Australian Woollen Mills Pty Ltd v The Commonwealth

What happened?

The Commonwealth announced that it would pay a subsidy to manufacturers who bought wool for local manufacture. Australian Woollen Mills bought wool over a period and received payments. When the scheme ended it claimed further sums it said were owing, on the footing that the announcement and its purchases had made a contract.

What did the Court decide?

There was no contract. The announcement was a statement of government policy rather than an offer capable of acceptance, and the purchases were not given in return for it. The Court worked through the relation that must exist between the two, and it was absent here.

Why does this case matter?

It is where a great deal of promissory estoppel litigation begins. When a claim in contract fails at this point, reliance is often all a plaintiff has left — which is why the two topics are taught together, and why this case turns up in estoppel questions as often as in consideration ones.

It is also a case about government. Announcements of policy are made constantly, people order their affairs around them, and schemes are wound up; whether anything enforceable was created is a recurring question, and this is where the answer starts.

Exam and application relevance

Set the statement and the act side by side and ask what each was for. Was the act requested, and was the promise given in return for it? Answer from the words used and the circumstances, never from the kind of statement it was — an advertisement or a public offer of reward can be perfectly enforceable, and this judgment discusses one that was. Do not stop at causation.

Check your understanding

Assume the manufacturer bought the wool because of the announcement, and that doing so cost it a great deal. Why would that still not be consideration?