Summary of Leonard v. Pepsico
U.S. District Court, Southern District of New York, 1997
88 F. Supp. 2d 116
Procedural History: P filed suit in trial court. Court ruled for D.
Facts: D advertised a promotional for “Pepsi Stuff" on tv. In the commercial, it listed several items such as a jacket, a t-shirt, and sunglasses as prizes redeemable with pepsi points. At the end of the commercial, a Harrier Jet is shown, valued at 7m pepsi points. The jet was not listed in the catalogue of prizes. P sent in a check ($700K) purchasing 7m pepsi points asking for the Harrier Jet, which is in reality valued at $23m. D responded by returning the check with a letter stating that the Jet offer had been made in jest. P filed suit.
Issues: Did D’s inclusion of a Harrier Jet in the advertisement consist of a genuine offer, even though it was meant to be humorous? >No.
Was P’s subjective belief that the offer was genuine entitle him to enforcement of the promise? >No.
Rationale: The reasonable person clearly would not have taken the offer of the Harrier Jet seriously. D and P’s specific states of mind are irrelevant. Thus, no real offer was made in the context of the tv commercial, and P was not justified in believing it was a genuine offer.
Law: If an offer is made that is clearly meant to be a joke and interpreted as such by an objective standard, it does not constitute a binding offer.
A reasonable, objective person would have seen the commercial as a joke.
Pepsi does not possess a Harrier jet; it might in fact be illegal for them to own one. Not like Zehmer, who owned the land he was trying to sell. Some contracts are not enforceable because they involve illegalities.
Case could have been decided on illegality issue. But, judge took Mr. Loenard on his own terms, explaining what a joke was.
Courts care about the abuse of the judiciary, and will hold people who try to make a joke of it responsible.
>Importance of the reasonable objective person in context.
>Importance of the outward expression of the manifestation of intent.
>RT Sec. 1: very broad, vague. Some promises are binding and some are not. How do we figure out which is which?
>Most conventional way contracts are viewed:
-an acceptance – either by words or by performing
Promise for a promise is a bilateral contract.
RT Sec. 2: Manifestation adopts external interpretation
-courts are looking for things to hold onto in deciding if people are bound.
RT Sec. 17: Formation of a contract requires a bargain, and a mutual assent to the exchange.
RT Sec. 18: To manifest mutual assent, contracts can be bilateral or unilateral. Anything goes, but not everything will get there.
– Course of dealing (personality quirks, known by other party)
RT Sec. 22: Can drift into a contractual relationship with someone.
RT Sec. 24: Offer defined.
RT Sec. 50: Acceptance defined.
RT Sec. 71: Bargain for exchange.
RT Sec. 79: Adequacy of consideration.