Commercial Transactions (Contracts) Essay


This week’s individual project will be in the form of an executive summary. The summary will be based on a series of questions concerning 1) the city of Bigtown’s advertising campaign (courtesy of the mayor), 2) possible similarities of this promotion to a court decision and 3) possible repercussions that could be encountered if not executed with caution. The court decision concerning John D.R. Leonard vs. PepsiCo is the basis of my summary. My conclusion will be an alternative suggestion to be decided on by Bigtown’s counsel.

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Unit 3 – Commercial Transactions (Contracts)

Although Bigtown has devised creative advertising campaigns, our recent efforts to stimulate tourism have been unsuccessful. I am moved to address our current proposal to auction our fine city of Bigtown on eBay. Although this is sure to turn the heads of most WebCrawler’s our intentions are strictly fictitious (and should be displayed as such). Minimizing the potential of a frequent eBay auctioneer taking this “mock advertisement” seriously smacks of the “Pepsistuff”/Harrier jet incident that took place in 1996.

If not for the ruling in1999 for reasons stated below, PepsiCo would have been the brunt of the deal of the century; advertising to sell a 23 million dollar government-owned fighter jet for a mere 7 hundred thousand dollars.

(1)Some of the reasons the deal was not finalized was the contract was not valid. The buyer desired to buy the fighter jet and made an offer to PepsiCo. PepsiCo did not accept the offer (for obvious reasons) whereas the agreement is not mutual. When the buyer (John D.R. Leonard) did not see the Harrier Jet he desired on the ordering form to purchase the so-called “Pepsistuff”, this presents itself of not being a bargaining item, which means considering it is not valid.

Being that the buyer did not consider the obvious humor PepsiCo was presenting in this advertisement leads one to think of the buyer’s capacity to reason sensibly. Which brings me to the final reason the contract was invalid; a Harrier Jet (much like Bigtown) is property of the U.S. government, property that is not considered a lawful object to be sold commercially, or in our case, in a web-based auction. These are the four elements that made this contract invalid (Cheeseman, 2006).

(2)Let’s look closer at the case of PepsiCo and our proposed business suggestion. A soft drink company (though very large and quite successful) not affiliated with the United States Marine Corp in any way (except maybe to supply our troops with refreshing beverages) is giving away a fighter jet in a promotion; a promotion that would sell the jet for 3.04% of the government paid for it.

Surely, this is an offer made in jest; the way the jet is presented in the commercial along with the seven million Pepsi points to be considered. No one with a sane sense of reason would consider this to be factual, which puts the contract void under the objective theory (Cheeseman, 2006).

(3)Other reasons the court found the Pepsi agreement invalid; * The advertisement was not specific beyond the shadow of a doubt of the ways and means to obtain the item in question (if it were, that would be the exception to the rule). * The obvious limitation of the offer was not stated in the advertisement (how many of these jets could PepsiCo possibly have to offer?) * In the commercial, a student traveled to school in the Harrier jet. This premise alone makes the offer fantasy (PDF, 1997).

(4)Advertisement are not offers, they are more like invitations. Think of our city of Bigtown as a bakery; the smell of fresh breads and pastries being blown on the street by an exhaust fan would surly attract the passersby. However, once they inspect where the heavenly scents are coming from is where the offers begin. The advertisement is use to attract the customer; by law, it does not have to do anything with what is being offered.

Once the invitation is accepted, then the negations can begin (think of the sports cars with the blonde buxom bikini model; where are they when you by the sports car?). (5)If this were in fact a reward contract (unilateral), there would have been 1) some sort of promise that PepsiCo would have agreed to satisfy, such as promising to exchange the Harrier jet for the 7 hundred thousand dollars (which there was not) and 2) The conditions of his transaction were based on a loophole that the buyer concocted.

The seller (PepsiCo) has to make the offer, accept the conditions, and commit to oblige the buyer’s payment. This never took place after John Leonard proposal with check and order form. Unilateral only requires that one side make a promise to (“If you do this, I promise to pay you _____”). In this instance a contract was never finalized, so the offer never existed (void contract). In a bilateral situation (“I promise to pay me_____, I promise to give you____”), the contract would have been valid. Unfortunately, this was also not the case; both sides would have had to agree (Wikipedia, 2010).

In conclusion, it is obvious to see that if we are to consider this whole “Bigtown on eBay” campaign, the necessary measures to be implemented alerting the general public this is strictly humorous and should be taken in jest. Boosting the tourist of Bigtown is an issue that demands the corporation of our whole city council. Hopefully, the examples and suggestions given above will help us to avoid any legal entanglement. (Cheeseman, 2006)

Cheeseman, H. (2006). Contemporary business and online commerce law, fifth edition. Prentice Hall. Chapter 8: Nature of traditional and online contracts. Pgs. 171-179. Retrieved on February 26, 2010 from Contract (2010). Bilateral vs. Unilateral. Wikipedia, the free encyclopedia. Retrieved on February 26, 2010 from John D.R. Leonard v PepsiCo Inc. (1997). Enforcing promises (PDF). Retrieved on February 27, 2010 from

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