Walford v. Miles [1992] HL, Lord Ackner: Inherently adversarial process, no implied duty to negotiate in “good faith”. Court unable to decide if good reason to withdraw from negotiations. D must not make positive misrepresentations
cf: must perform terms in good faith.
2.1 Can there be an express agreement to negotiate?
Coal Cliff v Sijehama (1991) NSWCA: joint venture, heads of agreement signed, but parties to “proceed in good faith to consult together upon the formulation of a more comprehensive and detailed agreement”. Language was vague and provisional. Held: obligation to negotiate in good faith was too vague without external arbitrator. Court ill equipped to fill many unresolved issues.
Kirby P: Some agreements to negotiate in good faith can be binding. Must be clear, or part of wider arrangement. External standard may be relevant (doctrine of freedom of contract)
Handley JA: Negotiations are for parties’ discretion. promise to negotiate in good faith is illusory
Aiton Australia Pty Ltd v Transfield (1999) FLR: dispute resolution procedure clause: “shall make good faith efforts to resolve disputes” (manager meetings, mediation and expert resolution). Not uncertain as certain procedure established for resolution.
* Strzelecki Holdings v Cable Sands [2010] WACA): remediation needed for radioactive tailings. ‘If the parties acting in good faith are unable to conclude a contract for the sale and purchase of the Land between themselves within 30 days then MOU will cease”. no breach for not reaching agreement:
Good faith meant to act honestly 'within the framework of fidelity to the bargain‘
Not required to act another’s interest, must have freedom for self interested behaviour provided:
Subject themselves to the process of negotiation
Keep an open mind in the sense of being willing to consider proposals
Put forward options for the resolution of any differences
2.2 Good Faith Internationally
Vienna Convention: Art 7 “regard is to be had to…the observance of good faith in international trade”
European law: liable for loss caused if you break off negotiations contrary to good faith. Contrary to good faith if your negotiate with real intention of agreement
Dutch law: compensation for expectation if there is a reasonable expectation negotiations will conclude
3. Conditional Agreements: Theory
Condition precedent: Contract cannot come into existence until condition is first satisfied
Condition subsequent: Contract binding now, but may be ended by a condition happening
condition precedent to performance: contract binding but performance triggered by condition happening
Meehan v Jones (1982) HC: “Subject to Finance” Not uncertain, inserted for benefit of P; P has choice
*Masters v. Cameron: 3 classes (attempt to prevent being bound too early)
CBA v Dean (1983): Immediately Bound. later written record for file e.g MOU . Most common
Niesmann v Collingridge (1921): complete Agreement, performance conditional on later doc
Masters v. Cameron(1954): No intention to conclude bargain unless or until formal contract drawn up (to reserve right to withdraw OR in recognition some matters aren’t yet covered)
sum a deposit upon signing contract but should not become vendors property meanwhile
Anaconda Nickel v Tarmoola (2000): intend to be bound now, but intention to supersede by later agreement. ‘heads of agreement which constitutes an agreement in itself to be replaced by a fuller agreement not different in substance or form”.
Intention to Create legal Relations
Principle independent of offer and acceptance: “Voluntary assumption of a legally enforceable duty”
Dixon J Australian Woollen Mills: “Intention” always judged objectively.
merit v merit, per Lord Denning: ‘court does not try to discover the intention by looking into the minds of the parties. It looks at the situation in which they were placed and asks itself: would reasonable people regard the agreement as intended to be binding?’
SA v Cth (1962) Windeyer J: “circumstances may show parties did not intend to subject their agreement to the adjudication of the courts”
*Ermogenous v Greek Orthodox Community of SA Inc. (2002 HC): Caution in using ‘presumptions’ as to parties intentions. Merely burden of proof issue. take salient features of relationship into account, were parties in a commercial transaction and dealing at arms length?
1. Family Agreements
Old presumption that family and social agreements are not meant to be binding
Balfour v. Balfour (1919) Husband moved to Africa with wife, she returned but they did not separate. made oral agreement for £30 p.m. maintenance.
Most H-W ‘agreements’ not enforceable: bound in honour not contract, ‘where parties share love and natural affection courts unlikely to be enforceable. More likely if breakdown atkin LJ
Possible to be binding but depends on (objective) intention
Would W have accepted obligations/consideration?
Huge burden on spouse to rebut presumption
Family Law Act 1975 (Cth) (court now has power to split resources). Agreement is binding if it is signed by both parties and includes a certificate that they have both received independent legal advise VIII.
Family Cases were presumption was rebutted
Todd v. Nicol [1957] S.A.S.R: Letters to sister in law and niece for company: 'Come and live with me rent free’, ‘if I die yours for life’. Fell out. Was intention, permanent arrangement affecting financial security (sold belongings, moved from Scotland, resigned employment). Cf. balfour didn’t keep evidence of letters
Popiw v. Popiw [1959] V.R. 197: H - W living apart husband is physically abusive. H promise. 'Return and I'll transfer house into joint names'. H argued she did no more that here obligation as wife. not a love and affection case, returning was against her interest. Sufficient intention/consideration to be bound.
*Riches v Hogben [1986]: son agrees to come to Australia to look after mother. She will buy a house in his name. ejects him. binding as reasonable people would regard it so and considerable expense by son
