Leonard v. Pepsico – Was a Contract Formed?

Leonard v. Pepsico: Cold Hard Facts

Inspired by the commercial shown in this assignment’s video, Leonard set out to obtain a Harrier Jet. Leonard explains that he is “typical of the `Pepsi Generation’ … he is young, has an adventurous spirit, and the notion of obtaining a Harrier Jet appealed to him enormously”….

Although Leonard initially set out to collect 7,000,000 Pepsi Points by consuming Pepsi products, it soon became clear to him that he “would not be able to buy (let alone drink) enough Pepsi to collect the necessary Pepsi Points fast enough.” Reevaluating his strategy, Leonard “focused for the first time on the packaging materials in the Pepsi Stuff promotion,” and realized that buying Pepsi Points would be a more promising option. Through acquaintances, Leonard ultimately raised about $700,000.

On or about March 27, 1996, Leonard submitted a Pepsi Points Order Form, fifteen original Pepsi Points, and a check for $700,008.50. At the bottom of the Order Form, Leonard wrote in “1 Harrier Jet” in the “Item” column and “7,000,000” in the “Total Points” column. In a letter accompanying his submission, Leonard stated that the check was to purchase additional Pepsi Points “expressly for obtaining a new Harrier jet as advertised in your Pepsi Stuff commercial.”

Pepsi rejected Leonard’s submission and returned the check. Pepsi explained that: “The item that you have requested is not part of the Pepsi Stuff collection. It is not included in the catalogue or on the order form, and only catalogue merchandise can be redeemed under this program. 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.”

Leonard’s lawyer responded to Pepsi by writing: “Your letter is totally unacceptable. We have reviewed the video tape of the Pepsi Stuff commercial … and it clearly offers the new Harrier jet for 7,000,000 Pepsi Points. Our client followed your rules explicitly….This is a formal demand that you honor your commitment and make immediate arrangements to transfer the new Harrier jet to our client. If we do not receive transfer instructions within ten (10) business days of the date of this letter you will leave us no choice but to file an appropriate action against Pepsi….”

Pepsi refused to honor the letter and Leonard filed suit against them to force them to give him a Harrier jet.

*Choose which side you will represent (Leonard or Pepsi), and complete the appropriate questionnaire. For additional extra credit, you can complete both questionnaires.

Plaintiff Questionnaire

Instructions: Pretend that you are an attorney representing Leonard in the case. Answer the following questions and present arguments for why Leonard should win. Remember: if there is an offer, acceptance, and consideration, then a legally enforceable contract was formed. As a representative of Leonard, you will want to argue that all these things were present.

1. Why should the commercial constitute an offer? Argue that it did.

2. Did Leonard accept the offer? Explain how he accepted the offer.

3. Did both Leonard and Pepsi give consideration? If yes, what consideration did Leonard give? What consideration did Pepsi give?

4. Does Pepsi have any viable defenses (e.g., fraud, duress, violation of public policy) against the creation of a contract? What are arguments against these defenses? Remember, as Leonard’s representative you don’t want Pepsi to present any viable defenses.

Defendant Questionnaire

Instructions: Pretend that you are an attorney representing Pepsi in the case. Answer the following questions and present arguments for why Pepsi should win. Remember: if there is an offer, acceptance, and consideration, then a legally enforceable contract was formed. As a representative of Pepsi, you will want to argue that all these things were present. Furthermore, you will want to present affirmative defenses.

1. Why did the commercial not constitute an offer? Argue that it wasn’t an offer.

2. Why did Leonard’s submission of the check, 15 Pepsi points, and the Order Form not constitute an acceptance? Argue that it wasn’t an acceptance.

3. Was there consideration given by Pepsi and Leonard? If yes, what was it? Why shouldn’t it be consideration?

4. What affirmative defenses (e.g., duress, fraud, public policy) will you present?

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