Electronic Industries Ltd v David Jones Ltd

The Supreme Court of New South Wales considered a dispute between Electronic Industries Ltd (the plaintiff) and David Jones Ltd (the defendant) concerning a contract for the demonstration of televisions. The core of the disagreement revolved around whether the terms of the original agreement had been validly varied.

The central legal issue before the court was whether the parties' conduct, specifically David Jones Ltd's forbearance from insisting on the original demonstration period and Electronic Industries Ltd's continued demonstration of televisions, amounted to a variation of the contract. The court had to determine if this conduct effectively altered the fixed period stipulated in the original agreement.

The court reasoned that a contract could be varied by the conduct of the parties, even if there was no express agreement to vary its terms. It applied the principle that if parties act in a way that is inconsistent with the original terms of their contract, and both parties understand and accept this departure, then the contract may be taken to have been varied by their conduct. In this instance, David Jones Ltd's acceptance of demonstrations beyond the agreed fixed period, and Electronic Industries Ltd's continuation of these demonstrations with the implied consent of David Jones Ltd, demonstrated a mutual intention to depart from the original contractual stipulation. The court found that this forbearance and continued performance constituted a variation of the contract, effectively extending the demonstration period.