Legal Case Summary
Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1975] UKHL 4; [1976] 1 WLR 1
Intention to create legal relations and consideration for a contract of sale in the formation of contracts.
Facts
Esso, a petrol company, ran a sales promotion 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 advertised the promotion in the press and on television. 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.
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Issues
The question was whether the coins were “produced in quantity for general sale” and therefore chargeable to purchase tax. This depended on whether participating garage proprietors sold the coins to motorists, rather than merely on whether there was a binding promise to supply them.
Decision / Outcome
The House of Lords dismissed the Commissioners’ appeal by four to one. The coins were not produced for general sale within the relevant provision and were not chargeable to purchase tax.
On intention to create legal relations, Lord Simon, Lord Wilberforce and Lord Fraser considered that motorists could have contractual rights to the coins. The promotion took place in a business setting, was designed to bring commercial advantages and was more than a mere advertising puff. Viscount Dilhorne and Lord Russell disagreed on that issue.
Lord Simon, with whom Lord Wilberforce agreed, analysed the promise of a coin as a collateral contract: the motorist provided consideration by entering into the separate contract to buy petrol. There was therefore consideration for the promise, but the coins were not transferred for a money price. A binding collateral promise did not make the transaction a sale of the coins. Viscount Dilhorne and Lord Russell likewise considered that, even if there was a contract concerning the coins, it was not a sale for money. Lord Fraser dissented on the tax outcome, treating the petrol and coin as sold together for an inclusive price.
