## Facts

- PepsiCo ran a “Pepsi Points” promotion in which consumers could redeem points for merchandise identified in a promotional catalog.
- A televised commercial showed various items with specified point totals and then depicted a Harrier jet arriving at a school with the caption “7,000,000 Pepsi Points,” in an exaggerated, comedic scene.
- John D.R. Leonard learned points could be purchased from PepsiCo for $0.10 per point and attempted to obtain the jet by submitting 15 points plus a check for $700,008.50 to cover the remaining points needed to reach 7,000,000.
- Leonard’s submission specified he was ordering the Harrier jet shown in the commercial; PepsiCo refused, stating the jet was not part of the promotion and was presented as a joke.
- Leonard sued seeking, among other relief, specific performance requiring delivery of the jet; the district court granted summary judgment for PepsiCo, and Leonard appealed.

## Issues

1. Whether the television commercial constituted a definite contractual offer for a Harrier jet redeemable for 7,000,000 Pepsi Points rather than a nonbinding advertisement.
2. Whether an objective, reasonable viewer would interpret the commercial as manifesting PepsiCo’s intent to be bound to provide a military aircraft in exchange for points.
3. Whether any alleged contract for the jet was unenforceable under the New York Statute of Frauds applicable to sales of goods exceeding $500.

## Decision

- The Second Circuit affirmed summary judgment for PepsiCo, adopting the district court’s reasoning.
- The commercial was not an offer; it functioned as an advertisement and directed consumers to a catalog that set the promotion’s actual terms and redeemable items, which did not include a Harrier jet.
- No objective, reasonable person could conclude the commercial seriously offered a Harrier jet, given the absurd and comedic presentation and the extraordinary nature of the item.
- Even assuming offer and acceptance, the alleged agreement failed the New York Statute of Frauds because there was no sufficient signed writing by PepsiCo evidencing a contract for a transaction far exceeding $500.

## Legal Principles

- Advertisements are generally invitations to negotiate, not offers, unless they are clear, definite, explicit, and leave nothing open for negotiation.
- Contract formation is governed by the objective theory of assent: liability depends on outward manifestations as understood by a reasonable person, not a party’s subjective belief.
- Where an advertisement references separate detailed materials (such as a catalog) for terms, those materials control the scope of any redeemable offers.
- Under U.C.C.-based Statute of Frauds rules, a contract for the sale of goods priced at $500 or more is unenforceable absent a sufficient writing signed by the party to be charged.

## Conclusion

The court held that the Harrier jet depiction in PepsiCo’s commercial was not a contractual offer and could not reasonably be treated as one; in any event, enforcement was independently barred for lack of a writing satisfying the Statute of Frauds, so PepsiCo was entitled to summary judgment.


Leonard v. Pepsico, Inc., 210 F.3d 88 (2d Cir. 2000)