To Agree Or Not To Agree?

October, 2014

Time and again we see disputes between parties that are not so much an argument as to the content of an agreement but whether an agreement has been reached at all. The latest is Pasado Pty Ltd v Totally Raw Pty Ltd & Anor [2014] QCA 252 where the Court considered an agreement may have been entered into where one party considered they had no intention to be bound. The court took a dim view of the asserted lack of intention where personal experience and business acumen demanded he ought to have understood he was playing with live ammunition.

The Company Directors of Stratogen Holdings Pty Ltd held a meeting in which a Share Transfer was negotiated and resolved. Each of the Company Directors signed the Minutes which contained the specific terms of the Share Transfer Agreement. Over the weekend one remorseful Director regretted his signature and purported to rescind the agreement reached the following Monday. Not surprisingly, the remaining Directors challenged his ability to do so. The Court considered the circumstances and held the parties intended to be bound immediately by the terms contained in the Minutes. There was nothing to suggest the disgruntled Director did not have the relevant commercial experience and business acumen to prevent him from objecting to the terms negotiated and agreed to at the time of the meeting. When read as a whole the Minutes contained, and ought to have been considered by each of the experienced Directors, a binding contract which each agreed to.

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