Edwards v Skyways
Citations:  1 WLR 349;  1 All ER 494; (1964) 108 SJ 279;  CLY 589.
The defendant was an airline company. They agreed with a pilot’s association that they would make ‘ex gratia‘ payments of a particular amount to redundant employees. The association gave consideration for this promise. The claimant was made redundant. The defendant refused to pay him the ex gratia payment. He sued, arguing that there was an enforceable contract for the payment. The defendant argued that there was no contract because they did not intend to be legally bound by the promise.
- Did the defendant intend to be legally bound by the promise?
The High Court held in favour of the claimant. The court presumed that the defendant intended to be legally bound because he dealt with the pilot’s association on a commercial basis. The defendant failed to provide enough evidence rebutting this presumption.
This Case is Authority For…
Where the parties deal with each other on a commercial basis, there is a strong presumption that they intend to be legally bound. The burden is on the defendant to show the absence of intention.
The test for intention to be legally bound is objective. The courts assess this requirement from the perspective of a reasonable bystander. The parties’ subjective intentions are irrelevant.
The court noted that the use of language such as ‘ex gratia‘ does not on its own imply a lack of intention to be legally bound. It merely denotes that the speaker does not admit liability.