Barbaro v Gambacorta Gambacorta v Calabria

In *Barbaro v Gambacorta Gambacorta v Calabria* [1988] NSWCA 12, the New South Wales Court of Appeal considered a dispute arising from a contract for the sale of a business. The primary issue concerned the interpretation of a clause within the contract that stipulated the vendor's obligation to procure a new lease for the purchaser. The purchasers alleged that the vendor had breached this term, leading to their inability to secure the premises necessary for the continued operation of the business.

The Court was required to determine whether the vendor had taken all reasonable steps to procure the new lease as stipulated in the contract. This involved an examination of the vendor's conduct in negotiating with the landlord and the extent of their efforts to secure the renewal of the lease on terms acceptable to the purchasers. The central legal question was whether the vendor's actions, or lack thereof, constituted a breach of their contractual obligations.

The Court analysed the contractual provision in light of the surrounding circumstances and the implied duty of good faith in contractual performance. It was held that the vendor's obligation was not merely to make an attempt, but to pursue the procurement of the lease with reasonable diligence and in good faith. The Court found that the vendor had failed to demonstrate that they had taken all reasonable steps to secure the new lease, particularly in their dealings with the landlord, and therefore had breached the contract. The appeal was allowed, and the matter was remitted for further consideration of damages.