Module 3 - IRAC Analysis (Group)

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Module 3 - IRAC Analysis (Group) by Mind Map: Module 3 - IRAC Analysis (Group)


2. Group Members

2.1. Todd LeClair

2.2. Cotter Smith

2.3. Matthew Geudtner

3. Facts

3.1. Parties

3.1.1. John Leonard - Plaintiff

3.1.2. PEPSICO Inc - Defendant

3.2. What Happened

3.2.1. PEPSICO aired a commercial 1995 that allowed consumers to collect points from soft drink purchases and exchange them for merchandise The teenage actor in the commercial was seen in a fighter jet with the required points of 7 million Consumers had the option of also buying points for 10 cents per point

3.2.2. Plaintiff claimed the advertisement was a realistic offer Sent in the equivalent of 7 million points to claim the fighter jet 15 points and a check for $700,000

3.3. Procedural History

3.3.1. Southern District of New York previously found for the defendant

3.3.2. Appeal brought to the US Court of Appeals for the Second Circuit Argued March 21, 2000 Decided April 17, 2000

4. Issues Before the Court

4.1. Whether the advertisement constituted 1) an offer of goods 2) in which an objective person would reasonably conclude PEPSICO was offering consumers a fighter jet 3) and the alleged contract met New York statute of frauds.

5. Rule of Law

5.1. Necessary elements to constitute an offer of contract

5.1.1. Offeror must have serious intention to become bound by the offer

5.1.2. Terms of offer must be reasonably certain or definite

5.1.3. Offer must be communicated to the offeree

6. Application

6.1. Defendent

6.1.1. Part of the advertisement that referenced the fighter jet was a joke and no reasonable person would expect it to be a realistic offer of merchendise Court agreed that the commercial did not amount to offer of goods Court agreed that no reasonable person would conclude that a fighter jet was a realistic available form of merchandise

6.1.2. Promotional catalog was referenced in the advertisement and the catalog did not contain the fighter jet

6.2. Plaintiff

6.2.1. Requested jury trial so peers could evaluate reasonability of offer Request was denied

7. Conclusion

7.1. Result

7.1.1. Court agreed with PEPSICO and found for the defendant

7.1.2. PEPSICO continued to air the advertisement by increased the cost of the jet to 1 billion points

7.2. Impact

7.2.1. Contrast to other rulings on "offers in jest" Lucy v Zehmer in which Zehmer wrote contract for sale of a farm which he contended was in jest and the court found outward expression was reasonable and over road internal intent Carlill v. Carbolic Smoke Ball Co in which advertisement was deemed a unilateral offer not requiring acceptance

7.3. Why We Care

7.3.1. Marketing often utilizes "jest" in advertisements This advertising tool need protection from unreasonable expectations of consumers

7.3.2. Protection of necessary elements in an offer

7.4. Practices Influenced by Case

7.4.1. Continued advertising employs "jest" as part of its campaigns This has protection under the ruling