Sheehan v Zaszlos [1994] QCA 145

Court of Appeal (Qld)|1994-05-13|Before: Davies J, Pincus J

For the reasons which we have given, the appeal should be allowed. The appellants should have judgment for $32,227.53 and costs and should have the costs of this appeal.

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APPEAL ALLOWED. JUDGMENT FOR THE APPELLANTS IN THE SUM OF $32,227.53 AND COSTS, WITH COSTS OF THE APPEAL.

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CATCHWORDS: PARTNERSHIP - AGREEMENT FOR PARTNERSHIP - whether parties intended to be immediately bound by terms agreed in oral negotiations to be stated subsequently in written agreement - Masters v. Cameron - whether in absence of common practice inference of intention to be bound only upon execution of formal agreement may be inferred from the nature of the agreement.

Solicitors: Conroy & Associates t/a for McDonald & Co. for the Appellants

Lees Marshall & Warnick t/a for Garrick & Co. for the Respondents

IN THE COURT OF APPEAL [1994] QCA 145

We cannot therefore agree with his Honour's conclusion that what took place comes within the third class of case referred to in Masters v. Cameron [1954] HCA 72; (1954) 91 C.L.R. 353 at 360, namely one in which the intention of the parties is not to make a concluded bargain at all unless and until they execute a formal contract. On the contrary, we think that the case comes within the first class of case discussed in Masters, namely one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.

The respondent sought to call in aid of his Honour's conclusion a line of New Zealand cases which appear to hold that in commercial contracts or contracts for the sale and purchase of land for commercial purposes, where the parties contemplate the execution of a formal contract, the "natural inference" is that the parties are not to be bound until at least the contract has been formally executed on each side: Carruthers v. Whitaker (1975) 2 N.S.W.L.R. 667; Concord Enterprises v. Anthony Motors (Hutt) Ltd (1981) 2 N.Z.L.R. 384; Shell Oil v. Wordcom Investments (1992) 1 N.Z.L.R. 129. No doubt where parties intend to contract in accordance with a common practice it may be readily inferred that they did not contemplate the coming into existence of a binding contract except in accordance with that practice. See Eccles v. Bryant (1948) 1 Ch. 93; Bridle Estates Pty Ltd v. Myer Realty Pty Ltd (1977) 51 A.L.J.R. 743; Sindel v. Georgiou [1984] HCA 58; (1984) 58 A.L.J.R. 515. But in the absence of such common practice we think that any such "natural inference" is inconsistent with the view expressed in Masters that the question in which of the three classes there identified a case will fall "depends on the intention disclosed by the language the parties have employed" (at 362); to which we would add "or inferred from their conduct".

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