Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1976] 1 All ER 117
Contract; formation; intention to be legally bound; commercial agreements.
Facts: Esso Petroleum produced a set of commemorative coins. The coins were collectors' items - they had no value as money. To promote sales of its petrol, Esso promised to give motorists a 'free' coin with every four gallons of Esso petrol purchased. The Commissioner of Customs and Excise argued that the 'free' coins were 'produced in quantity for general sale' and were therefore subject to a purchase tax.
Issue: Did Esso have the intention to be legally bound by the offer to give the coins to motorists who purchased its petrol?
Decision: In a majority decision, the House of Lords held that the terms of the promotion were intended to be a legally binding promise. The coins were therefore subject to the purchase tax.
Reason: The offer of commemorative coins was a commercial promotion from which Esso and its station operators stood to gain, and the coins were only offered to its customers. Thus, although the offer of the coins was described as a 'gift', it could be inferred from the commercial circumstances that it was a promise made with an intention to be legally bound.