Esso created promotional footaball coins given free to customers who bought a certain quantity of petrol. The customs people said that the coins were taxable as a good “produced in quantity for general sale”. HL said that the customs people were wrong because the contract was for the motorists was to buy a certain amount of petrol from ESSO, NOT to pay money for the coins (which the act on which the customs people relied required). Therefore the coins weren’t produced “for sale”.
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.