Sui v Jiang (No 2)

The Full Court of the Supreme Court of Victoria, comprising Payne, Stern and McHugh JJA, considered an appeal concerning the construction of a contract and the validity of an election made after its termination. The dispute arose from an agreement where the parties had apparently entered into mutually exclusive scenarios, and the central question was whether the contract imposed an obligation to elect between these scenarios and, if so, whether a valid election could be made after the contract had ended.

The court was required to determine two primary legal issues. Firstly, whether the contract, on its proper construction, imposed a positive obligation on one of the parties to elect between two mutually exclusive scenarios contemplated by the agreement. Secondly, if such an obligation existed, the court had to consider whether a valid election could be made after the contract had been terminated. This involved an examination of the principles governing the exercise of contractual rights and the requirements for clear and unequivocal communication or conduct in such circumstances, particularly when no relevant communication or conduct occurred within the period stipulated or implied by the contract.

The court reasoned that for a party to be obliged to elect between mutually exclusive scenarios, the contract must clearly and unequivocally impose such a duty. In this instance, the court found that the contract did not contain such a provision. Furthermore, the court held that an election, to be valid, must be made during the currency of the contract, unless the contract expressly or by necessary implication permits an election after termination. As no valid election had been made during the contract's subsistence, and the contract did not permit a post-termination election, the purported election was ineffective.

Consequently, the appeal was dismissed with costs.