IRAC Assignment: Business Law Essay

Matthew Conde

Albers School of Business and Economics, Seattle University

BLAW 3700-02

[Professor’s Name]

26 February 2023
Leonard v. PepsiCo, Inc. -Breach of Contract

John Leonard did not receive a harrier jet from PepsiCo, which he thought he was entitled

to get. PepsiCo will argue that there was no offer and that their advertisements and catalogs had

sufficient disclaimers about the jet not being a legitimate “Pepsi Points” prize. Leonard will

claim that PepsiCo engaged in deceptive advertising and breached their contract because he

believed that there was a lack of information to deny the jet as an offer. Since Leonard believes

that PepsiCo was misleading and broke an offer, he will sue for fraud and breach of contract.

Leonard argues that PepsiCo owes him the jet because of their deceptive advertising, a

form of fraud and misrepresentation of fact. Since Leonard believes the jet was a real offer, he

will hold PepsiCo responsible for breach of contract. However, a breach of contract implies that

there was an offer and a legally enforceable contract. Contracts are binding agreements that

courts enforce, and they require mutual assent, consideration, legal capacity, and lawful purpose.

Also, offers are only valid upon the following criteria: The offer must be communicated to the

offeree, be intended to enter into a contract, and be sufficiently definite and certain.

Leonard argues PepsiCo breached their contract and must prove that an intentional and

authorized offer was communicated to him. Assuming the jet was a real offer, Leonard claims

the offer is authorized and intentional—PepsiCo publicly broadcasted this commercial, and

Leonard knows about the jet. PepsiCo claims they never made an offer at all, for advertisements

are not offers—they are invitations to bargain (Restatement [Second] of Contracts).

To determine if there is an intention to enter into a contract, the court must determine if a

reasonable person sees the jet as an offer. The commercial appears to urge people to accumulate

and redeem “Pepsi Points,” and the jet comically expresses that notion (Justia). Leonard argues

that PepsiCo intends to enter a unilateral contract (Carlill v. Carbolic Smoke Ball Co) because
the commercial says that, if people collect points, they earn prizes. PepsiCo argues that the jet

offering is unreasonable, as the jet is not listed on any catalog and is a joke. Obvious jokes are

not contracts (Corbin on Contracts). PepsiCo adds that if commercials bounded them to offers

with viewers, they’d have an excessive number of contracts for jets (Mesaros v. United States).

Leonard claims the commercial provides an offer because there were definite terms for

the jet (Lefkowitz). PepsiCo’s commercial values the jet at 7,000,000 points, and Leonard claims

he met those terms with 15 “Pepsi Points” and a $700,008.50 check. PepsiCo would refute this

claim by showing that there were no clear and definite terms that would constitute an offer—the

jet was not included in the catalog and the commercial had the disclaimer, “Not available in all

areas. See details on specifically marked products,” on the screen (PepsiCo Commercial).

Leonard claims PepsiCo’s commercial is fraudulent misrepresentation because he

believes that PepsiCo truly offered the jet. Leonard must prove that PepsiCo’s misstated facts

induced him to pursue the jet (Justia). With PepsiCo’s advertisement disclaimer and the jet’s

absence from the catalog, the court would affirm that PepsiCo provided adequate information to

reflect their intention of not offering the jet. Leonard may counter by showing that PepsiCo

changed their commercial twice and increased the “Pepsi Points” from 7,000,000 to 700,000,000

for the jet (Justia). PepsiCo can maintain a good defense argument and claim that they made the

jet joke more unrealistic and comical to further clarify that the jet is not an offered prize.

PepsiCo would win this case against Leonard. Since PepsiCo did not meet the

requirements for a valid offer, they did not make an offer. Without an offer, mutual assent is

gone, and contracts cannot be legally enforceable without mutual assent. Lacking an offer and

contract, PepsiCo would not have breached a contract. Also, PepsiCo did not engage in fraud, as

they gave adequate information that shows the jet was a comedic act to market “Pepsi Points.”