The Pepsi Harrier-Jet Case.
John D. R. Leonard took PepsiCo seriously when one of its Pepsistuff commercials made an offer of a Harrier jet—the famous high-tech "jump jet" used by the U.S. Marines. In a TV commercial that aired in 1995, Pepsi jokingly included the Harrier as one of the prizes that could be received with a mere 7 million Pepsi points. While that sounds like a lot of points to get from drinking Pepsi products (roughly 190 Pepsis a day for 100 years), the company also allowed customers to purchase points for 10 cents a piece.
Leonard did the math, and discovered that the cost of the 7 million points needed for the jet was a mere $700,000. He then put together a business plan, raised the $700,000 from friends and family, and submitted 15 Pepsi points, the check, and an official order form along with a demand for the Harrier jet.
PepsiCo wrote back, stating: "The Harrier jet in the Pepsi commercial is fanciful and is simply included to create a humorous and entertaining ad. We apologize for any misunderstanding or confusion that you may have experienced and are enclosing some free product coupons for your use."
The free coupons did not satisfy Leonard, who then took PepsiCo to task in court. Finally, on August 5, 1999, a federal judge for the Southern District of New York held that PepsiCo was only joking when it implied in its ad that it was giving away fighter jets. Judge Wood noted that since the jets sell for approximately $23 million each, "no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier jet." Instead, this was a classic example of a deal too good to be true.
If you wish to find out more about this case (and the rationale underlying Judge Wood's decision) you can view the entire opinion and order.
Write a 1–2 page executive summary answering the following questions:
•What are the four elements of a valid contract?
•Describe the objective theory of contracts. How does that theory apply to this
Leonard did the math, and discovered that the cost of the 7 million points needed for the jet was a mere $700,000. He then put together a business plan, raised the $700,000 from friends and family, and submitted 15 Pepsi points, the check, and an official order form along with a demand for the Harrier jet.
PepsiCo wrote back, stating: "The Harrier jet in the Pepsi commercial is fanciful and is simply included to create a humorous and entertaining ad. We apologize for any misunderstanding or confusion that you may have experienced and are enclosing some free product coupons for your use."
The free coupons did not satisfy Leonard, who then took PepsiCo to task in court. Finally, on August 5, 1999, a federal judge for the Southern District of New York held that PepsiCo was only joking when it implied in its ad that it was giving away fighter jets. Judge Wood noted that since the jets sell for approximately $23 million each, "no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier jet." Instead, this was a classic example of a deal too good to be true.
If you wish to find out more about this case (and the rationale underlying Judge Wood's decision) you can view the entire opinion and order.
Write a 1–2 page executive summary answering the following questions:
•What are the four elements of a valid contract?
•Describe the objective theory of contracts. How does that theory apply to this