Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd

[2016] NSWCA 123

NSW Court of Appeal

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Interrogate

Catchwords

1. Contract
2. › Formation
3. › Agreement to agree
4. › Heads of agreement
5. › Whether acceptance of letter of offer to enter into agreement for lease and lease gave rise to binding contract
6. › Proper characterisation of agreement where several terms remained to be agreed
7. › Whether agreement to negotiate in good faith
1. Contract
2. › Termination
3. › Repudiation
4. › Whether letter refusing to proceed on current proposed terms amounted to repudiation
5. › Whether invitation to continue negotiations negated repudiatory intent
1. Contract
2. › Termination
3. › Right to terminate for repudiation
4. › Whether right to terminate lost where party alleging repudiation refused to continue to negotiate
5. › Whether party alleging repudiation was itself ready willing and able to perform
6. › Whether performance of obligation had been dispensed with
1. Damages
2. › Contract
3. › Avoided loss
4. › Benefit derived from termination of agreement
5. › Whether benefit sufficiently close to claimed head of damages as to be appropriate to set off against it
6. › Onus of proof of avoided loss

Quick Take

Practitioners drafting heads of agreement for commercial leases should note that where significant terms remain to be agreed, the agreement may be characterised as an agreement to negotiate in good faith rather than a binding agreement for lease, and that a party's indication that it wishes to renegotiate terms does not necessarily constitute repudiation if it invites further negotiation.