The Pepsi Points Case

The Pepsi Points case, also known as Leonard v. Pepsico, Inc., 88 F. Supp. 2d 116 (S.D.N.Y. 1999), aff’d 210 F.3d 88 (2d Cir. 2000), concerns offer and acceptance in American contract law.

Customers could earn Pepsi Points through a promotional loyalty programme launched by PepsiCo in 1996.  John Leonard, the complainant, found a flaw in the programme that allowed him to buy Pepsi Points for 10 each. Next, Leonard delivered a cheque for $700,008.50 to PepsiCo in an effort to buy the jet. PepsiCo first rejected Leonard’s offer, pointing to the advertisement’s comedy in doing so.

Wood made the decision to support PepsiCo, pointing out the protagonist’s portrayal of landing a fighter plane in a school zone as frivolous and implausible. Releasing the advertisement, PepsiCo put a 700,000,000 Pepsi Point value on the jet.

Pepsi battled Coca-Cola for market share in the middle of the 1990s and made an effort to appeal to younger consumers. The advertising effort was the biggest in Pepsi history.

In accordance with the requirements of the programme, Leonard sent a check for $700,085.00 and 15 labels. Pepsi declined the offer, calling the advertisement’s promotion of the Harrier jet “fanciful” and claiming that its goal was to make a “funny and engaging ad.”

PepsiCo, the plaintiff, filed a motion for summary judgement under Federal Rule of Civil Procedure 56. Leonard asserted, among other things, that a federal judge was unable to decide the case and that a jury of people from the “Pepsi Generation,” to whom the commercial would supposedly constitute an offer, should instead make the decision.

There was no fraud because Pepsi never cashed the check. Pepsi kept running the advertisement, but changed the Harrier Jet’s price to 700 million Pepsi Points and added a “Just Joking” disclaimer to clarify.

Case Rule:

Any objective person cannot conclude that a television commercial was an actual offer of a military jet that consumers could accept; a television commercial that was an alleged contract did not satisfy the New York statute of frauds. A television commercial that features a military jet is not an offer of goods.

Case Question:

Did the trial court correctly grant PepsiCo corporation summary judgement?

Case Answer:


Case Conclusion:

The court upheld the district court’s decision on appeal for largely the same reasons.

The court determined that even if the advertisement had been an offer, no sane person could have thought that the business actually planned to sell a plane valued at about $37.4 million for $700,000, i.e. that it was just puffery.

The teen’s statement that taking a Harrier Jet instead of the bus to school “certainly beats the bus” reveals an uncharacteristically casual attitude concerning the relative difficulty and hazard of flying a combat plane over residential areas.

No school would permit the use of a student’s fighter jet or support the disruption its usage would bring about.

The Court Further Declared That:

Even if, as plaintiff claims, the jet is capable of being purchased “in a form that eliminates potential for military use,” depicting such a jet as a way to get to school in the morning is obviously not serious given its well-documented role in attacking and destroying surface and air targets, conducting armed reconnaissance and air interdiction, and engaging in offensive and defensive anti-aircraft warfare.