Attrill v Dresdner Kleinwort Ltd
An announcement to employees at a staff meeting can be a binding contractual promise.
Facts
In 2008 Dresdner Kleinwort, an investment bank, was about to be taken over by Commerzbank, and it wanted to keep its staff. At a town hall meeting broadcast to employees, the chief executive announced that a guaranteed minimum bonus pool of €400 million had been set aside for employees for 2008. The announcement was followed by letters to individual employees setting out provisional bonus amounts. After the takeover, and following heavy losses, the bank reduced the bonuses by 90 per cent. Employees sued for the full amounts.
Legal principle
The Court of Appeal held that the announcement was a binding contractual promise, and the bank was in breach of contract. The announcement was made by the chief executive in a formal setting, to retain employees in a difficult period, and was reasonably understood as intended to have legal effect; it was not a mere statement of intention. In the employment context there is no presumption against legal relations, and the commercial setting supported the conclusion that the bank intended to be bound. The terms were sufficiently certain to be enforceable.
Related cases on intention to create legal relations
- Baird Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274, [2002] 1 All ER (Comm) 737
- Balfour v Balfour [1919] 2 KB 571
- Blue v Ashley [2017] EWHC 1928 (Comm)
- Edwards v Skyways Ltd [1964] 1 WLR 349
- Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1976] 1 WLR 1
- Jones v Padavatton [1969] 1 WLR 328
- Jones v Vernon's Pools Ltd [1938] 2 All ER 626
- Kleinwort Benson Ltd v Malaysia Mining Corp Bhd [1989] 1 WLR 379
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