Is it a deed? Is it a contract? It s a matter of construction.

Transcription

1 Prevention Partners NSW a gram of Prevention is worth a kilo of cure Is it a deed? Is it a contract? It s a matter of construction. Monica Kelly, B Comm, LLB, MALP Copyright owner Prevention Partners NSW ABN

2 DEED Contract AGREEMENT Memorandum of Understanding

3 Key factors The document means what it says. Whole agreement clauses are designed to exclude discussions, s, diary notes. If it quacks like a duck and swims like a duck It s all about construction. Call a spade a spade.

4 Agreement

5 Agreements Various definitions depending upon context: We have reached agreement either intended or not intended to be legally binding; either written, verbal or a combination of both; either for consideration or not. A meeting of the minds following offer and acceptance Agreement to agree: Coal Cliffs Collieries Pty Ltd v Sijehama Pty Ltd (1991) NSWLR 1

6 Coal Cliffs Collieries Pty Ltd v Sijehama Pty Ltd CCC and Sijehama, & ors, executed a heads of agreement, which provided that the parties would contract in good faith in the future to mine coal. No final agreement resulted and negotiations terminated. Sijehama alleged that CCC breached the heads of agreement and successfully claimed damages of $1.2 mil in first instance.

7 Coal Cliffs Collieries Pty Ltd v Sijehama Pty Ltd The Court of Appeal found that an agreement to agree is mostly too uncertain. Law is not settled. In good faith : duties of honesty, any fiduciary duty that may be present, and avoidance of deceptive and misleading conduct, but good faith? Caution: direct negotiations are to be generally avoided.

8 Memorandum of Understanding

9 Memorandum of Understanding Memorandums of Understanding (MoU) are often used between government bodies to outline the scope of the relationship between parties. Two councils agreeing to build a bridge across a creek common to them both. Can be either legally binding or not. Usually not for valuable consideration.

10 Contracts

11 Contract What is a contract? Offer, (negotiation) and acceptance Agreement: Woollahra Municipal Council v Secure Parking Pty Ltd [2015] NSWSC 257 Clarity. Consideration. Can be written or verbal, or a combination of both.

12 Process Contract A process contract is separate from the tender contract. A process contract comes about when council informs the tenderers of the guidelines that will be used to assess the tenders: Hughes Aircraft Systems International Inc v Airservices Australia (1997) 76 FCR 151

13 Process Contract The purpose of a process contract is to ensure the integrity of the bidding system : R v Ron Engineering & Construction (Eastern) Ltd [1981] SCR 111 at 273. Yet, process contracts are not automatic, but dependant upon a consideration of the circumstances and the obligations expressly or impliedly accepted : Pratt Contractors Ltd v Palmerston Nth City Council 1 NZLR 469 at [478 9].

14 Process Contract We have encountered some council tender documents which attempt to exclude process contracts through the drafting of specific clauses. The court would likely read down such clauses and hold that a process contract was created regardless: Cubic Transportation Systems Inc v NSW [2002] NSWSC 656.

15 Deeds

16 Deed A deed is treated by the courts differently to other contractual documents. Deeds must be signed, sealed and delivered. Now, delivery is vital, while common law has blurred the necessity of signing and sealing. However, a deed can be delivered conditionally upon some future event.

17 Deed A deed can be delivered without ever leaving the hands of the deed-making party. A guarantor was held to have delivered a deed by faxing it and retaining the original: Segboer v A J Richardson Properties Pty Ltd [2012] NSWCA 253 Legislation removes the necessity of sealing except in Tas and NT.

18 Deed A deed must be expressed as a deed or expressed to be sealed. Common types of deeds: Deed of release, eg settlement of damages/compensation; Deed of separation, eg after marriage; Deed poll, eg to change a person s name.

19 Deed Moral of the story don t use a deed unless you MUST.

20 Tone

21 Tone Corporate tone of the organisation? Documents aimed at the reader? Say what you mean: Southern Cross Assurance Co Ltd v Australian Provincial Assurance Association (1935) 53 CLR 618 Examples: two (2)

22 Tone Use charts, tables, diagrams? Plain English. Use active voice. Use consistent language: Eureka Funds Management Ltd v Freehills Services Pty Ltd [2008] VCA 156

23 Tone scale; Plain English Foundation Tone Informal Friendly Formal, yet friendly Official Officialese Legalistic Text Got your note and liked it. Thanks for your note. I ve read it with interest. Thank you for your letter and for the comments you make in it. I have received your letter and noted the matters you raise. Receipt is acknowledged of your recent communication, whose contents have been noted. Acknowledgment is hereby made of your communication (herein the letter ) by the undersigned who has apprehended its matter. 19 th Century Your esteemed communication to hand of the fourth ultimo; contents of same have been duly noted. Biblical I recieveth unto me thy epistle, and its wisdom escapeth me not

24 Summary Avoid deeds, unless necessary Clarity is vital Consider the tone of your documents Call Prevention Partners NSW for assistance

25 Prevention Partners NSW a gram of Prevention is worth a kilo of cure Monica Kelly, B Comm, LLB, MALP Principal Monica.kelly@preventionpartnersnsw.com Liability limited by a scheme approved under Professional Standards Legislation