Litig8: Shifting sands- contracting with government

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By Damian Ward, Partner

Each month as a part of Mills Oakley’s Litig8, we bring to you snapshots of eight key cases, legislative changes or other legal events. The summaries are not comprehensive and do not constitute legal advice. You should seek professional advice before taking any action based on the content of this email.

Part 4 of Litig8 Edition 3

Government at all federal levels are a major user of goods and services provided by many sectors of business and industry in Australia however, contracting with government is a different world to conventional commercial agreements.

From time to time changes in government, policy and legislation may impact upon existing contracts entered into with members of the business community. How legislative or policy shifts will affect a contract is an important issue for the contracting party to consider when negotiating and entering into the agreement.

This issue has recently been addressed by the High Court in Tabcorp Holdings v Victoria (2016) HCA 4. This decision involved gaming legislation in Victoria. The primary issue before the court was the proper construction of a clause of a contract dealing with compensation in the context of legislative and policy change. Another key matter considered by the High Court was the broader context and purpose of the agreement.

Whilst there were no clear statements of principle by the Court, it highlighted that close attention should be paid to the following important practical implications:

  1. The precision and clarity with of change of law/policy clauses;
  2. Any compensation regime agreed to;
  3. The rights of variation or termination in the context of policy and legislative change.

Full consideration of the potential implications of policy or legislative change will assist in navigating often fluky and inscrutable political winds.

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