ACI Operations Pty Ltd v Berri Ltd

ACI Operations Pty Ltd, the plaintiff, sought a declaration from the court that a supply agreement with Berri Ltd, the defendant, remained in force. The defendant argued that the agreement had been properly terminated due to the plaintiff's acceptance of a third party offer for products substantially the same as those specified in the supply agreement. The matter was heard in the Supreme Court of Victoria.

The primary legal issue before the court was whether the third party offer constituted an offer for products substantially the same as those specified in the supply agreement. A secondary issue was whether the third party offer was made in good faith and for the improper purpose of resolving the plaintiff's legal problems by terminating the supply agreement. The court was also required to determine whether the plaintiff, the third party, and the third party offer were "arm's length" when the third party stipulated the products and the term of the offer was extended in return for payments by the plaintiff representing estimated damages for the plaintiff's repudiation of the contract with the third party.

The court held that the products in the third party offer were substantially the same as those specified in the supply agreement. It found that the want of good faith and improper purpose was not established and that the plaintiff, the third party, and the third party offer were not "arm's length." The court reasoned that the third party had been solicited by the plaintiff, who stipulated the products, and the term of the offer was extended in return for payments by the plaintiff representing estimated damages for the plaintiff's repudiation of the contract with the third party. These circumstances indicated that the third party offer was not made in good faith and for an improper purpose. Furthermore, the court found that the plaintiff, the third party, and the third party offer were not "arm's length" as the third party had been solicited by the plaintiff.

The court made a declaration that the supply agreement between the parties remained in force and that the defendant was required to continue supplying the plaintiff with the specified products.