Business Law: A Harrier Jet, Pepsi, and John Leonard

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Introduction

John Leonard should have known that it was an example of “puffery” and that winning a Harrier Jet was not a realistic prize option and therefore Pepsi is not liable for providing the promised prize in this context. The pursuit of the Harrier Jet by John Leonard is a classic case of how to make a distinction between an invalid and a valid contract. Leonard had better kept in mind the four components of a valid contract. The first element of a valid contract requires a meeting of the minds (Slorach & Ellis, 2015). In other words, both parties must comprehend the terms of the contract and come to an agreement on the basics of the deal. The idea of Leonard regarding the contract breaks down at this juncture. Leonard did not have such a meeting of the minds with Pepsi. Instead, Leonard only saw a commercial advert, took it seriously and never went on to authenticate this offer through the official catalog of Pepsi.  The second element of a legal contract is consideration whereby by something of value is exchanged between the concerned parties or the services that are to be performed (Slorach & Ellis, 2015). On this end, Leonard the requirements through his act of paying the necessary Pepsi Points along with the shortfall of $700,000.  However, the Pepsi Company was not subject to any form of obligation to accepting it for the reasons that it had not listed a price for the Harrier jet in their official Pepsi Stuff catalog.

The third element of a varied contract in an agreement by the two parties to enter into a deal or rather contract (Slorach & Ellis, 2015). Despite the fact that Leonard obviously agreed to the contract, his counterpart the Pepsi Company had not. A piece of evidence proving that Pepsi did not enter into an agreement with Leonard is the catalog itself since it did not include the Harrier jet. The last element required in making a contract varied is that parties are of sound mind and at the same time legally able to sign a contract (Slorach & Ellis, 2015). Whereas one might question the judgment of Leonard in taking a silly commercial earnestly, both he and PepsiCo were of sound mind and legally capable of entering into a contract.

What a Court should do to resolve a Matter like This

The assumption of the objective theory of a contract is that parties involved should have good intentions while going into a contact (Slorach & Ellis, 2015). The theory also supposes that the contract must be viewed in the light of objectivity as opposed viewing from the point of one of the parties (Johnson & Bruce, 2014). The court did view the contract objectively where it found out that there was no legal contract between Pepsi and Leonard concerning the purchase of the jet.  The basic rule of a contract holds that whether an offer has been made rests on the objective reasonableness of the alleged offering entity’s conviction that the solicitation or advertisement was intended as an offer (Slorach & Ellis, 2015).

The ruling of the court was in agreement with this basic rule as it held that there did not exist an agreement based on the fact that a reasonable individual ought to have seen that the advertisement was intended to be taken seriously because it was made in jest. The exclusion of Harrier jet from the company’s official catalog makes it clear that the advertisement was a jest. Nevertheless, it is generally unacceptable to construe an advertisement as an offer. Reasonably, an advertisement is just but a mere request to make a consideration which ought to be examined and negotiated. What is more, there was no clear language in Pepsi Stuff advertisement that definitively and in a clear language stated that the Harrier Jet was for sale even in the official catalog.

Pepsi’s Obligations towards John Leonard Trouble

In a reward situation, the entity offering the reward has an obligation such that when a certain act is done, compensation will be provided (Johnson & Bruce, 2014). For instance, Pepsi had a mountain bike contract such that if a customer presented the 3000 points to Pepsi or an equivalence of 15 points along with the monetary difference, he or she would take delivery of a mountain bike designed exclusively for Pepsi. The example mentioned above was a reward situation for the reasons that it was stated in the official catalog that such a bike would be available for 3000 points. In the Harrier Jet case of Leonard, no such offer was proposed. The catalog neither contained the Harrier jet nor the number of points that would be required for the purchase of the jet.  PepsiCo would have been obliged to trade the Harrier Jet to Leonard if it would have listed in its official catalog the required points for the same. In this regard, Leonard would not receive any compensation despite completing the requirements which he perceived to be requisite for the reward.

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