Case: Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Pty Ltd [2001] NSWCA 111 ; (2001) Aust Contract R 90-129
Outcome: applied
that in mind, ITW contends that Adnunat has failed to adduce any, or any sufficient evidence, to demonstrate that Adnunat and ITW had by their correspondence or conduct intended to bind themselves to a new contract in the same terms as the Settlement Deed. In "contract by conduct" cases, it said, it is necessary to show from the parties' conduct a "tacit understanding or agreement", where the conduct is such as to prove "all the essential elements of an express contract": see Giles JA, with whom Priestley JA and Meagher JA agreed, in Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Pty Ltd [2001] NSWCA 111 ; (2001) Aust Contract R 90-129 ( Industrial Rollformers ) at [137]. In particular, if a court is to hold that one party has bound itself in contract by its conduct, it must be able "to identify within the conduct of both parties the terms of the contract , and to be objectively satisfied that both parties agreed to be bound by those terms": see Giles JA at [138] (emphasis added). Here, ITW submitted, its conduct in purchasing 9 tonne anchors points to nothing more than the existence of an agreement for the sale of those goods. Adnunat failed to adduce evidence of any conduct or communications by ITW that are referable unequivocally to the express terms of the Settlement Deed, for example the grant of the licence (cl 3.1), the payment of royalties (cl 3.2), the undertaking not to infringe or challenge the validity of the Patent (cl 4 and cl 4.1), the release (cl 5.1) or indemnities (cl 5.3). Moreover, the lack of any such conduct is explicable said ITW, because: ITW then made the following submissions in response to the evidence put forward by Adnunat, summarised at [26]-[31]: ITW also relied on what it described as a number of "serious legal and factual questions" about Adnunat's case, which have a bearing on the terms of the Settlement Deed and which it said are properly determinable only at trial. Adnunat claims that since July 2003 it has had an exclusive licence agreement with Olivetti Concrete for Olivetti Concrete to manufacture, advertise and sell 9 tonne anchors (see par 8 of the applicants' statement of claim and exhibit MGO-1 to Mr Olivetti's affidavit). However, according to its ASIC company extract, Olivetti Concrete did not exist under that name in July 2003. It was instead called Hatherford Pty Ltd until 29 June 2007. While the business name "Olivetti Concrete Lifting Systems" had existed since August 2000, it was registered in the name of Olivetti Engineering until 30 September 2005, when it was transferred to Hatherford Pty Ltd and thereafter deregistered in July 2007. ITW submitted that the exclusive licence agreement was therefore either a forgery or the reference in it to Olivetti Concrete was an error. Despite the lack of any direct written evidence of an agreement between Adnunat and ITW, Adnunat contends that one must be inferred from their conduct. A contract may in certain circumstances be inferred from conduct, even where no offer and acceptance can be identified: see Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97326 ; Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 ( Vroon ); Industrial Rollformers [2001] NSWCA 111 ; (2001) Aust Contract R 90-129. However the existence or otherwise of an enforceable agreement depends ultimately on the manifest intention of the parties, objectively ascertained: see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548-50 (Gleeson CJ) and his Honour's reference to Gissing v Gissing [1970] UKHL 3 ; [1971] AC 886 ; see also Cheshire &amp; Fifoot's Law of Contract (9 th ed, LexisNexis, 2008) at [3.5] and [3.9]. Where mutual promises are sought to be inferred, the conduct relied upon must, on an objective assessment, evince a tacit agreement with sufficiently clear terms. It is not enough that the conduct is consistent with what are alleged to be the terms of a binding agreement. The evidence must positively indicate that both parties considered themselves bound by that agreement: Industrial Rollformers [2001] NSWCA 111 ; (2001) Aust Contract R 90-129 at [137] - [138] and [142]; Pacific Brands Sport &amp; Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 ( Pacific Brands ) at [47].