Brief-Leonard v. Pepsico - Contracts PDF

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Leonard v. Pepsico, 88 F.Supp.2d 116 (S.D.N.Y., 1999). Facts:  

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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: 

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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 Lefkowitz standard, where ads = offers if and only 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 Carlill, however, because in Carlill, there were specific, definite terms that anyone who performed the detailed instructions of the ad would receive a reward. In Leonard, by contrast, there was no direction, merely encouragement to 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)....