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Where in Edwards v Skyways Ltd[19] a bonus payment, described as 'ex gratia', was promised to an

employee, this was found to be legally binding. He had relied upon the promise in accepting a
redundancy package, and his employer could not adequately prove that they had not intended their
promise to become a contractual term. [

Edwards v Skyways Ltd [1964] 1 All ER


494
 defendants terminated made
plaintiff redundant with 3 months'
notice
 contract gave him two company
pension options:
o a) take his contributions out
of the fund
o b) get a paid-up pension at
50
 negotiated agreement: if plaintiff
took option (a), defendants would
make ex gratia payment equal to
total contributions
 plaintiff did so and defendants then
refused to make ex gratia payment
 plaintiff sued and won
 judge ruled use of term 'ex gratia'
didn't produce negative contract,
just meant employer didn't admit to
preexisting liability

Commercial Agreement

Presumption

Where parties negotiate and agree in a business setting, it is assumed that the parties intended the
agreement to have legal consequences. Therefore, the party alleging that an agreement relating to
business matter is of no legal effect has the heavy onus of demonstrating that to be the case.

Edwards v Skyways

It can sometimes be difficult determining whether a transaction has taken place in a business setting, a
broad approach to what constitutes a business setting must be adopted.
Esso Petroleum Co Ltd v Customs & Excise

There are a number of circumstances in which one party in an agreement can prove that there was an absence in intention during
the formation of the contract. If this absence of intention is proven by either party then there is no enforceable agreement or binding
contract. One circumstance for a contract to be not binding is through an 'Ex Gratia' payment, this is when a payment is made out
voluntarily to another party to reimburse some kind of loss.[14] In 2008 undisclosed payments were given to the families of four
domestic soldiers Shiels, Williams, Satatas and Hayward by the Commonwealth to ease their trauma which originated because the
soldiers commited suicide as they suffered from harassment and neglect on duty. The Commonwealth government claimed that
these payments were ‘Ex gratia’ and therefore meant that they accepted no liability for the causes of the soldiers suicide.[15]

In the case of Edwards v skyways Ltd a British airline company promised to make an "ex gratia" payment
to its redundant airline pilots. The payment was described as "approximating to the company's
contributions for each member of the pension and superannuation fund". [16] Having made this
promise, Skyways then decided not to make a payment to the pilots and argued that the promise should
be regarded as merely a honour clause. [17] Honour clause is defined above. Despite the use of the term
‘ex gratia payment’, Megaw J held that the parties have had an intention to create legal relations hence,
honours clause couldn’t operate. [18] He also indicated that the term ‘ex gratia payment’ does not point
out that a promise for such a payment is not enforceable by law. The term is simply used to diminish any
pre existing liability on the part of the party agreeing to pay. [19] However, in British Steel Corp. v.
Cleveland Bridge & Engineering a ‘letter of intent’ was signed. Although the work was substantially done,
the anticipated contract never materialised as the parties were unable to agree on terms. Here the court
found that the parties did initially intend to create legal relations with one another. Therefore the British
Steel Corp (BSC) won judgement and Cleveland Bridge & Engineering co. was ordered to recompense
BSC for the work done. [20]

Harvey v. Facey, [1893] A.C. 552. (Privy Council of Jamaica)

Facts: Facey (D) was in negotiations with the Mayor and Council of Kingston regarding the sale
of his store. Harvey (P) sent Facey a telegram stating: “Will you sell us Bumper Hall Pen?
Telegraph lowest cash price-answer paid.” On the same day, Facey sent Harvey a reply by
telegram stating: “Lowest price for Bumper Hall Pen £900.” Harvey sent Facey another telegram
agreeing to purchase the property at the asking price. D refused to sell and P sued for specific
performance and an injunction to prevent Kingston from taking the property. The trial court
dismissed on the grounds that an enforceable contract had not been formed and P appealed. The
Supreme Court of Jamaica reversed and D appealed.

Issue: Is a statement of the minimum price at which a seller would sell an offer?

Holding and Rule: No. A mere statement of the minimum selling price is an invitation to treat
and not an offer to sell.
The court held that by replying to P’s question regarding the lowest price of the property, D did
not make an affirmative answer to the first question regarding his willingness to sell. The court
held that D had made an invitation to trade and not an offer.

Disposition: Reversed, judgment of trial court restored.

Harvey v. Facey – Case Brief


Posted by LawRiotAdmin on March 8th, 2010

Contracts

Brief

Harvey v. Facey

Procedural History:

 Trial Court dismissed the action on the ground that the agreement did not disclose a concluded
contract.
 The Supreme Court of Jamaica Reversed.
 Defendant appeal to Judicial Committee
 Reversed to original decision of the trial court for the Defendant.

Facts:

 Harvey and other solicitors are interested in a piece of property owned by Facey called Bumper
Hall Pen.
 Facey had been involved in negotiations to sell the property to the city.

Telegraphs

 Harvey telegraphs Facey asking is he will sell us the property? Also asked Facey to telegraph
back the lowest cash price—Answer Paid.
o This telegram is actually asking two questions. The first question is to the willingness of
the defendant to sell the property. The second question is pertaining to what the lowest
price would be to sell.
 Facey replied by telegraph that the lowest price would be 900 pounds.
 Facey was merely replying with a quote for the land and not offering the land for a price of 900
pounds. He was merely opening negotiations and giving Harvey a starting point. Nowhere does
he offer the land for 900 pounds, just gives the worth.
 Harvey responded by saying they agree to buy Bumper Hall for the sum of 900 pounds asked
by defendant.
 Harvey took this as an offer and thus responded with an acceptance. This was false on his part
because in no way was this is   an offer. If Facey had replied to this telegram stating that they
accepted the offer to purchase the land for 900 pounds then it would have been a binding
contract. In reality this was an offer by Harvey to purchase the land for 900lbs and if Facey was
to reply with an acceptance then it would have been binding.

Issue:

 Was a binding contract formed through an offer and an acceptance?

Holding:

 No. There was no concluded contract between Harvey and Facey in the telegrams.

Posted in Briefs Tags: Briefs-Contracts


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