It was a good solicitor who helped to establish that certain types of marketing claims went beyond the bounds of mere puffery and exaggeration but instead formed the basis of a contract between the company and the customer.
This case, Carlill v Carbolic Smoke Ball Company from 1892, established the basis of contract law so completely that to this day it is still often cited when examining the core components of a contract and has become a common first case to study for law students.
However, an even more outlandish marketing campaign did not expand these claims further but instead established their limits, largely by showing that a serious contract needs to do more than merely look like one.
“Sure Beats The Bus”
In 1996, PepsiCo launched the Pepsi Stuff catalogue first in the USA and later in the UK, a loyalty scheme where people who bought specially marked bottles, cans, multipacks or cups from drinks dispensers could collect points that could be spent on premium items.
The types of items that could be claimed included clothing, posters, watches, bags, sports equipment, sunglasses and even a mountain bike, all available through a seasonal catalogue and a mail-order system.
According to the 1996 catalogue, a Fila Mountain Bike was the most expensive item, and according to the campaign rules, each extra Pepsi Point you needed cost 10 cents each, aside from the minimum 15 points that needed to be collected from marked packages.
This meant that with some rough mathematics, you could get an idea of what each item was worth. A T-shirt cost $8, a leather jacket cost $120 and the mountain bike cost $275.
However, one item not in the catalogue but had a points value described in a now infamous advertisement is a Harrier Jump Jet, a vertical take-off and landing (VTOL) fighter-bomber used at the time by the Royal Air Force.
In the advert, a teenage character flies to school in an AV-8B Harrier II, quipping that it “beats the bus” with a price of 7,000,000 Pepsi Points.
One man, John Leonard, quickly realised that this meant that a jet valued at $37.4m could be bought for $700,000 worth of Pepsi Points and quickly got a set of investors together to send a cheque to PepsiCo for $700,008.50, including 15 labels to qualify for the deal.
This offer was quickly refused and led to Leonard v PepsiCo, a contract lawsuit claiming fraud and breach of contract, alleging that, to “members of the Pepsi Generation”, the advert was seen as an offer under contract law.
This was very swiftly rejected, partly because, unlike the Carbolic Smoke Ball Company, simply having a points value did not constitute an offer by itself, that no reasonable person would seriously believe any company would sell a multi-million dollar jet for $700,000.
As well as this, the Pentagon noted that they would never allow the Harrier to be sold to civilian pilots without removing its VTOL unit.
The case notes described the entire advert as an “exaggerated adolescent fantasy”, called the “callow youth” a “highly improbable pilot”, and noted that the use of the jet itself was clearly not serious even if it could have been bought in a way that was legal.
PepsiCo, to cover their bases, increased the required points to 700,000,000 (or $70m) and added a “just kidding” disclaimer to avoid a similar lawsuit happening again.
