SUPREME COURT OF VICTORIA
COURT OF APPEAL
No 9700 of 2005
| PRA ELECTRICAL PTY LTD (ACN 062 906 487) | Appellant |
| v | |
| PERSEVERANCE EXPLORATION PTY LTD (ACN 010 604 878) | 1st Respondent |
| and MR RICHARD MANLY SC | 2nd Respondent |
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JUDGES: | MAXWELL P, NETTLE AND ASHLEY JJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 4 December 2007 | |
DATE OF JUDGMENT: | 18 December 2007 | |
MEDIUM NEUTRAL CITATION: | [2007] VSCA 310 | |
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Contract – Offer and acceptance – Term of agreement that contract not come into effect until formal instrument of agreement executed by parties – Whether condition precedent to formation of contract or condition entitling supplier of services to suspend performance of contract in event of non-compliance – Whether contract should be implied in terms of agreement other than term concerning execution of formal instrument – Whether supplier of services estopped from denying that executed formal document not required, and that binding contract existed between parties.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr B Jenner | Russell Kennedy |
| For the 1st Respondent | Mr J Digby QC with Mrs K L Stynes | Clayton Utz |
| For the 2nd Respondent | No Appearance ( see n 7) |
MAXWELL P:
I have had the considerable advantage of reading in draft the reasons for judgment of Ashley JA. For the reasons given by his Honour, I too would dismiss the appeal.
NETTLE JA:
I have had the advantage of reading in draft the reasons for judgment of Ashley JA.
I agree with his Honour that this is a case of implied contract or, perhaps more precisely, one in which the parties agreed by their conduct[1] to act on an agreement embracing all of the terms set out in or referred to in the letter of 16 August 2004, except for Special Condition SC4.
[1]Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, 693; Vroon BV v Foster’s Brewing (1994) 2 VR 32, 79; cf Gjergja v Cooper [1987] VR 167, 205 (Ormiston J).
I reject as untenable the suggestion made by counsel on behalf of the appellant (PRA) that it was caught unaware on the issue. It is true that the point was not agitated below. But the issue of estoppel was the subject of debate; and, in my view, it would be fanciful to suppose that there might be evidence relevant to the question of implied agreement that was not thought to be relevant to the issue of estoppel.
Views may differ, perhaps, as to the precise point of time at which the agreement came into existence. As McHugh JA said in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd:[2]
[2](1988) 5 BPR 11,110, 11,117-8, Brambles Holdings Pty Ltd v Bathurst City Council (2001) 53 NSWLR 153, 176 [71]-[82] (Heydon JA).
… in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions…
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- Case
- [2007] VSCA 310
- Decision Date
CaseChat Overview and Summary
The court had to determine the precise nature of the term concerning the formal instrument and whether the contract should be implied in terms other than this condition. Additionally, the court examined whether PRA was estopped from asserting that the formal document was not required and that a binding contract had been formed between the parties. The court evaluated the conduct of both parties and the surrounding circumstances to discern the true intention of the parties as expressed in their agreement.
The court concluded that the term in question was a condition precedent to the formation of the contract, rather than a condition that entitled PRA to suspend its performance. This meant that without the execution of the formal instrument, no binding contract existed between the parties. The court also found that PRA was not estopped from denying that the executed formal document was not required for the contract to be binding. Consequently, the court dismissed the claim, ruling that no contract had been formed between the parties due to the failure to execute the formal instrument.
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