Case: Uranium Equities Ltd v Fewster [2008] WASCA 33 ; (2008) 36 WAR 97
Outcome: referred to
submits in written closing submission that the authorities such as Anaconda, Pagnan SpA, Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 and Uranium Equities v Fewster [2008] WASCA 33 ; (2008) 36 WAR 97 relied on by FMG state that whether or not the parties intended to contract, they must agree on such terms, normally described as essential terms, such that the contract could be enforced or made complete by implying terms or applying considerations of reasonableness. I will consider these authorities further. In Anaconda [2000] WASCA 27 ; 22 WAR 101 , the Court of Appeal found that a binding contract had been made when a heads of agreement containing five clauses was signed, the last paragraph of which said that the heads of agreement "constituted an agreement in itself intended to be replaced by a fuller agreement not different in substance or form". At [28], Ipp J referred to the following statement by Sugerman J, approved by Menzies J in Thorby v Goldberg [1964] HCA 41 ; (1964) 112 CLR 597 at 607: It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential and critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties. Again, there is no binding contract where the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intentions. In Uranium Equities [2008] WASCA 33 ; 36 WAR 97 , a recent judgment of the Supreme Court of Western Australia (Court of Appeal), the Court stated at [127]: There is some overlap between the requirements of intention to create legal relations and certainty. If a contract is legally uncertain, this might indicate that the parties did not intend to create legal relations. A contract can be uncertain in various ways, one of these being incompleteness, in the sense that essential terms are lacking: Thorby v Goldberg [1964] HCA 41 ; (1964) 112 CLR 597 , 603 (Kitto J); Godecke v Kirwan [1973] HCA 38 ; (1973) 129 CLR 629 , 646 - 647 (Gibbs J). The overlap between intention and uncertainty is at its greatest in cases in which agreement on some matters is deliberately postponed. If what is postponed is essential to the agreement (itself a question that largely depends upon the intention of the parties) , the agreement, to the extent that it has been reached, will be void. Also, the fact that essential terms have been left over for later agreement will militate against a finding that the parties intended to create contractual relations. (Emphasis added) In Uranium Equities [2008] WASCA 33 ; 36 WAR 97 , the parties to the putative agreement had been negotiating over a proposed mining joint venture, but no heads of agreement had been executed. The Court found that the trial judge was right in concluding that the parties did not intend to be bound by anything said or done by them until such time as the heads of agreement had been executed. The Court went on to state on the question of uncertainty at [257] that it is "trite" that, even when the requisite intention is present, a contract can fail for uncertainty. The Court said it is also trite that only the omission of an essential term will have the effect that a contract is so incomplete or uncertain as to render it invalid, citing Ipp J in Anaconda [2000] WASCA 27 ; 22 WAR 101 at [29] . The Court referred to the statement of Lloyd LJ from Pagnan SpA [1987] 2 Lloyd's Rep at 619 and found that when regard was had to all the circumstances the parties did not intend to be bound by anything said or done by them until such time as the heads of agreement had been executed . The Court concluded that although some of the matters left over by the parties for future negotiation were important, none were essential to the efficacy of the alleged agreement in the sense that the agreement could not be enforced without it. This fourth category was recognised by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 and on appeal in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 where McHugh JA delivered the Court of Appeal's judgment and observed that the magnitude, subject matter or complexities of a transaction may indicate that an agreement was a limited one not intended to have legal effect (634D) but that what was critical was the parties' intention objectively ascertained, and that this intention should prevail (634E-F). In Uranium Equities Ltd [2008] WASCA 33 ; 36 WAR 97 , the Supreme Court of Western Australia (Court of Appeal) stated at [129] that the fourth Masters v Cameron category was a variation of the first category.