and only Lefkowitz
if they are clear, definite, explicit, and leave nothing open to negotiation, because a) the
commercial reserved the details of the offer to the catalog, which made no mention of the jet,
and b) because even if the commercial and the catalog had both mentioned the jet, the terms
would still have been vague enough to not constitute an offer under .Lefkowitz
The plaintiff claimed that the ad was a unilateral offer, such as in the case of Carlill v. Carbolic
Smoke Ball. The court distinguished this case from , however, because in , there wereCarlill Carlill
specific, definite terms that anyone who performed the detailed instructions of the ad would
receive a reward. In , by contrast, there was no direction, merely encouragement to Leonard
accumulate Pepsi Points and buy items from the catalog. Therefore, the court held that the ad
was not a unilateral offer.
The court also held that a reasonable person would not have thought that the ad was an offer,
and therefore it was not.
Disposition: The court granted summary judgment to the defendant.
Holding/rule: Because the ad for the Harrier jet had no clear terms, because it contained no instructions
for performance, and because a reasonable person would not have thought that it constituted an offer, it
was not an offer for the jet but merely an advertisement using “zany humor”. Leonard v. Pepsico, 88
F.Supp.2d 116 (S.D.N.Y., 1999).
