Firstly, any liability that could fall on Pepsi Corporation would have to be based on a breach of contract. Therefore, it is essential to establish whether the advertisement creates a contractual relationship between Pepsi Corporation and the viewers. According to Carlill v Carbolic Smoke Ball Company , advertisements do not ordinarily constitute offers to sell. However, if an advertisement specifies an explicit form of acceptance, it is regarded as an offer.
In the Pepsi advertisement, it is the payment of the points that would constitute acceptance by its viewers. The details of the steps necessary to accept the offer are contained in the advertisement and the catalog. As such, the commercial advertisement is not detailed enough to be regarded as an offer. Even in the absence of such details, it is applying the “reasonable man” test that would rid Pepsi Corporation of contractual obligations. The advertisement will not be regarded as an offer only if a reasonable man would not have reason to believe that it was indeed an offer.
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Then, the questions to be answered is whether a reasonable man would believe the advertisement to be serious are:
The teenager depicted in the video is not a probable pilot, and as such, a reasonable person could indeed not believe the advertisement to be an offer.
The teenager is seen to be using the jet as a means of transportation to school. This is also a highly improbable occurrence that communicates to a reasonable man that the advertisement is not intended to be an offer.
To get the seven million points required to “earn” the jet in the advertisement, one would be required to drink approximately one hundred and ninety Pepsi drinks in a day for a hundred years, which is also highly improbable.
A reasonable man would not take the commercial seriously, and as such, liability issues are unlikely to arise on the part of Pepsi Corporation. However, it is essential to note that the above-discussed reasons are not a guarantee that a contractual lawsuit will ensue. Therefore, Pepsi Corporation needs to include additional terms in the advertisement to clarify its status as a joke instead of a serious contract. This will resolve the indefiniteness surrounding the binding nature of the advertisement.
Reference
Carlill v Carbolic Smoke Ball Company (1893) 1 QB 256 (Eng.).
