What to make of a clause in a contract specifying that an amount owing following a breach can be calculated according to the terms of the contract?

Often when seeking to imply a term in a contract, a party will claim that the term should be implied because it is ‘necessary to give business efficacy’ to the contract. What might this mean, in practical terms?

In Patel v Sengun Investment Holdings Pty Ltd [2023] VSCA 238, the Victorian Court of Appeal has held that a document styled as a ‘Heads of Agreement’ for the sale of land was capable of specific performance as a binding contract. This was in circumstances where the Court accepted the document’s characterisation as a contract not for the purchase of the subject property but for a ‘call option’ for its potential later purchase.

In the case of Pugwall Pty Ltd v Arthur McKenzie Investments Pty Ltd [2022] VSCA 272, the Court of Appeal ruled on the question of whether a director of a company, in signing a guarantee on the company’s behalf, was personally bound by that guarantee. More broadly, the Court considered the question of whether, and in what circumstances, a person objectively has intended to be bound by a contract even if — and the Court’s decision serves as a potent reminder of this — that person may not (subjectively) have intended so.

In a case where a purchaser sought to terminate a contract for the sale of land and recover a deposit paid, the Court of Appeal in Willis v Crosland [2021] VSCA 320 has construed what it means to be ‘in default’ under a particular type of standard form contract. The Court also has set out clearly the interaction between two key doctrines of contract law: repudiation and termination for breach. These are principles of relevance not only to conveyancing matters but also to contractual disputes generally.

A landlord seeking to regain possession of retail premises where a tenant has breached the terms of the lease is required to follow certain steps in first giving notice to the tenant. Landlords should give proper notice not only in the interests of fairness to a tenant but also in order to avoid regaining possession of premises unlawfully. The recent decision in CB Buffett (Burwood) Pty Ltd v Delloyd Pty Ltd (Building and Property) [2020] VCAT 1234 involved an application for relief against forfeiture and illustrates the importance of a landlord giving proper notice to a tenant. The decision also demonstrates that a notice which specifies multiple defaults cannot be struck down as invalid simply because the landlord fails to substantiate some of those defaults.

A cooling off period can be a saving grace to a purchaser of residential property who no longer wishes to proceed with the transaction. Issues can arise where a purchaser exercises a right to cancel the purchase during the cooling off period but then decides instead to proceed with the purchase. Does the contract survive? What happens to any deposit which has been paid? The Supreme Court has addressed such a situation in the case of Stewart v White [2020] VSC 116.

Parties to commercial contracts enjoy — and are burdened by — the implied duty that they cooperate in carrying out their respective ends of the bargain so that they each can have the benefit of the contract. The situation can become complicated where the contract expressly contains a mechanism for one party to seek the other’s consent to a particular course of action. Where the contract states that consent must not unreasonably be withheld, is there a binding promise not to unreasonably withhold consent? And how does the implied duty to cooperate interact with the concept of ‘reasonableness’? The Full Court of the Supreme Court of South Australia recently considered such issues.

Fiduciary duties can arise in a multitude of relationships. An issue can arise as to whether, in light of the terms of their bargain, parties in a contractual arrangement owe fiduciary duties to one another including in circumstances where the contract relates to a joint venture. The Queensland Court of Appeal has ruled on such a case and has set out some useful points to consider when determining whether a given contractual relationship involves a fiduciary relationship.

Among the more common forms of relief sought in civil litigation are claims for payment of debt and claims for damages. While these are distinct remedies with their own elements, they are at times liable to be conflated or confused. The decision of the Victorian Court of Appeal in Yang v Finder Earth Pty Ltd [2019] VSCA 22 illustrates how both the pleading of a cause of action and the framing of the relief sought can affect a party’s procedural rights. The decision serves as a reminder of the importance of clear and thoughtful pleading when formulating claims.

Where the owner of goods gives possession to a bailee and the bailee then wrongfully pledges the goods to a third party, is that third party liable to the owner for conversion of the goods? Will mere possession and control of the goods suffice to establish conversion, or is something more required? The Court of Appeal in Sell Your Gold Pty Ltd v Australian Diamond Trading Corporation Pty Ltd [2018] VSCA 355 considered those questions and, in doing so, raised concerns about the lack of clarity in the law and the pressing need for legislative reform.

In the context of contracts for the sale of land, it is quite common to see clauses permitting the purchaser to nominate a third party to which title is to be transferred. Less common (one would hope) are issues arising from this, such as whether a right to nominate has been validly exercised and whether the contract of sale ultimately has been novated. Such issues recently arose for the New South Wales Court of Appeal’s resolution in Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd [2018] NSWCA 282.