Case: Meehan v Jones [1982] HCA 52 ; (1982) 149 CLR 571 
Outcome: applied
Meehan v Jones [1982] HCA 52 ; (1982) 149 CLR 571 concerned a special condition in a contract for the sale of land on which an oil refinery had been built as follows: 'This contract is executed by the parties subject to the following:- (a) the purchaser or his nominee entering into a satisfactory agreement or arrangement with Ampol Petroleum Limited for the supply of a satisfactory quantity of crude oil ... (b) the purchaser or his nominee receiving approval for finance on satisfactory terms and conditions in an amount sufficient to complete the purchase hereunder.' Gibbs CJ said (at 580 581): 'The intention of such a clause in my opinion is to leave it to the purchaser himself to decide whether the terms and conditions on which finance is available are satisfactory. The condition prevents a purchaser from being obliged to go through with a sale when he does not believe that he can raise the necessary funds. Such a condition is generally entirely for the protection of the purchaser, and it is the satisfaction of the purchaser, not that of some hypothetical reasonable man, that will satisfy the condition. No doubt it may be implied that the purchaser will act honestly in deciding whether or not he is satisfied. However, it does not seem to me necessary, in order to give business efficacy to a contract, that a condition should be implied that the purchaser will make reasonable efforts to obtain finance. The parties may expect that he will, but he does not contract to so do.' Mason J said (at 589): 'To say that a "subject to finance" or "subject to finance on satisfactory terms and conditions" clause denotes finance which is satisfactory to the purchaser is not to say that he has an absolute or unfettered right to decide what is satisfactory. To concede such a right would certainly serve the object of the clause in protecting him. But it would do so at the expense of the legitimate expectations of the vendor by enabling the purchaser to escape from the contract on a mere declaration that he could not obtain suitable finance. With some justification the vendor can claim that the agreement made by the parties is not an option but a binding contract which relieves the purchaser from performance only in the event that, acting honestly, or honestly and reasonably, he is unable to obtain suitable finance.' After referring to authority, his Honour said (at 590 591): 'In this case it is not necessary to decide whether the purchaser, in deciding whether finance is on satisfactory terms, is bound to act honestly or whether he is also bound to act reasonably. The cases already mentioned appear to support the first rather than the second alternative. And there is some ground for thinking that the parties contemplated that the question was to be left to the honest judgment of the purchaser rather than to the judgment of a court as to whether the purchaser acted reasonably in the circumstances. On the other hand, it has been said that a condition of this type imports an obligation or promise on the part of the purchaser to act honestly and reasonably ( Barber v. Crickett ([1958] N.Z.L.R. 1057); Scott v. Rania ([1966] N.Z.L.R., at p. 539), per Hardie Boys J.; Gardner v. Gould ([1974] 1 N.Z.L.R. 426)). McCarthy J., who in Scott v. Rania ([1966] N.Z.L.R., at p. 534) preferred to base his reasoning on the principle that a party to a contract cannot be permitted to rely on his own wrong, later in Gardner v. Gould ([1974] 1 N.Z.L.R., at p. 428) adopted the implied promise theory. The reasoning which underlies the decisions of this Court upholding the implication of an obligation on the part of a party to a contract to do all that was reasonable on his part to obtain a statutory consent applies with equal force here. In Butts v. O'Dwyer ((1952) [1952] HCA 74 ; 87 C.L.R. 267, at p. 280), Dixon C.J., Williams, Webb and Kitto JJ. said: "It has been held in cases too numerous to mention both before and after the classic statement of Bowen L.J. in the case of The Moorcock ((1889) 14 P.D. 64, at p. 68) that the law raises an implication from the presumed intention of the parties where it is necessary to do so in order to give to the transaction such efficacy as both parties must have intended that it should have." Here the expressed intention of the parties was that the purchaser would obtain finance; his obtaining of finance on satisfactory terms was necessary to give the transaction its intended efficacy. The consequence would be that he had an obligation to do all that was reasonable on his part to obtain that finance. It would make for greater consistency to say that, if the purchaser is bound to act reasonably in seeking to obtain finance, he is bound to act reasonably as well as honestly in deciding whether the finance was satisfactory. So understood the special condition would preserve an even balance between the vendors and the purchaser. However, I have no need to decide the question. Here it makes no difference whether the purchaser was under an obligation to act honestly or honestly and reasonably in deciding whether the terms of an offer of finance were satisfactory.' Wilson J agreed with Mason J and was inclined to believe that an honest judgment was all that was required although there was necessity to express a concluded view as to that (at 597). Murphy J took the view that no implication was necessary (at 596 597). 175 I shall return to these authorities having examined the purpose of the Council in purporting to utilise cl 17 as it did. The most significant indicia of the true purpose of the Council was the so called order of 19 October 1999. Out of the blue it purported to make time of the essence for delivering nearly one half of the annual requirement in the space of eight weeks. There had been no hint of that requirement at the meeting of 29 September 1999, as a result of which it would have been reasonably anticipated that an order would be received promptly for a true staged delivery of the required poles for the balance of the current annual period with a small number of poles to be delivered by Christmas. Goldspar had been pressing for forward scheduling since late 1998 and had received no response. The Council had, by then, acquired the only stock of extrusions in existence and was about to let a tender which, in addition to utilising those columns, would be competing with Goldspar for all relevant supplies. The 'order' was given on opaque terms which would obviously be regarded as unacceptable by Goldspar. There was the reference to time being of the essence, correctly described by counsel for Goldspar as menacing as it flagged termination of the contract if the impossible demand was not met.