Law and Justice
Consumer Law / Contracts
Promissory Estoppel, Leonard v. Pepsico - Botz (2012)
Objectives
• Provide students with a very basic introduction to contract law
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How a contract is formed
What defenses may be raised in a contract case
How a lawyer analyzes problems
• Have students look at arguments on both sides of a case
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Analyze a legal problem
Think objectively about a problem
Pepsi Harrier Jet Commercial 1
Reflection
The video is a Pepsi commercial from the mid-90s. The commercial shows a variety of
products that can be purchased with “Pepsi Points”. The Pepsi points are acquired after
purchasing Pepsi products. The commercial shows that you can purchase a Harrier Jet for
7,000,000 Pepsi Points.
Formation
A contract is not formed unless the following elements are in place between the parties to the contract.
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Offer: a proposal to another person to enter into an agreement to perform some action. Must be pretty
specific. Person making offer is called offeror.
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NOTE: generally advertisements don’t constitute offers. Exceptions if specifically targeted at an audience perhaps.
Acceptance: The person to whom the offer is made must assent to enter into the terms of the offer in order
create a contract.
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Example: I’ll sell you my laptop for 500 dollars.
Example: Sure, I’ll buy your laptop for 500 dollars OR in the alternative, the offeree (person to whom an offer is
made) could just give the person 500 dollars and by performing, accepts the contract.
Consideration: a fancy term for what the parties (offeror and offeree) are exchanging between each other.
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Ask: What would be the consideration in the above example? in the example above, 500 dollars and the laptop.
Defenses
If you have the elements above, consider whether you have a defense to the formation of
the contract. Ex., something that voids the existence of the contract.
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Statute of Frauds: Generally, contracts over 500 dollars must be in writing.
Minor: Children (kids under the age of 18) cannot enter into binding contracts.
Duress: You can’t be forced into entering a contract. Entering into a contract must be
voluntary. No one can put a gun to your head and tell you to do something.
Fraud: You can’t be deceived into entering a contract.
Unconscionability: If the terms are super unfair, then the contract may be voidable.
Example: promise to pay 5 million dollars in exchange for a laptop computer.
Public Policy????: sometimes courts may void a contract if it is against public policy.
Example: contract to kill someone.
Breach
If one of the parties doesn’t perform, then they have breached the contract and may be able to
seek “damages.”
Handout
Promissory Estoppel, Leonard v. Pepsico - Botz (2012)
Actual Case Results
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“Leonard v. Pepsi” (decided in 1999)
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The court ultimately decided in favor of Pepsi. The court gave several reasons for its
decision:
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A reasonable person would not consider the commercial as an offer for the sale of a jet.
• “An obvious joke would not give rise to a contract.”
The contract was not in writing, so it didn’t satisfy the statute of frauds.
• “A contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense
unless there is some writing sufficient to indicate that a contract for sale has been made between the parties
and signed by the party against whom enforcement.”
Perhaps an underlying public policy reason?
• Selling a Harrier Jet to a member of the public seems crazy.
Leonard appealed to the circuit court.
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The third circuit simply agreed with the District Court’s opinion.