Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130

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  • Biotechnology Australia Pty Ltd (“BTA“) employed Dr Pace as a research scientist.
  • BTA’s letter of offer for employment provided for a salary package of $36,000 per annum, a company car and the option to participate in the company’s “senior staff equity sharing program.
  • There was actually no such equity sharing scheme. Pace realised this when he began working for BTA.
  • Pace eventually left BTA and sued for breach of contract.


  • Was the promise of an option to participate in the equity sharing scheme capable of being part of BTA’s employment contract?


  • The Court by majority (Kirby P and McHugh JA) held that the promise was illusory.
  • The scheme was incapable of being valued by any reasonable or objective standard.
  • The promise was very vague and ambiguous.  This made the promise unenforceable.


A consideration is illusory if its payment or fulfillment depends upon an unfettered discretion vested in the promisor. Thus a promise by the Commonwealth that it will pay a subsidy “of an amount or at a rate determined by the Commonwealth from time to time” is an illusory consideration.

(McHugh JA)

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