Leonard v. Pepsico, Inc.

88 F. Supp. 2d 116 · District Court, S.D. New York · 1999

Facts

PepsiCo ran a "Pepsi Stuff" promotion, advertising various merchandise redeemable with Pepsi Points, including a television commercial that humorously depicted a Harrier Jet available for 7,000,000 Pepsi Points. Plaintiff John Leonard, believing the commercial to be a serious offer, raised $700,000 to purchase the necessary points and attempted to redeem them for the jet. PepsiCo rejected his order, stating the jet was not part of the promotion and the commercial was merely humorous.

Procedural history

PepsiCo initially brought a declaratory judgment action in this district. Leonard then filed a suit in Florida state court, which was removed to the Southern District of Florida and subsequently transferred to this Court. Leonard moved to dismiss PepsiCo's declaratory judgment action for lack of personal jurisdiction, which was granted. Leonard also moved to voluntarily dismiss his Florida action, which was granted on condition he pay attorneys' fees. After failing to pay, Leonard elected to proceed with litigation, and the parties stipulated to dismiss prior appeals. PepsiCo then moved for summary judgment.

Issue

Did PepsiCo's television commercial, featuring a Harrier Jet for 7,000,000 Pepsi Points, constitute a valid offer that could be accepted by the plaintiff to form a binding contract?

Holding

No, the court held that the commercial was not an offer and granted summary judgment for PepsiCo. The court found that no objective, reasonable person would have understood the commercial to be a serious offer for a Harrier Jet.

Rule

Advertisements are generally not offers but invitations to negotiate, unless they are clear, definite, explicit, and leave nothing open for negotiation. Under the objective theory of contracts, an offer is determined by what a reasonable person would understand it to convey, and an offer made in obvious jest does not create a binding contract. Furthermore, the alleged contract failed to satisfy the Statute of Frauds, which requires a writing for the sale of goods over $500.

Read the full opinion on CourtListener

Case brief last reviewed . Prepared by CaseReader from the published opinion.