Leonard v. Pepsico, Inc. (1999)

In the 1990s, Pepsi was competing with Coca-Cola and wanted to attract younger customers. They launched a promotion called Pepsi Stuff in March 1996, which allowed customers to collect points from buying Pepsi products and redeem them for items like T-shirts and jackets. They advertised the promotion with TV commercials, one of which featured a computer-generated image of a Pepsi-branded Harrier II jet that could be bought for 7 million Pepsi points.

A 21-year-old business student named John Leonard saw the commercial and noticed that the promotion also allowed people to buy Pepsi points directly for 10 cents each. He convinced five investors to lend him $700,000, and he sent a check for $700,008.50 to Pepsi along with 15 labels as required by the promotion rules.

Pepsi rejected Leonard's offer to buy the Harrier jet, stating that the commercial was meant to be "humorous and entertaining" and that the idea of actually buying a jet with Pepsi points was not realistic.

Judge Kimba Wood presided over the case and denied John Leonard's claims for recovery on several grounds. The court found that the advertisement featuring the jet did not constitute an offer under the Restatement (Second) of Contracts. Even if the advertisement had been an offer, the court found that no reasonable person could have believed that PepsiCo seriously intended to convey a jet worth approximately $37.4 million for $700,000. Therefore, the advertisement was deemed mere puffery, or exaggerated advertising.

Furthermore, the value of the alleged contract fell under the provisions of the Statute of Frauds, which requires a written agreement between the parties for contracts exceeding a certain value. However, no such agreement existed, and therefore no contract had been formed.

The court also made several observations about the nature and content of the commercial, stating that the idea of a high school student flying a Harrier Jet to school was clearly an exaggerated adolescent fantasy. The court found that the depiction of a Harrier Jet as a way to get to school in the morning was not serious, given the jet's well-documented function in attacking and destroying targets, reconnaissance and air interdiction, and anti-aircraft warfare. The court concluded that PepsiCo's advertisement was evidently done in jest, and therefore John Leonard had no grounds for recovery.