Leonard v. Pepsico, Inc.

United States District Court for the Southern District of New York · 1999 · Contracts

ContractsAdvertisements as offersObjective theory of assentStatute of FraudsFraudadvertisementoffersolicitation for offers

Facts

Pepsi ran a "Pepsi Stuff" promotion in which consumers collected Pepsi Points and redeemed them for merchandise listed in a catalog and order form. A television commercial showed a teenager arriving at school in a Harrier Jet, with the on-screen legend "HARRIER FIGHTER 7,000,000 PEPSI POINTS," and also directed viewers to see details on specially marked packages; the catalog, however, did not list any Harrier Jet and stated that merchandise could be ordered only with the original order form. Leonard sent Pepsi an order form, fifteen original Pepsi Points, and a check for $700,008.50, writing in "1 Harrier Jet" and "7,000,000" points. Pepsi rejected the submission, stating that the jet was not part of the promotion and that the commercial's depiction was fanciful and humorous.

Issue

Did Pepsi's television commercial constitute a valid offer that Leonard could accept by tendering Pepsi Points and money for a Harrier Jet? If not, could Leonard nevertheless prevail on contract or fraud theories, including in light of the Statute of Frauds?

Rule

An advertisement is generally not an offer but merely an invitation to negotiate or a solicitation of offers, unless it is clear, definite, and explicit and leaves nothing open for negotiation, ordinarily containing language of commitment or an invitation to take action without further communication. Whether an alleged offer exists is judged by the objective reasonable person standard, and acts evidently done in jest do not create contractual liability. Separately, under New York U.C.C. § 2-201(1), a contract for the sale of goods for $500 or more is unenforceable absent a writing sufficient to indicate a contract for sale and signed by the party against whom enforcement is sought.

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A furniture store in Chicago runs a Sunday newspaper ad stating, “This weekend only—handcrafted oak dining tables, $900. Visit our showroom for details and available finishes.” Maya Ortiz arrives Monday morning with $900 and demands a table at that price, but the store refuses to sell to her.

Is the advertisement most likely an enforceable offer that Maya accepted by tendering payment?

Explanation. The majority opinion states the general rule that advertisements are not offers, but merely invitations to negotiate, unless they are clear, definite, explicit, and leave nothing open for negotiation. This ad refers customers to the showroom for details and available finishes, showing that further communication is contemplated. Maya’s tender of payment therefore would be at most an offer requiring acceptance by the store, not an acceptance creating a contract.