Esso Petroleum v Customs & Excise [1976] 1 WLR 1

Viscount Dilhorne

• His approach was to look at the coin as a free gift and NOT as an object to be supplied by legal obligation i.e. there was no intention to enter a contract regarding the coins.

• To say that there was a contract would be to make every free gift, designed to promote sales, a good to be supplied by contractual obligation, which blurs the distinction between a gift and a contractually sold object.

• Also the coins couldn’t be “purchased” themselves. 

Lord Simon

• There WAS an intention to create a legal obligation to give away the coins, or the court would be allowing the “mere puff” reasoning of the defendant in Carlil v Carbolic Smoke Ball Ltd, which would be misleading to consumers.

• His approach is to say there is a “collateral contract” i.e. a contract, part of the consideration for which is the making of some other contract.

• In this case, the motorist who sees the advertisement and drives in is accepting the offer of a coin with his petrol (contradicts the doctrine that advertising is not an offer) and is also himself offering to buy the necessary amount of petrol.

• Here, the coins were not transferred for a money consideration (the price, which is necessary to classify the goods as being on “sale”) but for the consideration of entering into another contract (the contract of buying the petrol).

  • The problem is that this treats the advertisement as an offer to gain coins in consideration for petrol and this contradicts the doctrine that advertisements are not offers.

  • This highlights a problem with the doctrine, not his analysis, which appears the most realistic. 

Lord Russel

• There was no legal obligation since if a garage offered “free water” but the machine was out of order that day, the garage owner could not be sued.

  • Actually, if the free water was only allowed once a person had purchased petrol, and they did so on that condition, there is no reason why they should not be. 

RELATED CASES

• Chappell v Nestlé

• Carlil v Carbolic Smoke Ball Ltd