EMClarity Pty Ltd v BSO Network Inc

EMClarity Pty Ltd, the appellant, brought an appeal against BSO Network Inc and Apsara Networks Pty Ltd, the respondents. The appellant designs, produces, and supplies radio technology, while the respondents provide IT and telecommunication services. The dispute centred on the validity and interpretation of contracts for the supply of radio products between the parties. Specifically, the appellant sought to determine whether the contracts in question constituted variations to or displacements of a prior development agreement. Additionally, the appellant argued that its delay in delivering the products was justified by an extraordinary circumstance beyond its control.

The court was tasked with interpreting the 2019 agreements and determining whether they constituted variations to the 2018 development agreement. The court examined the language of the contracts, the parties' conduct during negotiations, and the payment terms. The court found that the 2019 agreements did not depend on further development of the radio products and that the parties to the 2018 agreement were different to those of the 2019 agreements. The court concluded that the 2019 agreements did not displace the 2018 agreement but rather constituted variations to it. The court also considered whether the 2019 agreements contained an implied term regarding the reasonable time for delivery of the products, a matter not contested on appeal.

The court assessed whether the appellant's delay in delivering the products constituted a repudiatory breach of the 2019 agreements. The court found that the appellant's implementation of a "quality review" and subsequent cancellation of orders for component parts indicated a lack of willingness to perform the contracts, amounting to repudiation. The court also examined whether the appellant breached an equitable duty of confidence by disclosing certain materials to a competitor company post-contract. The court held that the disclosure did not breach the equitable duty of confidence as it was an internal communication of the appellant's governing minds.

The court concluded that the appellant's delay in delivering the components was extraordinary and beyond its control, thus postponing the date upon which a reasonable time for delivery would have elapsed. The court dismissed the respondents' challenge to this finding and varied the primary judge's orders accordingly. The court allowed the appeal in part, varying the orders to reflect the breaches of the 2019 agreements and dismissing the cross-appeal. The court also directed the parties to provide written submissions on the costs of the proceedings.