Law and Justice Consumer Law / Contracts Promissory Estoppel, Leonard v. Pepsico - Botz (2012)

Objectives Provide students with a very basic introduction to contract law 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 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. 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. Example: I’ll sell you my laptop for 500 dollars. 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. 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. 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. 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 “Leonard v. Pepsi” (decided in 1999) The court ultimately decided in favor of Pepsi. The court gave several reasons for its decision: 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. The third circuit simply agreed with the District Court’s opinion.