In 1998-99 John Leonard watched a Pepsi commercial and thought he had an opportunity to purchase a Harrier Jet (military aircraft) worth approximately $23M for the cash equivalent of $700K. Â He collected enough money, added the jet to the bottom of the order form in the Pepsi catalog and sent it in to Pepsi. Â When they refused to produce the jet and returned his money, he filed a lawsuit for breach of contract. He claimed that the Pepsi Commercial was a valid offer to make and contact and he accepted that offer by sending in the money. After watching the YouTube video presentation of Pepsi’s Harrier Jet Commercial, (Links to an external site.) discuss the following questions completely using contract law principles.
1. Â How does the objective theory of contracts apply to this case? (The objective theory is explained on pages 189-190 of your textbook. Â This rule states that unless a third party looking at the situation objectively thinks that both the offeror and offeree want to enter into a contract, no contract can be created. Â Â Offers or statements made in jest , anger or undue excitement do not include the necessary intent to be valid offers. Did Pepsi intend to make an offer in this case?)
2. Â How does the “advertisement as a special offer” rule apply to this case? (This rule is found on page 204 of the textbook. Â It says that a commercial or advertisement for the sale of goods – like the Harrier Jet – is not offers to make a contract, even if a specific price for the good is listed by the seller.)
3. Â The court concluded that no contract existed between John Leonard and Pepsi? Â Do you agree? Â Beside to support whatever position you take using contract law principles.
For another perspective on this case, you may want to watch this video from Things You Might Not Know()