The Pepsi Harrier Jet Case: When a Commercial Becomes a Contract

When discussing how advertising intersects with contract law, another famous case that frequently comes up alongside Carlill v. Carbolic Smoke Ball Co. is Leonard v. PepsiCo, Inc. (1999). While the Carbolic Smoke Ball case demonstrated how advertisements can be legally binding contracts, the Pepsi case is a fascinating counterpoint—it shows the limits of that principle and how courts determine whether an ad is a genuine offer or mere puffery.

The Story of the Pepsi Harrier Jet Offer

In the mid-1990s, Pepsi launched a promotional campaign called "Pepsi Stuff", where customers could collect points from Pepsi products and redeem them for merchandise such as T-shirts, sunglasses, and jackets. The campaign was widely advertised on TV and in print, with a commercial that would later become the centerpiece of a legal battle.

In the commercial, Pepsi humorously depicted a high school student arriving at school in a Harrier Jet—a military-grade fighter aircraft. The ad suggested that, for 7,000,000 Pepsi Points, customers could redeem the jet as a prize. Notably, the commercial did not include any disclaimers or fine print suggesting the offer was a joke.

John Leonard, a business-savvy college student, saw this commercial and decided to test whether Pepsi would honor the offer. Instead of collecting millions of Pepsi Points through purchases, he found a loophole in the promotion’s fine print: customers could buy additional points for 10 cents each. Doing the math, he realized he could buy 7,000,000 points for $700,000—a fraction of the actual cost of a Harrier Jet, which was valued at over $23 million at the time.

Leonard sent a check to Pepsi along with his order form, formally requesting the jet. Unsurprisingly, Pepsi refused, stating that the ad was meant to be a joke and that the jet was not actually part of the promotion. Leonard then sued, arguing that Pepsi’s commercial constituted a legally binding offer and that he had accepted by fulfilling the stated requirements.

The Legal Battle and the Court’s Decision

The case was heard in the United States District Court for the Southern District of New York. The core legal question was whether the advertisement constituted a legitimate offer capable of acceptance, forming a contract.

The court ruled in favor of Pepsi, rejecting Leonard’s claim. Several key legal principles emerged from the ruling:

1. Was the advertisement a legally binding offer? The court held that it was not. Unlike in Carbolic Smoke Ball, where the language was clear and serious, the Pepsi commercial was deemed a joke. A reasonable person would not expect a multinational company to be offering military aircraft in exchange for soft drink points.
   

2. Would a reasonable person believe the ad was serious? The court applied the reasonable person standard, concluding that no reasonable person would think Pepsi was genuinely offering a Harrier Jet. The court noted that the commercial was clearly meant to be humorous and exaggerated, reinforcing the idea that it was mere puffery rather than a contractual offer.
   

3. Was there an intention to be legally bound? The court found that Pepsi had no intention of entering into a contract to deliver a fighter jet. Even if the ad had been clearer, it lacked essential contract elements, such as specific terms of delivery and feasibility.

   
   

4. Did Leonard’s check constitute valid acceptance? Since the offer itself was not legally valid, Leonard’s check did not count as acceptance. Without a legitimate offer, there can be no acceptance and, therefore, no contract.

Ultimately, the court dismissed the case with prejudice, and Pepsi was not required to provide the jet. This ruling solidified an important distinction in advertising law: not all advertisements are contractual offers, especially when they are clearly hyperbolic or humorous.

What many people don’t realize is that at one point, John Leonard was offered a settlement of $1 million by Pepsi to walk away quietly. For a college student in the 1990s, this was a life-changing sum. But Leonard declined. Whether it was conviction, overconfidence, or the thrill of taking on a corporate giant, he chose to push the case all the way to federal court — and ultimately walked away with nothing.

This moment in the story is more than just a legal footnote; it’s a critical lesson in strategy. Sometimes, the boldest move isn’t to double down, but to know when to cash in. In business, as in life, greed and ego can turn a partial win into a total loss. Leonard’s case reminds us that understanding the landscape — both legal and psychological — is often just as important as having a good argument.

The Impact of the Case on Marketing and Consumer Law

The Pepsi Harrier Jet case reinforced several legal principles that continue to influence advertising law today:

• Puffery vs. Offers While Carlill v. Carbolic Smoke Ball showed that some ads can be binding, the Pepsi case clarified that businesses cannot be held to absurd claims that a reasonable person would not take seriously.
  

• The Importance of Disclaimers One of the reasons the case made it to court was that Pepsi did not include a disclaimer in the commercial stating that the Harrier Jet was not actually available. Today, companies frequently include fine print to avoid similar legal challenges.
  

• The Reasonable Person Standard in Contracts Courts will interpret ads and promotional materials based on how a reasonable consumer would perceive them. If an ad clearly appears to be a joke or exaggeration, it is unlikely to be considered an enforceable offer.
  

• Avoiding Legal Ambiguity in Marketing This case is a cautionary tale for businesses: clarity matters in advertising. Companies must be careful not to mislead consumers, even unintentionally, or risk facing lawsuits, reputational damage, or regulatory scrutiny.

Why This Matters for Businesses Today

For businesses and marketers, the Pepsi Harrier Jet case is a key lesson in advertising law and risk management. When crafting marketing campaigns and promotions:

• Be mindful of exaggerated claims that could be misinterpreted as real offers.

• Use clear disclaimers to specify terms, conditions, and limitations.

• Ensure all promotions are legally vetted to avoid unintended contractual obligations.

• Understand the difference between legitimate offers and puffery to craft effective yet legally safe advertising strategies.

At Northeastic, we help businesses navigate marketing, ensuring that their promotional materials are both compelling and sound. Whether you're launching a campaign, creating customer guarantees, or structuring rewards programs, understanding the implications is key to protecting your brand and maintaining consumer trust.

The Pepsi Harrier Jet case remains one of the most famous examples of how courts distinguish between genuine contract offers and marketing puffery. While it might seem humorous, the legal precedent it set is a crucial lesson for businesses looking to balance creative marketing with legal compliance.

Want to ensure your advertising campaigns stay within boundaries? Contact Northeastic today for a consultation!