That Time Pepsi Promised to Give Away a Harrier
Jet Back in the halcyon days of 1995, Pepsi launched
their aptly titled “Drink Pepsi, Get Stuff” campaign that allowed customers to earn points
on every Pepsi product they bought and then exchange them for things like Pepsi branded
t-shirts and hats. The promotion was a roaring success and resulted
in nothing of note happening whatsoever… unless of course you count the guy who sued
them because they refused to exchange 7,000,000 Pepsi points for a Harrier Jet. The man in question was John Leonard and in
the later months of 1995 he turned on his TV and saw this ad announcing the Pepsi Stuff
promotion. For those who aren’t interested in watching
the advertisement, it essentially shows a teen on his way to school, highlighting items
one can buy with Pepsi points, such as a Pepsi T-shirt for 75 points, a leather jacket for
1450 points, etc. The book The Law of Marketing, by Lynda J.
Oswald, describes what happens next in exquisite detail: The scene then shifts to three young boys
sitting in front of a high school building. The boy in the middle is intent on his Pepsi
Stuff Catalog, while the boys on either side are each drinking Pepsi. The three boys gaze in awe at an object rushing
overhead, as the military march builds to a crescendo. The Harrier Jet is not yet visible, but the
observer senses the presence of a mighty plane as the extreme winds generated by its flight
create a paper maelstrom in a classroom devoted to an otherwise dull physics lesson. Finally, the Harrier Jet swings into view
and lands by the side of the school building, next to a bicycle rack. Several students run for cover, and the velocity
of the wind strips one hapless faculty member down to his underwear. While the faculty member is being deprived
of his dignity, the voice-over announces: “Now the more Pepsi you drink, the more
great stuff you’re gonna get.” The following words then appear: “HARRIER
FIGHTER 7,000,000 PEPSI POINTS.” Upon seeing the commercial, Leonard, a 21
year old business student, did a little research and came to a startling conclusion- the Pepsi
Harrier giveaway was actually an amazing deal at only 7,000,000 points. You see, in 1995, the value of a single Harrier
Jet was about $33 million, give or take a few million depending on whose estimates you
want to use. This meant that even if every 2 litre bottle
of Pepsi only awarded a single point (in reality many bottles and cans offered more depending
on where they were purchased), the Harrier would still only cost about $7 million in
real money. To confirm there were no loopholes here, Leonard
got his hands on a Pepsi Stuff prize catalogue. While no Harriet Jet was listed there, he
did notice it stated in the small print that if a person already had 15 Pepsi Points, they
could purchase an unlimited number of additional points towards any item they wanted for 10
cents apiece. This meant Leonard could actually effectively
purchase the Harrier for a mere $700,000, and wouldn’t need to pre-purchase millions
of dollars of Pepsi products to do it, making the whole business venture significantly less
risky from a financial standpoint. And so it was that on March 27th of the following
year, Leonard sent 15 Pepsi Points, an order form with the words “1 Harrier Jet” written
in the item description, and a cheque for $700,008.50 ($699,998.50 for the remaining
6,999,985 points and $10 for shipping and handling) to the required address and waited. Pepsi, upon receiving the order, sent the
cheque back with a letter explaining that the Harrier Jet was “not part of the offer”,
nor was it included in the prize catalogue, and that its inclusion in the advertisement
was merely intended as “fanciful” addition to make the ad more entertaining. The letter also included a bunch of coupons
to apologise for “any misunderstanding or confusion”. Of course, Leonard was dead serious, in the
previous year having managed to convince five unnamed investors to back his little venture. When later asked by the news about why he
was so intent on getting a Harrier Jet, Leonard explained that as a member of the so-called
“Pepsi generation” the company was advertising to, the “notion of owning a Harrier Jet
appealed to him enormously”. Of course, with investors involved, it’s
far more likely the group was simply looking for a large out of court settlement. Whatever the case, when Leonard received the
response from Pepsi, his lawyer responded in turn on May 14, 1996: Your letter of May 7, 1996 is totally unacceptable. We have reviewed the video tape of the Pepsi
Stuff commercial… and it clearly offers the new Harrier jet for 7,000,000 Pepsi points. Our client followed your rules explicitly… This is a formal demand that you honor your
commitment and make immediate arrangements to transfer the new Harrier jet to our client. If we do not receive transfer instructions
within ten (10) business days of the date of this letter you will leave us no choice
but to file an appropriate action against Pepsi. Oddly, rather than reply themselves this time,
Pepsi forwarded the letter to the ad company responsible for the commercial, who replied
to Leonard stating that the offer “was clearly a joke”, adding that they found it hard
to believe anyone had actually taken it seriously. However, perhaps at least being a little nervous
over the issue, in order to avoid copycat lawsuits, Pepsi promptly changed the price
of the jet in the ad from 7,000,000 Pepsi Points to 700,000,000. But they still had to deal with Leonard, who
sued Pepsi for fraud, breach of contract and deceptive advertising. The case limped through the courts for three
years. While the court of public opinion was strongly
on the side of Leonard and his investors- after all, the commercial clearly stated that
if you acquired seven million Pepsi points, you could exchange them for a Harrier jet-
the court that actually had power to issue a ruling was not. The issue was finally settled in 1999 with
the judge concluding that “no objective person could reasonably have concluded that
the commercial actually offered consumers a Harrier Jet”. It is notable that Leonard’s legal team
attempted to argue that no judge could accurately determine whether the target audience of the
commercial, the ‘Pepsi Generation’, would or would not conclude that the commercial
was really offering a jet. Specifically noting, “a federal judge [is]
incapable of deciding on the matter, and that instead the decision had to be made by a jury
consisting of members of the ‘Pepsi Generation’ to whom the advertisement would allegedly
constitute an offer.” In any event, in regards to the accusation
of fraud, this too was thrown out as commercials aren’t considered legally binding offers
under the Restatement (Second) of Contracts treatise, which notes: Advertisements of goods by display, sign,
handbill, newspaper, radio or television are not ordinarily intended or understood as offers
to sell. The same is true of catalogues, price lists
and circulars, even though the terms of suggested bargains may be stated in some detail. It is of course possible to make an offer
by an advertisement directed to the general public, but there must ordinarily be some
language of commitment or some invitation to take action without further communication. Finally, the courts ruled that not giving
Leonard the Harrier wasn’t in breach of contract as no written agreement between the
two parties involving the giving or receiving of a jet had been drafted or signed. As Arthur Linton Corbin notes in Corbin on
Contracts, “There would be no enforceable contract until [the] defendant [Pepsi Co.]
accepted the Order Form and cashed the check.” As Pepsi did neither, there was no breach
of contract. This all leaves one wondering, had the court
ruled otherwise, would Pepsi have been able to give Leonard the jet? The answer, according to Pentagon spokesman
Ken Bacon, was decidedly no. In response to Bacon’s assertions, Leonard
stated that he would take a Harrier Jet “in a form that eliminated [its] potential for
military use”. The U.S. military has in the past, for instance,
sold tanks to civilians after their weaponry was removed. In response to that, Bacon claimed that doing
the same to the jet would strip it of its ability to fly, rendering it useless. That’s not to mention that a Harrier Jet
uses a massive amount of fuel per minute of flight, varying depending on what you’re
doing at the time, and requires millions of dollars of maintenance over the course of
its lifetime, both of which make it prohibitively expensive for any but the richest of civilians
to operate. But, of course, it is likely Leonard and his
investors were never actually interested in the jet, just the potential payout if the
court ruled in their favor. Leonard attempted to appeal the court’s
decision in 2000, with the ruling ultimately upheld.
Why does he describe what is happening in the video. He is playing the video. Why?
10 min video to explain the story?
Where's my elephant?
I wonder what would have happened if he got 7 million actual points instead of trying to buy the points. Because then he would have given Pepsi his money and had their invented currency.
classic law school 1L contracts case
The case is actually very famous and is well known by most law students as it is a core case in most Contracts 101 courses. It sets legal precedence that an "offer at large" is not actually an offer in itself but rather an "offer for offers". In the case, the order form that Leonard sent back was the actual offer, rather than the advertisement. Hence why there was no contract until Pepsi Co had agreed to provide what was outlined on the order form (which they didn't).
I'm not sure if it's in the video, I didn't watch it, but the man didn't accumulate 7,000,000 Pepsi points. He sent a certified check for $700,008.50 as permitted by the contest rules. He had 15 existing points, paid $0.10 a point for the remaining 6,999,985 points, and a $10 shipping and handling fee.
OP you in law school finals right now?
Law Student here that just wrote a contracts final:
What matters in these situations where there is a unilateral contract (here, an offer that is open to the public) is whether the reward would have been in the reasonable expectations of the parties when the offer was made. This is how lawyers decide if it is legally enforceable or not. There is another case of Carlill v. Carbolic Smoke Ball that was similar in principle (unilateral offer that someone took the company up on) but the results were different. Carlill was held to the offer because they put $1000 in a bank account specifically for the reward and because the offer can be REASONABLY construed as a live offer (the reasonable person would expect the company to follow through with it). Absurd offers, like a jet or, in that one episode of the Simpsons with Bart and the radio context for an elephant, are deemed unenforceable.