Placer Development Ltd v Commonwealth (1969) 121 CLR 353
Contract; formation; offer; illusion of promise.
Facts: The Commonwealth government said that it would pay a subsidy to companies that imported timber products into Australia. The subsidy was to be 'of an amount or at a rate to be determined by the Commonwealth from time to time'. The government made some initial payments to importers, but then stopped. Placer, who had imported timber, wanted to enforce payment of the subsidy.
Issue: Was what the government said about paying a subsidy to importers a legally enforceable promise?
Decision: In a majority decision, the court held that what the government had said was not a legally enforceable promise. What was said may have appeared to be a promise, but on proper analysis it was not actually a promise at all.
Reason: Taylor and Owen JJ said (at [7]):
"A promise to pay an unspecified amount of money is not enforceable where it expressly appears that the amount to be paid is to rest in the discretion of the promisor and the deficiency is not remedied by a provision that the promisor will, in his discretion, fix the amount for payment. Promises of this character are treated not as vague and uncertain promises - for their meaning is only too clear - but as illusory promises."