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.
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.
Related cases on intention to create legal relations
- Attrill v Dresdner Kleinwort Ltd [2013] EWCA Civ 394, [2013] 3 All ER 607
- 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)
- 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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