## Facts

- Esso Petroleum ran a sales promotion offering a commemorative World Cup coin to any customer purchasing four gallons of petrol.
- The Commissioners of Customs and Excise sought to levy purchase tax on the coins, arguing they were "produced in quantity for general sale" under the Purchase Tax Act 1963.
- Esso contended the coins were free gifts, given as part of a promotional scheme, and that there was no sale nor intent to create legal relations in transferring the coins.
- The Commissioners argued that, according to section 1 of the Sale of Goods Act 1893, a contract of sale arises where goods are transferred for monetary consideration, potentially subjecting the coins to purchase tax.
- The dispute turned on whether the transfer of coins via the promotion constituted a contract of sale.

## Issues

1. Whether Esso’s promotional offer of a coin with petrol purchase demonstrated an intention to create legal relations sufficient to constitute a binding contract.
2. Whether the transaction involving the coins amounted to a contract of sale under section 1 of the Sale of Goods Act 1893, thus making the coins liable to purchase tax.
3. Whether the promotional coins were a gift or subject to legal obligations in the context of the promotion.
4. Whether commercial context created a presumption of legal intent for the arrangement.

## Decision

- The House of Lords held that a unilateral contract arose through Esso’s promotional offer, with customers accepting by purchasing four gallons of petrol.
- The court found the arrangement indicated an intention to create legal relations, particularly due to the commercial context and benefit to Esso.
- However, the court determined that the contract regarding the coins was not a 'contract of sale' as defined by section 1 of the Sale of Goods Act 1893, because no separate monetary consideration was given for the coins.
- Accordingly, the coins were not subject to purchase tax, as they were not sold under a contract of sale.
- The court rejected the dissenting view that the coins' negligible value meant there was no legal intent; the majority emphasized the presumption of intention in commercial promotions.

## Legal Principles

- In commercial contexts, there is a strong presumption that parties intend to create legal relations, especially where a transaction confers commercial advantage.
- A unilateral contract may be formed when a party offers a benefit to anyone performing a stipulated act, accepted by performance of that act.
- A contract of sale under the Sale of Goods Act 1893 requires goods to be exchanged for monetary consideration; collateral contracts involving promotional gifts do not satisfy this requirement.
- The value of the promotional item is not necessarily determinative; commercial context and the nature of the offer are key factors in assessing legal intent.
- The distinction between a contract of sale and a collateral unilateral contract impacts the applicability of statutory tax provisions.

## Conclusion

The House of Lords held that although a legally binding unilateral contract existed for the transfer of Esso’s promotional coins, it did not amount to a contract of sale because no money was given specifically for the coins. Thus, the coins were not subject to purchase tax. The case affirmed the presumption of intention to create legal relations in commercial promotions and clarified distinctions between different contractual structures in such contexts.


Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1976] 1 WLR 1