Over on Lex Ferenda, Daithà has an alarming-sounding post: Postgraduate diploma in Aisle Seven. But this is neither another of the many online fake degrees, nor yet Tesco moving into the education business, selling qualifications next to the chopped tomatoes and pasta. Rather, it is the news that points earned through Tesco’s Clubcard loyalty scheme can now be applied to fees at the Open University. Leaving aside questions about the privacy implications of loyalty card schemes, the power of supermarkets in our society, or even the ubiquity of Tesco, there is a very interesting issue here from the perspective of the Law of Contract.
For there to be a contract, there must be a serious agreement about a price. The law of contract judges whether there is an agreement by determining whether one party has made an offer which the other has accepted; one of the ways in which it judges whether the agreement is serious is by determining whether the parties have a sufficient intention to create legal relations; and it judges whether there is a price by means of the rules relating to consideration (which is nothing more than a long word for price). The law now takes the view that anything that can confer a benefit on the parties can count as consideration. Hence, as long ago as 1960, the courts accepted that wrappers from chocolate wrappers returned to a company as part of a promotion in part-exchange for a record could constitute good consideration. In Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87 (HL), Lord Somervell said:
A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn. As the whole object of selling the record, if it was a sale, was to increase the sales of the chocolate, it seems to me wrong not to treat the stipulated evidence of such sales as part of the consideration.
The news that that the Open University is to take Tesco clubcard points in lieu of cash is simply another application of the same principle. The OU has decided that the receipt of clubcard points is of benefit to it; and the Chappell precedent suggests that the law would therefore have no difficulty in treating these points as good an valuable consideration in contracts between the OU and its students.
So, if you’re an OU student, when you’re shopping, you can, in a very real sense, also be buying your degree!
Hi Eoin, love the blog! The broad view of consideration and intention to create legal relations taken in your post is borne out by the recent Irish decision of Kelly J in O’Keeffe v Ryanair, unreported, High Court, the 19th day of July, 2002 where it was held that the fact that the the plaintiff had consented to participate in the publicity given to her by Ryanair as the airline’s one millionth passenger constituted consideration for its promise to give her free air travel for life, stating that this participation “was regarded as being of value by the defendant and I see no reason why the law should not regard it as likewise being of value. The surrender by the plaintiff of her anonymity and privacy and her active participation in the generation of the publicity that was created on the day in question in my view amounted to a real consideration and sufficient to support a valid contractâ€?. He also rejected Ryanair’s argument that the promise was not intended to create legal relations, stating that
“the onus of proving that there was no such intention is on the party who asserts that no legal effect is intended, and the onus is a heavy one.� Do you agree with these conclusions?
PS for a recent issue involving Ryanair and unfair contract terms (in the UK) see
http://www.out-law.com/page-7487