Jago v Coastalwatch Pty Limited

In the Federal Court of Australia, Jago, the plaintiff, sought to enforce an alleged agreement with Coastalwatch Pty Limited, the defendant, for the appointment of the plaintiff as managing director. The dispute centred on whether the parties had reached a binding agreement prior to the preparation of formal documentation. The plaintiff contended that the defendant had agreed to his appointment as managing director for a fixed term, with an option to acquire shares at a specified price, and that these terms were finalised before the drafting of the shareholder agreement. The defendant, on the other hand, argued that no binding contract was formed until the shareholder agreement was executed and that the plaintiff had repudiated any potential agreement by failing to meet certain conditions.

The court was required to determine if a binding contract existed prior to the execution of the shareholder agreement, and if so, whether either party had repudiated the contract. The key issues involved the interpretation of verbal negotiations, the existence of a fixed-term agreement, the validity of an option to acquire shares, and the role of conditions precedent in the formation and enforcement of the contract. The court needed to assess whether the verbal negotiations constituted a concluded contract or were merely preparatory steps towards a future agreement.

The court found that the verbal negotiations between the parties did constitute a concluded contract before the drafting of the shareholder agreement. The court held that the terms of the contract, including the fixed-term appointment and the option to acquire shares, were sufficiently defined to be enforceable. The court further determined that the plaintiff had not repudiated the contract, as the conditions precedent were not absolute and the plaintiff had taken steps to fulfil them. The court ruled in favour of the plaintiff, finding that the defendant was liable to honour the terms of the contract as agreed upon during the verbal negotiations.

The court ordered Coastalwatch Pty Limited to appoint the plaintiff as managing director for the specified term and to honour the option for the plaintiff to acquire shares at the agreed price. The court also awarded the plaintiff damages for the breach of contract.