Elkington v Farsands Solutions Pty Ltd

The plaintiff, Elkington, sought leave to appeal a decision of the primary judge who had dismissed his statement of claim as disclosing no reasonable cause of action. The dispute concerned an option to subscribe for shares in the defendant company, Farsands Solutions Pty Ltd. Elkington alleged a breach of contract, contending that the company's decision-makers included individuals with conflicting obligations to the company, thereby breaching an implied term. The appeal was heard by Barrett JA and Tobias AJA.

The central legal issue before the Court of Appeal was whether there was an arguable case that a term should be implied into the option agreement. Specifically, the court had to determine if it was arguable that the contract contained an implied term by which the company promised that its decision-makers would not include any person who had obligations conflicting with those owed to the company.

The Court of Appeal held that such a term was not arguable. Applying principles relating to terms implied by law in contracts of a particular class, the court found no basis for implying the alleged term into a contract creating an option to subscribe for shares. The reasoning focused on the nature of such contracts and the absence of any established legal precedent or compelling commercial necessity to support the implication of such a restrictive term.

Consequently, the summons seeking leave to appeal was dismissed with costs.