Examination Timing: 00H01M18S
The fast food chain, DinoDonald's, made a special offer whereby any customer buying a family-sized DinoDonald's 'Lucky Feast' would receive a free sticker featuring an image of a famous sports personality, which could be collected to make a set but had virtually no intrinsic value. The question has arisen whether DinoDonald's should pay Value Added Tax (VAT) regarding the stickers.
Which option best states whether a contract of sale has arisen, if at all?
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Your selected option: D
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There was a unilateral contract under which DinoDonald's was saying, "If you will buy our 'Lucky Feast', we will give you one of these stickers." The decision of the House of Lords in Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 All ER 117 shows the difficulty in rebutting the presumption that business agreements are intended to be legally binding. While the majority held that there had been no sale and Esso was not liable for VAT, it decided that the petrol station's price indications were invitations to treat. The giving away of promotional material ex gratia formed part of a general offer, or unilateral contract. This unilateral contract ran parallel with the main contract of sale (an amount of petrol for an agreed sum). Therefore, there was legal intent despite the stickers having virtually no intrinsic value.
Key Point: In English contract law, business agreements are generally presumed to be legally binding unless there is clear evidence to the contrary. Promotional offers made by businesses, even if the items offered have little intrinsic value, can form part of a binding unilateral contract if there is an intention to create legal relations.
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