Sinclair v Balanian

In *Sinclair v Balanian*, the New South Wales Court of Appeal considered a dispute arising from a settlement agreement. The central issue concerned whether the parties, specifically directors who signed the agreement, were bound in their personal capacities or solely in their capacity as representatives of a company. The court had to determine the formation of the agreement and the intended legal relationships between the signatories.

The primary legal questions before the Court of Appeal were whether the settlement agreement was validly formed and, if so, whether the directors who executed the document were personally liable under its terms. This involved an examination of the intention of the parties at the time of signing, particularly in light of the drafting of the agreement and the presence of a counterparts clause, and whether the document, even if improperly executed as a deed, contained a binding contract.

The Court of Appeal reasoned that the identity of the parties to an agreement is a question of formation, not construction. It held that the surrounding circumstances, including the context in which the agreement was made and the conduct of the parties, were relevant to determining their intention to form legal relations. The court found that the parties intended to be bound by the settlement agreement, including the directors in their individual capacities, notwithstanding any issues with the formal execution of the document as a deed. The presence of an agreement within the improperly executed deed was sufficient to establish contractual liability.

Consequently, the Court of Appeal dismissed the appeals in both proceedings and ordered the appellants to pay the respondents' costs.