Legal Case Summary
Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 WLR
Intention to create legal relations and consideration for a contract of sale in the formation of contracts.
Facts
Esso, a petrol company, by which customers would receive one free World Cup coin for every four gallons of petrol purchased. The World Cup coins were manufactured coins with the head of a 1970 World Cup English footballer on one side and the word ‘Esso’ on another for a sales promotion. Esso ran advertisements The Customs and Excise Commissioners claimed that the coins were liable to purchase tax as goods “produced in quantity for general sale,” under the Purchase Tax Act 1963, Sch 1, Group 25. Esso claimed that the coins were free gifts and, thus, there was no sale with the intention to create legal relations and produce a legal effect.
Issues
The question arose as to whether, the distribution of the coins were goods “for general sale,” and thus sold per a legal obligation by Esso to supply the coins under a contractual relationship with customers.
Decision / Outcome
Firstly, the Court held that there was an intention to create a legal obligation by Esso to supply the coins. The transaction took place in a business setting, and was itself a legal offer beyond a mere ‘puff’ (p 5) that rendered Esso commercial advantages, and was accepted by the customers. Secondly, the Court held that, for a contract of sale, there must be a transfer of the goods for monetary consideration. The Court held that, despite the intention to create a legal obligation, there was no consideration for the transfer of the coins as the coins were transferred under the separate contract for sale of the petrol. Accordingly, the Court held that there was no contract of sale by Esso, there was a contract to produce the coins as goods “for general sale.”
Updated 19 March 2026
This case summary remains broadly accurate as a description of the House of Lords’ decision in Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 WLR 1. The core legal principles discussed — intention to create legal relations and the requirement of monetary consideration for a contract of sale — continue to represent established English contract law.
However, readers should note several points of context. First, the Purchase Tax Act 1963, under which the dispute arose, has long since been repealed; purchase tax was replaced by Value Added Tax when the United Kingdom joined the European Communities, and VAT is now governed principally by the Value Added Tax Act 1994. The case therefore has no direct relevance to current tax legislation, but retains significant value as an authority on contract formation principles. Second, the article’s summary of the outcome slightly oversimplifies the decision: the House of Lords was divided (3:2) on the question of intention to create legal relations, with the majority finding such intention existed, but the court unanimously or near-unanimously agreeing there was no ‘sale’ in the statutory sense because no money passed for the coins specifically. Students should consult the full judgment for the precise reasoning of each Law Lord. Third, this case is frequently cited alongside Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 and cases on collateral contracts; those surrounding authorities remain good law.
