Edwards v Skyways Ltd

In commercial agreements the burden of rebutting the presumption of legal intention is heavy, and words such as ex gratia do not rebut it.

Citation
[1964] 1 WLR 349
Court
High Court (Queen's Bench Division)
Year
1964
Subject
Contract Law
Topic
Intention to create legal relations

Facts

Skyways, an airline, made pilots redundant. In negotiations with the pilots' association, it agreed that redundant pilots who left the company's pension fund would receive a payment approximately equal to the company's contributions, described as an ex gratia payment. Mr Edwards relied on this and withdrew his own contributions from the fund, but Skyways then refused to make the payment.

Legal principle

Megaw J held that the agreement was binding and Mr Edwards was entitled to the payment. In business agreements there is a presumption that the parties intend to create legal relations, and the burden on the party seeking to rebut it is a heavy one. The words ex gratia meant only that the company did not admit any pre-existing legal liability to make the payment; they did not show that the promise itself was not intended to be binding.

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