Leonard v. PepsiCo, Inc. is a famous example of an invalid contract. In 1995, John Leonard under the influence of a Pepsi commercial tried to enforce an alleged offer to obtain a Harrier jet for 7 million company’s points (Contract Law, n.d.; Lexisondemand, 2009). The court ruled in Pepsi’s favor and decided that “no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier jet” (Smallwood, 2016, para. 4). Under the objective theory of contracts, it is clear that the company was justified in not providing the man with the jet.
There are several elements of a valid offer. The first requires two parties to make a promise, which must be clearly stated and understood by both of them. The second element that should have been contemplated by Leonard is consideration. This element of a valid contract may take a form of money or effort, and it is what distinguishes an offer from a gift (Goldman & Sigismond, 2013). Given that the company had not listed the value of the prize in their official catalogue, the plaintiff could not have expected Pepsi to honor the alleged contract (Smallwood, 2016). The third element of a contract is acceptance, which must be unambiguous. Taking into consideration the fact that the jet was absent from the catalogue, the requirement of acceptance was not met. The final element of a valid offer is mutuality. This element requires both parties to understand that they enter a legally binding agreement.
Since Leonard was unable to provide proof that the four elements were present in the alleged offer, the court’s decision to interpret the offer as invalid was not erroneous. Under these circumstances, a reasonable person could not have considered the company’s advertisement a valid offer.
References
Contract Law. (n.d.). What are the objective theory of contracts. Web.
Goldman, A., & Sigismond, W. (2013). Business law: Principles and practices. Boston, MA: Cengage Learning.
Lexisondemand. (2009). Pepsi Harrier jet commercial [Video file]. Web.
Smallwood, K. (2016). A Harrier jet, Pepsi, and John Leonard. Web.