Barrier Wharfs Ltd v W Scott Fell & Co Ltd

Barrier Wharfs Limited (the plaintiffs) appealed to the Full Court of the High Court of Australia from a judgment of Higgins J. The dispute concerned whether a binding contract had been formed between the plaintiffs, who owned a wharf, and W. Scott Fell & Co. Ltd. (the defendants), who were shipowners. The plaintiffs claimed damages for breach of an alleged contract for the use of their wharf by the defendants' steamers. The alleged contract was said to be partly verbal and partly contained in a series of letters exchanged between the parties in January and February 1906.

The court was required to determine two primary legal issues. Firstly, whether the correspondence between the parties, when considered on its face, constituted a binding contract. Secondly, if the correspondence could be construed as a contract, whether the subsequent conduct and further correspondence of the parties demonstrated that no binding contract was intended to be concluded until a formal agreement was executed.

Higgins J. found that no binding contract had been formed. His Honour reasoned that while the parties had engaged in extensive negotiations and had agreed on the wharfage rate of sixpence per ton, they had not reached a final mutual assent on all essential terms. The correspondence indicated that the defendants were seeking to have all terms, including tonnage dues and other operational matters, set out in a formal contract for their Board's approval before being bound. The subsequent conduct, including the defendants' continued use of other wharves and their requests for further information and clarification regarding a formal agreement, further supported the conclusion that no binding contract was intended or had been concluded. The court applied the principle that for a contract to exist, there must be a clear intention to be bound, and the contemplation of a subsequent formal document is strong evidence that the parties did not intend to be bound by their prior negotiations.

The appeal was dismissed, and judgment was entered for the defendants with costs.