And more importantly the seller is free to withdraw

and, more importantly, the seller is free to withdraw the item from sale if no bids are as high as the seller
desires.
Auctions are presumed to be with reserve unless they are explicitly represented as being without reserve .
The act of putting an article up for sale in a without reserve auction is treated as a definite offer. The first bid
creates a contract binding on the seller, unless a higher bid is made. The seller can no longer withdraw the
item. The highest bidder has a contract for sale that she can enforce.
NEXT: Module 25 presents a featured case on offers.

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Module 25: Featured Case - Offers
The issue in this case is whether part of a TV commercial originally meant as a joke amounted to an offer
when a viewer took it literally. It raises the different types of intent discussed in the previous module.
LEONARD v. PEPSICO, INC.
U.S. District Court, Southern District of New York, 88 F.Supp.2d 116 (1999)
Plaintiff Leonard saw a television commercial advertising a promotion that defendant PepsiCo was
sponsoring for its products. The ad stated that one could collect bottle tops and accumulate “points” for use
in buying Pepsi products. Many of the prizes were various types of merchandise featuring a Pepsi logo and
cost a few hundred Pepsi points. At the end of the ad, a high school student was shown landing a Harrier
Jet at a school with a subtitle indicating that the cost of the jet was 7 million Pepsi points. In the
promotion’s fine print was a statement that individual points could be purchased directly for ten cents each.
Plaintiff sought investors and accumulated $700,000, enough to purchase 7 million Pepsi points. He then
demanded a Harrier jet, and Pepsi refused. Plaintiff filed this suit for breach of contract. Defendant moved
for summary judgment. The following ruling was later affirmed by the Court of Appeals.
Wood, District Judge:
Plaintiff’s understanding of the commercial as an offer must be rejected because the court finds that no
objective person could reasonably have concluded that the commercial actually offered consumers a Harrier
Jet. In evaluating the commercial, the Court must not consider defendant’s subjective intent in making the
commercial, or plaintiff’s subjective view of what the commercial offered, but what an objective, reasonable
person would have understood the commercial to convey. If it is clear that an offer was not serious, then no
offer has been made. Plaintiff’s insistence that the commercial appears to be a serious offer requires the
Court to explain why the commercial is funny. Explaining why a joke is funny is a daunting task; as the
essayist E.B. White has remarked, “Humor can be dissected, as a frog can, but the thing dies in the process.”
The commercial is the embodiment of what defendant appropriately characterizes as “zany humor.”
First, the commercial suggests, as commercials often do, that use of the advertised product will transform
what, for most youths, can be a fairly routine and ordinary experience. The military tattoo and stirring