EDWARDS v SKYWAYS (1964) INTENTION TO CREATE LEGAL RELATION: Rebuttable Presumption

Commercial Agreements

Summary: An airline pilot was made redundant and as part of his redundancy package was offered and accepted a certain 'ex gratia' payment. The employer then refused to make the payment on the basis that there was no intention to be legally bound.

Plaintiff was employed by defendant company as an aircraft pilot, and as such he was a member of defendant company's contributory pension fund and entitled under its rules on leaving defendant company's services in advance of retirement age to a choice between two options, either to withdraw the sum of his own contributions to the fund or to take the right to a paid-up pension at retirement age. In January 1962, defendant company wrote to plaintiff, among others, informing him that it was necessary to declare a redundancy of approximately fifteen per cent of defendant company's pilot strength and giving him three months' notice terminating his employment.

At a meeting on 8 February 1962, between authorised representatives of defendant company and BALPA, plaintiff's trade association, it was agreed (as recorded in the notes of the meeting) that 'pilots declared redundant and leaving [defendant company] would be given an ex gratia payment equivalent to defendant company's contributions to the pension fund'. The representative of defendant company actually said at the meeting that defendant company would make ex gratia payments…