Model Lesson Plan
Bernie Botz
Lesson: Contracts – Promissory Estoppel
Source(s): Leonard v. Pepsico, 88 F.Supp.2d 116 (1999); Robert E. Scott and Jody S. Kraus, Contract Law and Theory, 4th Ed. (2007);

Date: May 16, 2012

Length: ~50 minutes
Number of Students: designed for ~30
Materials Required: Leonard v. Pepsico handout and worksheet (included below), access to youtube.
I.Goals.

  1. Provide students with a very basic introduction to contract law.
  2. Have students look at arguments on both sides of a case.

II. Objectives.

  1. Knowledge: students will have a better understanding about:
  2. How a contract is formed;
  3. What defenses may be raised in a contract case;
  4. How a lawyer analyzes problems.
  5. Skill/Application: Students will better know how to:
  6. Analyze a legal problem;
  7. Think objectively about a problem.
  8. Attitude: Students will better be able to feel:
  9. like they can discuss things with each other;
  10. like they can think like an attorney when they analyze a problem.

III. Classroom Methods.

  1. Hook: Show the students this video:
  2. The video is a Pepsi commercial from the mid-90s. The commercial shows a variety of products that can be purchased with “Pepsi Points”. The Pepsi points are acquired after purchasing Pepsi products. The commercial shows that you can purchase a Harrier Jet for 7,000,000 Pepsi Points.
  3. This relates to the activity later on in the class period.
  4. Overview of Contract Law: Give the students information about basic contract terms and law:
  5. Formation: A contract is not formed unless the following elements are in place between the parties to the contract.
  6. Offer: a proposal to another person to enter into an agreement to perform some action. Must be pretty specific. Person making offer is called offeror.
  7. Example: I’ll sell you my laptop for 500 dollars.
  8. NOTE: generally advertisements don’t constitute offers. Exceptions if specifically targeted at an audience perhaps.
  9. Acceptance: The person to whom the offer is made must assent to enter into the terms of the offer in order create a contract.
  10. Example: Sure, I’ll buy your laptop for 500 dollars OR in the alternative, the offeree (person to whom an offer is made) could just give the person 500 dollars and by performing, accepts the contract.
  11. Consideration: a fancy term for what the parties (offeror and offeree) are exchanging between each other.
  12. Ask: What would be the consideration in the above example? in the example above, 500 dollars and the laptop.
  13. Defenses: if you have elements above, consider whether you have a defense to the formation of the contract. I.e., something that voids the existence of the contract.
  14. Statute of Frauds: Generally, contracts over 500 dollars must be in writing
  15. Minor: Children (kids under the age of 18) cannot enter into binding contracts.
  16. Duress: You can’t be forced into entering a contract. Entering into a contract must be voluntary. No one can put a gun to your head and tell you to do something.
  17. Fraud: You can’t be deceived into entering a contract.
  18. Unconscionability: If the terms are super unfair, then the contract may be voidable. Example: promise to pay 5 million dollars in exchange for a laptop computer.
  19. Public Policy????: sometimes courts may void a contract if it is against public policy. Example: contract to kill someone.
  20. Breach: if one of the parties doesn’t perform, then they have breached the contract and may be able to seek “damages.”
  21. Distribute: Handout and worksheets (included below)
  22. Tell the students the handout contains a version of the facts from Leonard v. Pepsico. The case involves Leonard suing Pepsi because of an alleged contract that was formed after Leonard saw the commercial viewed at the beginning of class.
  23. Students also receive a second handout. On this handout, they will have to answer some questions and provide some arguments about who should win the case.
  24. There are handouts for people who will represent the plaintiff and people who will represent the defendant.
  25. Distribute an equal amount of handouts for both plaintiffs and defendants to the class because they will have to pair up later with someone from the other side.
  26. Tell students they will be graded on their answers to the questions in the handout. Especially on how thoughtful and creative they are and whether they used the information that we provided earlier in class about contracts.
  27. Give the students about 15 minutes to read the facts and answer the questions.
  28. Activity:
  29. Have the students divide up into groups of two.
  30. Each group should have a person with a plaintiff handout and a person with a defendant handout.
  31. Have them discuss with each other the arguments that they came up for their side.
  32. Also have them discuss which side they think should win. Tell them to try to come to an agreement.
  33. Monitor the students discussion to make sure that they are on topic.
  34. Give the students about 10-15 minutes on this portion.
  35. Pick 4 plaintiffs and 4 defendants (one for each question) who will provide an answer to one of the questions on the handout excluding the last question about which side should win.
  36. One person per question.
  37. Ask the class if any plaintiffs came up with other reasons for the plaintiffss side
  38. Ask the class if any defendants came up with other reasons for the defendant’s side.
  39. Go around the room and have each pair of plaintiffs and defendants report which side they thought should win and why. If they couldn’t come to an agreement, have them explain why.
  40. Have the students stand up when they present to the class.
  41. Debrief:
  42. Provide students with the actual information concerning the case.
  43. The facts are taken from an actual case called “Leonard v. Pepsi” (decided in 1999).
  44. The court ultimately decided in favor of Pepsi. The court gave several reasons for its decision:
  45. A reasonable person would not consider the commercial as an offer for the sale of a jet.
  46. “An obvious joke would not give rise to a contract.”
  47. The contract was not in writing, so it didn’t satisfy the statute of frauds.
  48. “A contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement.”
  49. Perhaps an underlying public policy reason?
  50. Selling a Harrier Jet to a member of the public seems crazy.
  51. Leonard appealed to the circuit court.
  52. The third circuit simply agreed with the District Court’s opinion.

IV. Evaluation

  1. Filling out the worksheet.
  2. Participation in the activity with other students.

VI. Materials

  • See Below

Leonard v. Pepsico: Cold Hard Facts

Inspired by th[e commercial shown at the beginning of class], Leonard set out to obtain a Harrier Jet. Leonard explains that he is "typical of the `Pepsi Generation' ... he is young, has an adventurous spirit, and the notion of obtaining a Harrier Jet appealed to him enormously"….

Although Leonard initially set out to collect 7,000,000 Pepsi Points by consuming Pepsi products, it soon became clear to him that he "would not be able to buy (let alone drink) enough Pepsi to collect the necessary Pepsi Points fast enough." Reevaluating his strategy, Leonard "focused for the first time on the packaging materials in the Pepsi Stuff promotion," and realized that buying Pepsi Points would be a more promising option. Through acquaintances, Leonard ultimately raised about $700,000.

On or about March 27, 1996, Leonard submitted a Pepsi Points Order Form, fifteen original Pepsi Points, and a check for $700,008.50. At the bottom of the Order Form, Leonard wrote in "1 Harrier Jet" in the "Item" column and "7,000,000" in the "Total Points" column. In a letter accompanying his submission,Leonard stated that the check was to purchase additional Pepsi Points "expressly for obtaining a new Harrier jet as advertised in your Pepsi Stuff commercial."

Pepsi rejected Leonard's submission and returned the check. Pepsi explained that: “The item that you have requested is not part of the Pepsi Stuff collection. It is not included in the catalogue or on the order form, and only catalogue merchandise can be redeemed under this program.The Harrier jet in the Pepsi commercial is fanciful and is simply included to create a humorous and entertaining ad. We apologize for any misunderstanding or confusion that you may have experienced and are enclosing some free product coupons for your use.”

Leonard’s lawyer responded to Pepsi by writing: “Your letter is totally unacceptable. We have reviewed the video tape of the Pepsi Stuff commercial ... and it clearly offers the new Harrier jet for 7,000,000 Pepsi Points. Our client followed your rules explicitly....This is a formal demand that you honor your commitment and make immediate arrangements to transfer the new Harrier jet to our client. If we do not receive transfer instructions within ten (10) business days of the date of this letter you will leave us no choice but to file an appropriate action against Pepsi....”

Pepsi refused to honor the letter and Leonard filed suit against them to force them to give him a Harrier jet.

Plaintiff Questionnaire

Instructions: Pretend that you are an attorney representing Leonard in the case. Answer the following questions and present arguments for why Leonard should win. Remember: if there is an offer, acceptance, and consideration, then a legally enforceable contract was formed. As a representative of Leonard, you will want to argue that all these things were present.

  1. Why should the commercial constitute an offer? Argue that it did.
  1. Did Leonard accept the offer? Explain how he accepted the offer.
  1. Did both Leonard and Pepsi give consideration? If yes, what consideration did Leonard give? What consideration did Pepsi give?
  1. Does Pepsi have any viable defenses (e.g., fraud, duress, violation of public policy) against the creation of a contract? What are arguments against these defenses? Remember, as Leonard’s representative you don’t want Pepsi to present any viable defenses.
  1. After consulting with a person from the Defendant’s side, who do you think should win the case?

Defendant Questionnaire

Instructions: Pretend that you are an attorney representing Pepsi in the case. Answer the following questions and present arguments for why Pepsi should win. Remember: if there is an offer, acceptance, and consideration, then a legally enforceable contract was formed. As a representative of Pepsi, you will want to argue that all these things were present. Furthermore, you will want to present affirmative defenses.

  1. Why did the commercial not constitute an offer? Argue that it wasn’t an offer.
  1. Why did Leonard’s submission of the check, 15 Pepsi points, and the Order Form not constitute an acceptance? Argue that it wasn’t an acceptance.
  1. Was there consideration given by Pepsi and Leonard? If yes, what was it? Why shouldn’t it be consideration?
  1. What affirmative defenses (e.g., duress, fraud, public policy) will you present?
  1. After consulting with someone from the plaintiff’s side, which side do you think should win the case?

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