Case: Toyota Motor Corporation Australia v Ken Morgan Motors Pty Ltd [1994] 2 VR 106
Outcome: applied
I have no doubt that, viewed objectively, the conduct of Mr Lewarne and Mr Scotts suggests that they intended their arrangements to have legal consequences and that a contract was made at the latest when Mr Lewarne paid his $300,000 to Mr Scotts; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8 ; (2002) 209 CLR 95 at 105-6. It is clear from Mr Dempsey's evidence that they intended to enter into an agreement that had been formally drawn by a solicitor. It may be that they envisaged that this could be done before they needed to commit to a binding arrangement and were prepared to consider the solicitor's advice as to how their relationship should be structured. It is equally clear in my view that this intention was overtaken by events. Mr Scotts' need for funds to meet the imminent settlement of the business purchase from Wellfox intervened. Although not legally sophisticated, both Mr Lewarne and Mr Scotts are experienced businessmen. The commercial nature of their activities, their conduct in advancing and receiving money and their active co-operation in the running of a business (discussed in more detail below) all point to them intending to enter into a binding contract; Edwards v Skyways Ltd [1964] 1 WLR 349 at 355; Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 177. 51 In Brambles Holdings at 177, Heydon JA, (also speaking from the Court of Appeal) observed that ' limited recognition has been given to the possibility of finding that contracts exist even though it is not easy to locate an offer or acceptance' (emphasis added). His Honour also noted that the 'offer and acceptance analysis is a useful tool' and approved the comment made by Tadgell J in Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 178, that situations where this is not the case are 'likely to be rare'. 52 Nevertheless Heydon JA pointed out, at 176, that there are many circumstances where this analysis does not work well: One example is a contract for the transportation of passengers on mass public transport ... Another is the contract between competitors in a regatta, they are bound by their conduct in "entering for the race, and undertaking to be bound by [the] rules to the knowledge of each other" ... Another example concerns the exchanges of contracts to sell land, which are hard to analyse in offer and acceptance terms ... Another example concerns simultaneous manifestations of consent ... Another example concerns contracts between numerous parties, or even two parties negotiated at meetings but not assented to until each party executes counterparts. Another is where the contract is made through a single broker acting for both parties. Another is where the parties are deadlocked and they agree to submit to a solution reached by a third party. 53 Where there is no clear evidence of offer and acceptance one must look to the conduct of the parties to determine if they have agreed to incur reciprocal promissory obligations; Toyota Motor Corporation at 178 per Tadgell J. Unlike the circumstances that confronted the Court in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, the present issue cannot be resolved primarily as a matter of construction of the relevant documents.