10 August 2021
Badly written contracts often lead to very expensive Court disputes.
In one recent case, Pittmore Pty Ltd v Chan, the parties in dispute had entered into a joint venture to build 24 apartments across 2 adjoining properties at Willoughby. A joint venture deed was prepared by lawyers to say that it was subject to and conditional upon the parties acquiring the properties “on or before 30 April 2017”. Before the deed was signed, those words were struck out and replaced with the hand-written words “prior to construction commences” (sic).
The following clause said the joint venture could be terminated if the condition in the preceding clause was not met “on or before 30 April 2017”. The parties did not change those words.
The evidence showed the parties understood that:
a) the properties had to be acquired before construction could start;
b) that the parties intended the handwritten words to reflect that necessity; and
c) that the latter clause was machinery to give effect to the preceding clause and that the parties had simply overlooked the necessary consequential amendment.
In that light, a Court read the joint venture deed as if the repugnant words in the second clause were omitted.
Compare that approach to that taken in another recent case, HDI Global Specialty SE v Wonkana No. 3 Pty Ltd.
A policy excluded cover for business interruption caused by “diseases declared to be quarantinable diseases under the Australian Quarantine Act 1908 and subsequent amendments”.
When the policy was issued, neither the insurer nor the insured realised that the legislation had been repealed and replaced by the Biosecurity Act 2015.
The court was unwilling to read the policy as if it contained the words “diseases determined to be a listed human disease under the Biosecurity Act 2015”.
Instead, it gave the contract its literal meaning. Of course, no declaration had been made about COVID-19 under the repealed Act. In that case, the exclusion clause did not apply.
Contract issues are the third leading reason that construction companies go out of business. It has been our experience that somehow, in some way, poorly written contracts figure into almost every dispute.
You can trust the experienced lawyers at Kreisson to write contracts that say what you mean. Contact us for any assistance you need drafting contracts or disputes involving contracts.
Please contact us on (02) 8239 6500 or at firstname.lastname@example.org if you have any queries or need any assistance.
This communication is sent by Kreisson Legal Pty Limited (ACN 113 986 824). This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.
Stay up to date.