Edwards was a pilot employed by the Cathay Pacific Ltd. Cathay promised him that if he would agree to be made redundant, they would pay him an 'ex gratia' payment equivalent to the company's contribution to his pension fund to avoid paying tax. Afterwards Cathay changed its mind and refused to pay Edward an 'ex gratia' payment, arguing that these words meant the company could pay if it so chose, not as an obligation under the terms of the contracts.

The words 'ex gratia' were held to mean that the party agreeing to pay but did not agree that it was bound to pay and did bind itself to reach a settlement or to avoid a dispute.

Please advise the liability of Cathay.