İnci Sevi Kaya
Bilkent Üniversitesi Hukuk Fakültesi
You may be familiar with the four-episode Netflix miniseries Pepsi, Where’s My Jet? It explores a notable advertising dispute involving PepsiCo, Inc. (Pepsi), in which a young man named John Leonard demanded that the company deliver a Harrier Jet as allegedly promised in a commercial. This dispute ultimately escalated to the United States District Court for the Southern District of New York in 1999. Interestingly, this was not the only instance where Pepsi refused to deliver a jet. In 1988, the United States Court of Appeals for the Fourth Circuit adjudicated Klein v. PepsiCo, Inc., a case concerning a failed sale of a second-hand Gulfstream G-II jet facilitated through Universal Jet Sales, Inc. (UJS). Both cases, in which Pepsi refused to transfer aircraft, have significantly contributed to American contract law literature, offering rich material for legal analysis.
Leonard v. PepsiCo, Inc.
To begin with the more well-known case, Leonard v. PepsiCo, Inc., it is essential to examine the advertisement at the heart of the dispute. At the time, Pepsi had a rewards catalog allowing consumers to redeem various items, such as jackets and t-shirts, by accumulating Pepsi Points. In a television commercial, the company displayed the number of points required for different items. Notably, the ad depicted a Harrier Jet with the caption “7,000,000 Pepsi Points,” without any disclaimers.
John Leonard, a young man in his twenties, learned that a friend was collecting points to claim the jet. Inspired by this idea, he set out to do the same. However, after calculating the cost, he realized that purchasing enough Pepsi products to accumulate seven million points was financially unfeasible. Concerned about potential competition from other collectors, Leonard sought the help of a wealthy friend to fund his plan. Recognizing the risk of being left with surplus Pepsi products, they reconsidered their approach.
Leonard then discovered that Pepsi’s promotional campaign allowed consumers to purchase additional Pepsi Points separately, without buying the products. With this knowledge, his friend issued a check for $700,008.50—an amount sufficient to buy the necessary points to claim the Harrier Jet as advertised. Since the jet was not listed in the official catalog, they manually added it to the order form before submitting their payment to Pepsi.
Under American contract law, the principles of offer and acceptance resemble those found in the Turkish Law of Obligations. If the court had deemed the commercial an offer—given that the points were displayed without a disclaimer—Leonard’s actions would constitute acceptance, forming a binding contractual agreement. However, the court ruled otherwise. The judge held that a reasonable person would not perceive the advertisement as a serious offer but rather as an exaggerated marketing ploy. Since an offer made in jest does not constitute a valid contractual obligation, the court dismissed Leonard’s claim. Additionally, the court found that Pepsi’s official catalog, which did not include the Harrier Jet, constituted the only legally recognized offer.
Despite the ruling, the decision was widely criticized. In interviews, Leonard pointed out that many consumers believed the advertisement to be genuine and attempted to collect the required points, ultimately benefiting Pepsi financially. He maintained that, as a 20-year-old, he had genuinely believed the commercial to be a legitimate offer. This controversy highlights the debate surrounding the "reasonable person" standard in contract law. Similarly, under the Turkish Law of Obligations, the Theory of Trust dictates that if a party knows or reasonably should have known that an offer was not serious, the statement is invalid. However, if the other party could not have reasonably inferred the jest, the statement remains binding. While Leonard v. PepsiCo, Inc. remains debated and analyzed across legal and academic circles, it has become a landmark case frequently referenced in contract law discussions.
Klein v. PepsiCo, Inc.
The second case involving a jet-related dispute with Pepsi was Klein v. PepsiCo, Inc. In this case, Klein intended to purchase a used Gulfstream G-II jet through UJS. After an initial inspection by representatives of both parties, Klein requested to personally examine the aircraft, which was then flown to Arkansas for his review. Following the inspection, the parties reached a price agreement.
In the 1980s, UJS used telex—a communication method similar to fax—to transmit purchase agreement proposals and a bill of sale to Klein. When Pepsi ultimately failed to deliver the jet, Klein alleged that the company had breached their contract. Due to this delay, the price of comparable aircraft increased, forcing Klein to pay a higher amount to acquire a different jet. Pepsi argued that no binding contract had been formed, but the district court disagreed, ruling in favor of Klein. The Court of Appeals, however, focused on whether the requested remedy—specific performance—was appropriate.
What made this case particularly significant was Klein’s request for specific performance, which is generally disfavored in American contract law. The prevailing principle in the U.S. legal system is that courts do not compel parties to perform contractual obligations but instead award monetary damages for breaches. This contrasts with Turkish law, where specific performance is not treated as an exception. Under Turkish contract law, if performance remains feasible and the debtor fails to fulfill their obligation, the creditor can demand precise fulfillment of the contract while also reserving the right to seek compensation for any resulting delay.
In American contract law, however, specific performance is typically granted only when the subject matter of the contract is unique or when monetary damages would be insufficient. The Court of Appeals found that the mere increase in the aircraft’s market price was not enough to justify specific performance, as such losses could be compensated through damages. Additionally, since multiple similar jets were available for sale, the court ruled that specific performance was unwarranted. This case remains a key precedent in American contract law regarding the limited circumstances in which specific performance is granted.
Legal and Philosophical Implications
The broader legal debate centers on whether specific performance or compensation should be the default remedy in contract disputes. Proponents of specific performance argue that without the threat of enforcement, contracts may lack true binding force. This approach aligns with the Turkish Law of Obligations, which places greater emphasis on enforcing performance. Conversely, advocates of compensation highlight the flexibility it provides, allowing parties to opt out of obligations in exchange for damages. This philosophy is reflected in American contract law, where monetary remedies are preferred to ensure economic efficiency and market fluidity.
Conclusion
The cases of Leonard v. PepsiCo, Inc., and Klein v. PepsiCo, Inc. continue to be taught in law schools and cited by practitioners analyzing contract formation and breach remedies. These cases illustrate both similarities and differences between American contract law and the Turkish Law of Obligations. Given Pepsi’s history of jet-related disputes, Pepsi, Where’s My Jet? is a must-watch series that, in many ways, serves as a near real-life sequel to these pivotal legal cases, shedding light on the foundational principles of contract law.
Works Cited
“Klein v. PepsiCo, Inc.” Casebriefs Klein v PepsiCo Inc Comments, www.casebriefs.com/blog/law/contracts/contracts-keyed-to-farnsworth/remedies-for-breach/klein-v-pepsico-inc/. Accessed 17 July 2023.
“Pepsi Harrier Jet Commercial 1.” YouTube, Nonfps, 4 Nov. 2007, https://www.youtube.com/watch?v=ZdackF2H7Qc. Accessed 12 July 2023.
United States District Court, S.D. New York. John D.R. LEONARD, Plaintiff, v. PEPSICO, INC., Defendant. 5 Aug. 1999, https://law.justia.com/cases/federal/district-courts/FSupp2/88/116/2579076/.
“‘Pepsi, Where’s My Jet?’ Subject John Leonard | Donnybrook Next Up.” YouTube, Nine PBS, 16 Dec. 2022, https://www.youtube.com/watch?v=XyXRjrMrCQc. Accessed 12 July 2023.
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