İnci Sevi Kaya
Bilkent Üniversitesi Hukuk Fakültesi
You may be familiar with the four-episode miniseries on Netflix titled "Pepsi: Where is My Jet?" It delves into a noteworthy advertising incident involving PepsiCo, Inc. (Pepsi) that led to a young boy named John Leonard demanding a Harriet Jet from the company. This demand escalated to the United States District Court, S.D. New York (Court) in 1999. What is even more interesting is that this was not the only time Pepsi refused to deliver a jet. In 1988 The United States Court of Appeals for the Fourth Circuit (Court of Appeal) had to resolve a dispute between Pepsi and Klein, who intended to purchase a second-hand Gulfstream G-II jet through the services of Universal Jet Sales, Inc. (UJS). Both of these cases, in which Pepsi refused to deliver jets, have contributed significantly to American Contract Law literature offering rich content to be unpacked by lawyers.
To begin with the more well-known case of Leonard v. PepsiCo, Inc., the mentioned commercial video must be watched [1]. Pepsi had a catalog where people who collected enough Pepsi Points from buying the products could order various items such as jackets and t-shirts. In the video, they showed the number of points that needed to be collected for various items and it said without disclaimers a “Harrier Fighter” Jet is “7.000.000 Pepsi Points” (“Pepsi Harrier…). As the story goes, young John who was around 20 years old hears a friend collecting and saving points for the Harrier Jet. Then, he decides to do the same.
Later he does the math and realizes that he does not have enough money to buy that many Pepsi products to collect the 7 million points before other people do. So, he thinks of an older and richer friend who could help with his business idea to buy and store enough products. John encounters a legitimate concern from his friend: what if someone else collects the points first, leaving them burdened with surplus products and a considerable financial outlay? A valid objection indeed. However, an epiphany strikes John when he realizes that Pepsi also sells points independently of the tied products. Armed with this revelation, his friend issues a check amounting to $700,008.50, precisely enough to acquire all the points requisite for the Harrier Jet, as explicitly stated in the commercial. The Jet was not in the ordering catalog so they drew a box and checked it before they sent the money to the company.
In American Contract Law the principles of offer and acceptance are similar to the concepts in the Turkish Law of Obligations. This implies that if the Court deems the commercial, where the number of points was presented without a disclaimer at the bottom, to be an offer, then what John Lenard did constitutes an acceptance, thereby forming a contractual agreement between the parties (United States…). The judge of the Court took a stance in favor of the argument that a reasonable person would perceive the depicted scene in the advertisement as lacking seriousness, and if it is a joking statement, it cannot be deemed as a valid offer. Additionally, Pepsi had a catalog that did not feature the Harrier Jet, and according to the Court, this catalog served as the sole offer.
However, the decision resulting in John Leonard not receiving the jet faced intense criticism. In his interviews, Leonard points out that many others at the time believed the advertisement and tried to collect enough points which increased the profit of Pepsi, as a 20 years old Leonard claims that he honestly believed what was said in the video commercial on television was a legit offer (“Pepsi, Where’s…). Therefore, the term for “reasonable person” was not enough to convince the losing party. A parallel critique can be applied to the Turkish Law of Obligations. According to the Theory of Trust, if the other party is aware or can become aware of the unserious nature of the situation, the jest statement will be deemed invalid; otherwise, the statement remains binding. Despite the Court's decision being extensively debated and criticized across various platforms, including Netflix, it has evolved into one of the most significant precedents utilized by academics, lawyers, and courts.
The second case that got Pepsi in trouble about a jet was Klein v. PepsiCo, Inc. The jet was inspected in the presence of both parties’ representatives and later Mr. Klein wanted to inspect the jet himself, which was then flown to Arkansas for his examination. Afterward, a price agreement was reached between the parties. In the 1980s, USJ used telex, a technology similar to fax, to dispatch purchase agreement proposals to both sides and a bill of sale to Mr. Klein. Mr. Klein argued that Pepsi, by failing to deliver the jet, had breached their contract. During the delay, the price of the specific jet increased, compelling him to pay more to another party for the same jet due to this contractual breach. Pepsi’s arguments that there was no formed contract were dismissed and the Court of Appeals dealt with whether the ordered relief was appropriate (Klein v.…).
What marked the significance of this case was Klein's uncommon demand for specific performance, which deviates from the usual practices in American Contract Law. According to the understanding, a court rule cannot force parties to act in a certain way to obey the contract but it can enforce compensations for the different kinds of damages that could emerge from the breach of contract. This concept of compensation being the rule, specific performance being the exception is not exactly parallel to the application of the Turkish Law of Obligations. In Turkish law, without categorizing specific performance as an exception, if performance is still feasible and the debtor fails to fulfill their obligation, the creditor may demand exact performance of the debt while reserving the right to claim additional compensation regarding the delay.
However, in American Contract Law, specific performance is typically granted only when the subject matter of the contract is unique or under certain obvious circumstances. Thus, the key question arises: does this case present a suitable scenario for specific performance rulings? The district court favored Klein, but the Court of Appeals deliberated that mere price increases were insufficient to warrant specific performance, as such monetary damages are easily compensable. Moreover, the aircraft in question was not unique; the discovery revealed three more on the market. Therefore, the Court of Appeals ruled that specific performance is not in order. This case became one of the most known cases where the principle of specific performance was driven from and used as the case law.
In the realm of legal philosophy, the ongoing debate revolves around whether specific performance or compensation should serve as the prevailing principle. Advocates for specific performance argue that there should be a meaningful consequence for non-compliance to make a contract truly binding. This perspective aims to ensure fidelity to the contract, and the Turkish Law of Obligations has embraced this approach. On the other side, proponents of compensation argue that it provides greater flexibility and freedom in some sense, and such a perspective has been adopted in American Contract Law.
The cases of Leonard v. PepsiCo, Inc., and Klein v. PepsiCo, Inc. are still taught in law schools, and used by lawyers to extract principles about the formation of contracts and the consequences of breach of contracts. The applications in these American Contract Law cases find their counterparts, both resembling and differing, in the Turkish Law of Obligations. With all these being noted, owing to Pepsi’s jet-related challenges, “Pepsi Where is My Jet?” is a worth-watching series that has an almost real-life sequel giving us the milestones of the law of contracts.
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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