Memery v Trilogy Funds Management Limited

[2012] QCA 160

Queensland Court of Appeal

Built by Barristers,
For Australian Law.

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Interrogate

Catchwords

1. Contract
2. › Formation
3. › Consideration
4. › Best endeavours obligation as consideration
5. › Whether conditional obligation to use best endeavours constitutes valid consideration
1. Contract
2. › Formation
3. › Consideration
4. › Discretionary performance
5. › Whether withdrawal clause reserving discretion to lender vitiated consideration
6. › Whether clause conferred unqualified discretion or was limited to defined circumstances
1. Contract
2. › Construction and interpretation
3. › Commercial contracts
4. › Loan facility agreements
5. › Whether application fee payable before advancement of loan
6. › Whether agreement binding prior to advancement of loan amount
1. Contract
2. › Construction and interpretation
3. › Commercial contracts
4. › Reconciliation of provisions
5. › Whether provisions should be read harmoniously
6. › Whether unreasonable result required plain words

Quick Take

A conditional obligation to use 'best endeavours' to advance a loan, subject to a withdrawal clause limited to defined circumstances (such as facts arising that may be prejudicial to the lender's interests), constitutes valid consideration for a borrower's obligation to pay an application fee. A withdrawal clause does not vitiate consideration unless it confers an unqualified discretion to withdraw for any reason. Loan application fees expressed as payable upon the borrower's withdrawal are enforceable even where the loan is never advanced.