Intention (Business and Agreements) Cases

Question 1

Edwards v Skyways Ltd

Answer 1

facts: employer promised a sum of money as an “ex gratia” payment for employee’s redundancy
held: despite term “ex gratia”, there was an intention to create legal relations.
principle: despite using ‘ex gratia,’ if both parties intended a legally binding agreement, it can be enforceable.

Question 2

Esso Petroleum v Customs and Excise

Answer 2

facts: Esso Petroleum disputed Customs and Excise’s excise duty
held: Customs and Excise overstepped their authority in imposing excise duty.
principle: VAT should be based on the full price paid by the customer, not the discounted amount.

Question 3

McGowan v Radio Buxton

Answer 3

facts: Ms. McGowan won a Renault Clio car competition but got a toy car.
held: radio station’s ad formed a contract, court awarded her damages for a new Renault Clio.
principle: In commercial contexts, ads can form legally binding contracts if there’s intention to do so, obligating parties to fulfill advertised offers.

Question 4

Kleinwort Bunson v Malaysian Mining Corporation

Answer 4

facts: Malaysian company secured a loan for its London subsidiary, issuing “comfort letters” to the bank. The bank relied on these letters for repayment when the subsidiary went into liquidation.
held: the letters didn’t constitute a legally binding contract for future payment, as they were statements of the bank’s policy and moral responsibility, not promises for future conduct.
principle: a mistaken payment could be recovered if it led to unjust enrichment.