Is an advertisement always an offer in contract law?

No. Most ads invite you to negotiate or buy. Only a very clear ad, with definite terms and an intent to be bound, can be an offer.

Why did the court reject the Pepsi Harrier Jet claim?

A reasonable person would not see the TV ad as a real offer to sell a military jet. It was a joke, not a serious, definite offer.

What is the test used in Leonard v. Pepsico?

The reasonable person test: would an ordinary viewer think the ad was a serious offer? If not, there is no offer and no contract.

How does this case help in exams?

Use it to show that advertisements are generally invitations to treat. Cite it when someone claims an ad created a contract.

Is there any exception where an ad can be an offer?

Yes. If the ad is clear, specific, and shows intent to be bound (like a reward ad), it can be a unilateral offer.

leonard-v-pepsico-advertisements-as-offers

Leonard v. Pepsico (Advertisements as Offers)

Contract Law 1999 (trial) U.S. District Court (SDNY) Citation: 88 F. Supp. 2d 116 Bench: District Judge Reading time: ~4 min

Author: Gulzar Hashmi | India | Published on 26 Oct 2025

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Quick Summary

Pepsi ran a funny TV ad showing a school kid arriving in a military Harrier jet and listed “7,000,000 Pepsi Points.” A buyer tried to claim the jet by sending points and money. The court said, “No contract.” A reasonable person would not think Pepsi seriously offered to sell a fighter jet. So, the ad was not an offer; it was a joke and an invitation to buy merchandise.

Issues

Did the Pepsi advertisement constitute a real offer to sell the Harrier jet?

Rules

Advertisements are usually invitations to treat, not offers.
Use the reasonable person test: would an ordinary viewer think this ad is a serious, definite offer?
Only a very clear and specific ad, showing intent to be bound (like a reward), can be a unilateral offer.

Exam tip: Compare with classic reward cases where ads are offers.

Facts (Timeline)

Timeline graphic for the Pepsi points promotion

Ad launched: Pepsi showed a humorous ad where a student lands at school in a Harrier jet for 7,000,000 Pepsi Points.

Points system: Points came from Pepsi products; extra points could be bought for $0.10 each.

Claim attempt: The plaintiff pooled points, added money, and sent a check asking for the jet.

Pepsi response: Pepsi refused, pointing to its catalog/brochure that listed real items—no jet.

Suit filed: Plaintiff sued for breach of contract, claiming the ad was a unilateral offer accepted by performance.

Arguments

Appellant (Plaintiff)

The ad promised a jet for points—clear terms (7,000,000 points; points purchasable).
By tendering points/money, I accepted the offer—so there is a contract.
Ads can be unilateral offers (compare with reward cases).

Respondent (Pepsico)

The ad was a joke—no reasonable viewer thinks Pepsi will sell a fighter jet.
The catalog controls the offer; the jet is not listed there.
No serious intent, no definite terms, and performance was impossible/illegal.

Judgment (Held)

The court held that the commercial was not a unilateral offer. It was an advertisement meant to be humorous. A reasonable person would not think Pepsi seriously offered a Harrier jet.

No offer → no acceptance → no contract.
The brochure/catalog, not the TV ad, contained the real purchase terms.

Ratio Decidendi

An advertisement is normally an invitation to treat. For an ad to be an offer, it must be clear, definite, and show intent to be bound. The Pepsi ad failed this test under the reasonable person standard.

Why It Matters

Clarifies that flashy marketing does not equal a legal offer.
Stops absurd contracts based on obvious jokes or puffery.
Guides students to analyze intent and definiteness before calling an ad an offer.

Key Takeaways

Ads ≠ Offers (usually). They invite you to buy.
Use the reasonable person test for seriousness.
Catalog/brochure can control the actual terms.
Clear reward ads may be unilateral offers—spot the difference.

Mnemonic + 3-Step Hook

Mnemonic: “JET = Joke, Entry, Terms”

Joke: The ad was humor, not a promise.
Entry: Ads invite you to enter the store/offer—not a contract.
Terms: Real terms live in the brochure/catalog.

3-Step Exam Hook

Ask: Would a reasonable person see a serious offer?
Check: Are terms clear, definite, and intended?
Confirm: Does a brochure/catalog control the offer?

IRAC Outline

Issue

Did Pepsi’s TV commercial amount to a binding offer to sell a Harrier jet?

Rule

Advertisements are invitations to treat unless they are clear, definite, and show intent to be bound (reasonable person test).

Application

The ad used humor and exaggeration. A military jet is unrealistic as a prize. The catalog controlled real items; the jet was not included.

Conclusion

No offer; therefore, no acceptance and no contract. Pepsi wins.

Glossary

Invitation to Treat: An invitation to make an offer or negotiate; not itself an offer.
Unilateral Offer: An offer to the world accepted by performing a stated act (e.g., reward).
Reasonable Person Test: Objective test: would an ordinary person see the ad as a serious offer?

FAQs

No. In most cases, ads invite you to buy or negotiate. They are not binding offers unless they are clear, definite, and show intent to be bound.

Because a reasonable viewer would see the jet scene as humor, not a serious promise. The controlling terms were in the catalog, which did not list any jet.

Yes, reward ads are a common example. They are specific and show intent: “Do X and get Y.”