- High Court of Australia
- Koompahtoo Local Aboriginal Land Council v. Sanpine Pty Limited
ADMINISTRATIVE CONTRACTS - LONG-TERM CONTRACTS - JOINT-VENTURE AGREEMENT - BETWEEN AN AUSTRALIAN LAND COUNCIL AND AN AUSTRALIAN COMPANY
UNIDROIT PRINCIPLES AS A MEANS OF INTERPRETING DOMESTIC LAW (AUSTRALIAN LAW)
RIGHT TO TERMINATE A CONTRACT FOR BREACH - DOCTRINE OF "INTERMEDIATE" TERMS - TO BE REJECTED - REFERENCE AMONG OTHERS TO CISG AND THE UNIDROIT PRINCIPLES (ARTICLES 7.3.1 AND 7.3.3)
Koompahtoo Local Aboriginal Land Council ("Koompahtoo") and Sanpine Pty Limited ("Sanpine") had entered into a joint venture agreement (the "Agreement") for the development and sale of a large area of land near Sydney. Koompahtoo contributed the land while Sanpine was to manage the project. However the project never proceeded even to the initial stage of obtaining rezoning of the land and the New South Wales Aboriginal Land Council ("NSWALC") appointed an investigator. On discovering a number of violations by Sanpine of its obligations deriving from the Agreement, the investigator terminated the Agreement. Sanpine commenced proceedings in the Supreme Court of New South Wales seeking a declaration that the termination was invalid and that the Agreement was still on foot.
The Court confirmed the decisions rendered in favour of Koompahtoo by both instances of the Supreme Court of New South Wales. However as to the legal arguments underlying the decisions, it rejected the lower Court's contention that Koompahtoo was entitled to terminate the Agreement on the ground that Sanpine had breached so-called "intermediate" terms of the Agreement, i.e. it had breached non-essential terms but its default was so significant as to go to the root of the contract. The Court held that the distinction between breach of essential terms and breach of non-essential terms and the identification with respect to the latter of a sub-category called breach of "intermediate" terms, as proposed in some English decisions and supported by legal writings, should not become part of Australian law. The Court pointed out that not only was such a distinction not accepted in other common law countries including the United States of America but "[t]here is nothing like it in the United Nations Convention on Contracts for the International Sale of Goods 1980 [n]or does it appear in the UNIDROIT Principles of International Commercial Contracts 2004 (see Articles 7.3.1 and 7.3.3)". According to the Court the correct statement of the common law of Australia in this respect was that a right to terminate the contract arises in respect of either breach of an essential term, or breach of a non-essential term causing substantial loss of benefit, or repudiation. Though not expressly stating it, by referring in a footnote to Articles 7.3.1 and 7.3.3 of the UNIDROIT Principles, the Court implicitly made it clear that Australian law and the UNIDROIT Principles coincided in this respect.
1. GLEESON CJ, GUMMOW, HEYDON AND CRENNAN JJ. This litigation arises from the termination, or purported termination, of a joint venture agreement for the commercial development of land.
2. On 14 July 1997, the first appellant, Koompahtoo Local Aboriginal Land Council ("Koompahtoo"), and the first respondent, Sanpine Pty Limited ("Sanpine"), entered into a joint venture agreement ("the Agreement") for the development and sale of a large area of land near Morisset, north of Sydney. The land had become vested in Koompahtoo as a result of claims made under the Aboriginal Land Rights Act 1983 (NSW). The development project, which was to be self-funded, was the first such project to be undertaken in New South Wales by a Local Aboriginal Land Council. Koompahtoo contributed the land. Sanpine, which had no other business, was the manager of the project. Each party had a 50% interest in the joint venture. Sanpine was also entitled to receive a management fee equal to 25% of the total project costs. The Agreement provided that it did not give rise to a partnership.
3. Although attempts were made to obtain the approval of the relevant authorities, including necessary rezoning of the land, and although liabilities in excess of $2 million were incurred on the security of mortgages over the land, the project, which was controversial within the Koompahtoo community, which involved sensitive environmental issues, and which evidently was unattractive to financiers, never proceeded even to the initial stage of obtaining rezoning of the land. In April 2002, a caveat was placed on the title to the land, which had the practical effect of impeding the prospects of further funding. In June 2002, the New South Wales Aboriginal Land Council ("NSWALC") appointed an investigator of Koompahtoo. On 25 February 2003, the second appellant, Mr Lawler, was appointed as administrator of Koompahtoo. On 10 April 2003, a mortgagee went into possession of the land. From February 2003 until December 2003, the administrator made attempts to obtain from Sanpine information as to the financial position of the joint venture. Proper books of account and financial records of the joint venture had never been kept by Sanpine. On 12 December 2003, the administrator, on behalf of Koompahtoo, terminated the Agreement. Sanpine commenced proceedings in the Supreme Court of New South Wales, seeking a declaration that the termination was invalid and that the Agreement was still on foot. There is other, presently irrelevant, litigation concerning the land.
4. Campbell J, at first instance, formulated a preliminary question as follows:
"Whether, on the proper construction of the agreement entitled 'Morisset Joint Venture Agreement' between [Sanpine] and [Koompahtoo], dated 14 July 1997, as amended by the 'Morisset Joint Venture Supplemental Agreement' dated 17 October 2000 ('Agreement'), and in the events which have happened, the Agreement was validly terminated by [Koompahtoo] by its letter to [Sanpine] dated 12 December 2003."
5. Campbell J answered that question in the affirmative and dismissed Sanpine's proceedings. The Court of Appeal of the Supreme Court of New South Wales, by majority (Giles and Tobias JJA, Bryson JA dissenting), allowed an appeal by Sanpine. The basis of Campbell J's decision was that there had been "gross and repeated" departures by Sanpine from its obligations under the Agreement, including a "total failure to adhere to the accounting obligations", and that, having regard to the nature of the Agreement and the consequences of the breaches, the breaches were "sufficiently serious" to give Koompahtoo a right to terminate. For the reasons that follow, the conclusion of Campbell J was correct.
91. This appeal thus presents two essential questions requiring resolution:
1. What are the principles of the common law of Australia governing the entitlement to terminate a contract for repudiation or other breach?
2. How are those principles to be applied in the circumstances of the present case, and with what outcome?
The governing legal principles
92. Competing taxonomies: Because the common law develops from hundreds of judicial decisions, sometimes over long periods of time, it is often the case that the conceptual framework that affords structure to a group of related legal principles is at first imperfect and unclear. It falls to judges and scholars to attempt to derive rules that are coherent, practical, just, and (so far as is possible) conformable with past decisions.
93. Campbell J, referring to leading Australian texts on contract law, identified two basic but different taxonomies as to the right to terminate a contract at common law. The first was drawn from Professor John Carter's text Breach of Contract, and the second from Dr N C Seddon and Associate Professor M P Ellinghaus's eighth Australian edition of Cheshire and Fifoot's Law of Contract.
94. Both taxonomies arrange the decisional law into a tripartite scheme of classification. Both recognise that a right to terminate will arise in respect either of a breach of an "essential" term or "repudiation" (in the sense of conduct manifesting that one of the parties is unable or unwilling to perform). It is over the character of the third class of circumstances authorising termination that the taxonomies diverge. Professor Carter postulates that a right to terminate exists at common law in respect of "a sufficiently serious breach of an intermediate term". Dr Seddon and Associate Professor Ellinghaus, on the other hand, state that a right to terminate will arise in respect of a "[b]reach causing substantial loss of benefit", that is, a "breach consisting of a failure to perform which has the effect of depriving the injured party of the substantial benefit of the contract".
95. Campbell J noted that neither of the parties to the proceedings had paid much attention to these competing theories for the classification of the principles emerging from the cases. Instead, they had "focussed attention on specific judgments of the High Court of the last twenty five years". Campbell J therefore proceeded to do likewise. From the point of view of a trial judge that was an understandable course of action.
96. However, taking that course diverted Campbell J from the attempt to rationalise and clarify the relevant legal principles according to the rules of law binding on him. It led his Honour, instead, into an invocation of judicial dicta. Such an approach is not conducive to the clear and consistent application of the law to cases that arise for judicial decision. Unless clear principles are derived from the cases, it is inevitable that overlapping categories will be confused and that new facts, as they arise, will be assigned to incorrect categories. In the result, decisions may be founded upon legal error, or their basis will be unclear and their foundation uncertain.
97. Campbell J purported to deal with the terms of the Agreement which he found Sanpine had breached not as "essential" but as "intermediate" terms. This conclusion, and the confusion it occasioned in the Court of Appeal, requires that something should be said by this Court about the problematic nature of such categories. It requires me to draw attention to two matters on which I would depart from the approach adopted in the joint reasons.
98. Essential and non-essential terms: Professor Jane Swanton, writing in 1981, commented that a point had then been reached in the evolution of the English law of contracts where it might have been expected that the common law would have abandoned the distinction between conditions and warranties. It is, after all, a distinction often difficult to draw in practice. It occasions litigation. It is often circular, in the sense that "conditions" or "essential terms" are, in the usual case, judged to be such because the drastic consequences that flow from their breach are considered to warrant termination in all of the circumstances. When this conclusion is reached it is the drastic consequences that emerge as the important criterion for relief. The description of the character of the term that is breached is no more than a consequential label. The categories thus represent a classic instance of consequential or circular reasoning.
99. Notwithstanding these difficulties, the law has persisted with the distinction. It has become well entrenched. I am prepared to accept that it is useful to maintain the rule that some contractual terms, limited in number, are so critical to particular contracts that their breach will give rise to an automatic right to terminate. I accept that such terms can be identified and characterised a priori as "essential". I would not disagree that whether or not a term is to be so characterised is a question to be determined with reference to the actual content of the contract, viewed in the context of the entire commercial relationship between the parties.
100. With respect, however, I have reservations that the reasoning of Jordan CJ in Tramways Advertising supplies the relevant test. This is so notwithstanding its adoption in other cases. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd, Murphy J remarked:
"This 'test' is so vague that I would not describe it as a test. It diverts attention from the real question which is whether the non-performance means substantial failure to perform the contractual obligations. The inquiry into the motivation for entry into the contract is not the real point. Numerous purchasers may enter into similar contracts with widely different motives. What does it matter if [the 'innocent' party] would have entered the contract even if the terms were as [the party alleged to be in breach] claimed them to be?"
101. As a matter of logic and principle, there is much force in this criticism. It is difficult to see how reference to the "common intention" of the parties at the time of contract formation advances the decision in a case such as the present. It is an artificial criterion in that it demands the drawing of inferences as to the parties' reactions to contingencies that in fact might (and usually would) never have been anticipated. It also affords scope for the importation of subjective considerations in a manner inconsistent with the modern general approach to the formation of contracts. In my view, it is preferable to place the "test" on a different footing and to inquire into the objective significance of breach of the term in question for the parties in all the circumstances. I would favour that approach. If it is adopted, it is difficult to see what purpose purporting to conduct a retrospective investigation of the "common intention" of the parties serves. The court creates an objective postulate. It applies it to the facts. There is then no need to resort to the fiction that Tramways Advertising introduces.
102. The actual consequences of a default that has occurred in fact ought not to be taken into account in determining whether or not the term of the contract that is breached is "essential" in character. If the position were otherwise, the purpose of maintaining a separate a priori class of "essential" terms would be defeated. It would be impossible to distinguish between an "essential" term and a "non-essential" term in respect of which serious breach could be said to "go to the root" of the contract.
103. Intermediate or innominate terms: The persistence of the law with the distinction between essential and non-essential terms necessarily gave rise to serious risks of practical injustice. It was this realisation that led to the invention of so-called "intermediate" or "innominate" terms. It was Diplock LJ who inserted this new class of contractual terms somewhere between "conditions" and "warranties". He did so in Hongkong Fir. The concept was further developed in Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos). It became entrenched in a number of decisions of English courts and judges that followed.
104. At the time of these developments, it was, for the most part, normal for Australian courts to follow English decisions affecting basic doctrines of the common law without serious question. Thus, the "intermediate" or "innominate" term entered into the discourse of this Court without any real consideration of its conceptual soundness or practical usefulness. However, despite occasional approval of taxonomies that incorporated the classification, this Court has not until this appeal given it unequivocal endorsement in a decision for which such recognition comprised part of the ratio decidendi of the case. It might have been "assumed" to be correct; but that was the way of earlier times.
105. In the present case, the joint reasons defend the so-called "intermediate" term derived from Hongkong Fir. Moreover, it is made explicit that the conclusion in the joint reasons depends upon the reception of that concept into law.
106. The joint reasons suggest that an "intermediate" term will have been breached where default in respect of a non-essential term is so significant as to go "to the root of the contract", a very imprecise and apparently self-justifying notion. Whether a breach goes "to the root of the contract" is said to depend upon "the nature of the contract and the relationship it creates, the nature of the term, the kind and degree of the breach, and the consequences of the breach" as well as whether or not damages would provide appropriate relief in the circumstances. Of paramount importance is the "construction of the contract" itself.
107. Respectfully, I disagree with this approach. If the classification of a contractual term as "intermediate" is nothing more than a function of ex post facto evaluation of the seriousness of the breach in all of the circumstances then the label itself is meaningless. It is not assigned on the basis of characteristics internal to, or inherent in, a particular term, as the joint reasons themselves acknowledge. Rather, it is imposed retrospectively, in consequence of the application of the judicial process. Effectively, there is no basis, and certainly no clear or predictable basis, for separating "intermediate" terms from the general corpus of "non-essential" terms or "warranties" prior to adjudication in a court. This throws into sharp relief the extreme vagueness of the Hongkong Fir "intermediate" term. Its imprecision occasions difficulties and confusion for parties and those advising them. It has the potential to encourage a proliferation of detailed but disputable evidence in trial courts and consideration of such evidence in intermediate courts. It renders uncertain the distinctions between the several categories said to provide a legal justification for the very significant step of terminating an otherwise valid contract.
108. Several additional factors militate against the incorporation of the so-called "intermediate" term into Australian law. It is a comparatively recent invention, finding little or no reflection in the common law that preceded Hongkong Fir. It is inconsistent with the approach of Australian legislation dealing with breach of contract in particular contexts. It is not reflected in the general codifications of contractual remedies law adopted in some common law countries. It is inconsistent with approaches suggested on the part of law reform bodies in England and Australia. It finds no reflection in the relevant parts of the United States Restatement of the law. Nor is it adopted in the Uniform Commercial Code of the United States. There is nothing like it in the United Nations Convention on Contracts for the International Sale of Goods 1980. Nor does it appear in the UNIDROIT Principles of International Commercial Contracts 2004. Even where recognising a classification analogous to "essential" terms, none of these codifications encumbers itself with an artificial additional subdivision of the broad class of "non-essential" terms that remains.
109. It is true that Mr Edwin Peel, the present author of Professor Treitel's The Law of Contract, expresses a preference for the retention of the "intermediate term" classification in the context of English law, citing what he describes as its "practical" usefulness. I am as sensitive as the next judge to the common triumph of pragmatism over principle in the history of the common law. However, for reasons explained above I have considerable doubts as to the suggested justification in this case. The text does not refer to Australian case law on the subject. In any case, Mr Peel acknowledges that there is authority for, and "considerable force in", the "alternative view that there are only two categories: conditions and other terms". This represents the classification that I would favour. It is more traditional. It has the weight of history on its side. It recognises the seriousness of providing a further classification with the potential to authorise the termination of a valid contract. It reduces the temptations of consequentialist reasoning essentially designed to fulfil the conclusion already contemplated or arrived at. And it avoids the difficulty of differentiating "intermediate" or "innominate" terms from essential "conditions" and "other" terms.
110. I acknowledge that, in a sense, whether there are two or three species of contractual terms might well be in large part a "terminological problem". However, getting the classification right has significant implications for countless contracting parties and legal practitioners, as well as for trial judges. I also recognise that this is an area of law in which it is difficult to establish rigid standards for the determination of future cases. Thus, Bryson JA noted in the Court of Appeal:
"Whether or not there has been a repudiation [in the broad sense] is a conclusion based on the application to the facts of each case of a standard which has not been, and I think cannot be formulated precisely or exhaustively. As with other legal standards, repudiation calls for judicial decision on whether conduct has passed a boundary although the precise location of the boundary is not clear."
111. However, the central point is that the performance of legal tasks is not assisted when misleading, imprecise and self-fulfilling labels are invoked in an attempt to rationalise results in individual cases after the event. Such labels comprise a source of needless complication and disputation. If what is required is an evaluation of whether the circumstances of a particular breach are of such an objectively serious nature as to vindicate unilateral termination, then this Court should formulate the relevant principles to say so. Continued reference to the vague and artificial concept of "intermediate terms" inhibits this exercise and obscures clear thinking in the performance of the legal task in cases such as the present.
112. In earlier times this Court felt itself obliged to follow judicial developments of legal doctrine affecting the common law of contracts, as expressed in the higher English courts. Substantially, this was because of the then legal tradition and training and because Australian courts, including this Court, were subject to appeals to the Judicial Committee of the Privy Council. Now we answer to a more testing standard of rigour, persuasiveness and conceptual coherence. We are governed not only by our own past decisional authority but also by our consideration of relevant legal principle and applicable legal policy.
113. An alternative formulation: It follows that I would endorse the argument advanced in the ninth Australian edition of Cheshire and Fifoot:
"It is difficult to see the necessity for introducing [an 'intermediate'] category of terms as a means of legitimising termination by reference to the extent of loss actually caused by a breach. Unless otherwise agreed, a breach that substantially deprives the other party of the benefit of a contract should entitle that party to terminate it, no matter whether the term in question is essential, intermediate, or inessential. The identification of a third kind of term distinct from, and intervening between, essential terms (conditions) and inessential terms (warranties), further proliferates an already over-elaborate terminology, and is an obvious invitation to circularity of reasoning. Many judgments acknowledge, even if only indirectly, that loss of substantial benefit may be sufficient as such to justify termination by the injured party."
114. Of the two taxonomies set out in the reasons of Campbell J, I prefer that proposed by Dr Seddon and Associate Professor Ellinghaus in the Australian edition of Cheshire and Fifoot. I regard it as a correct statement of the common law of Australia. Thus, a right to terminate arises in respect of: (1) breach of an essential term; (2) breach of a non-essential term causing substantial loss of benefit; or (3) repudiation (in the sense of "renunciation"). The common thread uniting the three categories is conduct inconsistent with the fundamental postulate of the contractual agreement.
115. This scheme of classification affords the requisite "flexibility" to ensure just outcomes in individual cases - a proper concern upon which the joint reasons rightly place emphasis. However, it avoids the need to invent so-called "intermediate terms". It also simplifies the determination of the consequences of breach of a contractual term, removing needless steps from the process of reasoning. Under taxonomies incorporating the "intermediate term", a finding that a term has been breached requires a determination of whether that term is essential or non-essential. If it is the latter, the court must then inquire as to whether it is of an "intermediate" character. If the answer to this question is in the affirmative, the court must make a further determination of whether the breach was of "sufficient seriousness" to warrant termination. The latter two steps are interrelated. However, when the "intermediate term" is excluded, the process of reasoning is simplified and clarified. Either the term breached is essential or it is non-essential. It cannot somehow be somewhere in between. If it is the former, termination will be justified. If it is the latter, the court can turn its attention directly to the objective indicia of "substantial loss of benefit" without feeling a need to affix the "intermediate" label on the contractual terms ex post facto.
116. I would prefer to decide the case on this footing. I express this preference because the holding in the joint reasons will now endorse the Hongkong Fir doctrine as part of the common law of Australia. I cannot agree in that result. Before that doctrine passes into endorsement by this Court as a binding rule of Australian law, I have endeavoured to explain its theoretical and practical imperfections and to set out an alternative and preferable expression of the governing common law rule. It produces the same outcome in this case. However, it does so without resort to the unpersuasive classification that is now upheld and applied.
Outcome and conclusion
117. Application of principles: It remains to apply the foregoing principles to the facts of the present appeal. As the joint reasons recount, Campbell J found that Sanpine had committed significant and repeated breaches of the Agreement in relation to:
1. the preparation and updating of documents;
2. the opening and maintenance of a joint venture bank account; and
3. the maintenance of proper books so as to allow assessment of the affairs of the joint venture.
118. I do not doubt that the terms of the contract found to have been breached were of substantial importance in the context of the agreement between the parties. From the point of view of Koompahtoo, the basic purpose of establishing the joint venture was to obtain the benefit of Sanpine's managerial expertise. Defaults on the part of Sanpine in this connection would have had the effect of calling into question the assumption that Sanpine was competent to provide such expertise - an assumption on which the contractual relations between the parties were founded.
119. I do not favour the conclusion that the terms found to have been breached included terms that were "essential" in nature. Even with respect to cl 16.5 of the Agreement it is possible to envisage breaches too trivial to be regarded as providing a licence for termination. It does not matter that in the event the relevant breaches were far from being so. The serious and significant consequence of determining a contractual term to be "essential" - being the vindication of unilateral termination for breach regardless of the circumstances - means that courts should be cautious in giving effect to such a result.
120. In the circumstances of the case, I consider that the breaches established had, as a matter of fact, the effect of depriving Koompahtoo of the substantial benefit of the contract. That benefit in large part comprised the application of Sanpine's expertise in management to the joint venture project. The defaults of Sanpine undercut that benefit to a significant extent. The maintenance of proper documentation and accounts, and the making available of relevant information to Koompahtoo, was basic to Sanpine's obligations under the Agreement. I agree with the joint reasons when they say:
"The nature of Sanpine's breaches was such that, even at trial, it was difficult, if not impossible, to know their full extent. The breaches deprived the Koompahtoo representatives of the capacity to make an informed decision as to the consequences for Koompahtoo of what was going on."
121. Conclusion and disposition: It follows that the appeal succeeds. The defaults of Sanpine were such as to vindicate Koompahtoo's termination of the Agreement. Given the context, those defaults deprived Koompahtoo of the substantial benefit of the Agreement. There is no need to appeal to the elusive and contestable concept of intermediate or innominate terms. So I would not do so. The Court of Appeal erred in its approach and in its conclusions. The orders of Campbell J should be restored for the reasons that I have explained.
122. The orders proposed in the joint reasons should be made.
 Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council  NSWSC 365.
 Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council  NSWCA 291.
 Carter, Breach of Contract, 2nd ed (1991) at 60  cited  NSWSC 365 at .
 Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 8th Aust ed (2002) at 927 [21.10] cited  NSWSC 365 at . See also Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Aust ed (2007) at 1012-1013 [21.11].
 cf Esanda Finance Corporation Ltd v Plessnig  HCA 7; (1989) 166 CLR 131 at 143 per Brennan J.
  NSWSC 365 at .
 See joint reasons at .
 Swanton, "Discharge of Contracts for Breach", (1981) 13 Melbourne University Law Review 69 at 70.
 Waddams, The Law of Contracts, 5th ed (2005) at 424.
 cf joint reasons at .
 See joint reasons at  where the relevant passage is set out.
 Associated Newspapers Ltd v Bancks  HCA 24; (1951) 83 CLR 322 at 337; DTR Nominees Pty Ltd v Mona Homes Pty Ltd  HCA 12; (1978) 138 CLR 423 at 430-431; Shevill  HCA 47; (1982) 149 CLR 620 at 627, 636; Ankar  HCA 15; (1987) 162 CLR 549 at 556.
  HCA 12; (1978) 138 CLR 423 at 436.
 cf joint reasons at .
 Placer Development Ltd v The Commonwealth  HCA 29; (1969) 121 CLR 353 at 367; Taylor v Johnson  HCA 5; (1983) 151 CLR 422 at 428-429; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd  HCA 52; (2004) 219 CLR 165 at 179 ; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd  HCA 55; (2005) 218 CLR 471 at 483 ; cf Mason and Gageler, "The Contract", in Finn (ed), Essays on Contract, (1987) 1 at 3-10; Mason, "Themes and tensions underlying the law of contract", in Lindell (ed), The Mason Papers, (2007) 296 at 299.
 cf joint reasons at .
  2 QB 26 at 71-72; cf at 64 per Upjohn LJ.
  1 QB 164.
 Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Aust ed (2007) at 1032 [21.22]; see also above at .
 Joint reasons at .
 See joint reasons at .
 Joint reasons at .
 Joint reasons at .
 Joint reasons at .
 Sale of Goods Act 1923 (NSW), s 34(2); Goods Act 1958 (Vic), s 38(2); Sale of Goods Act 1895 (SA), s 31(2); Sale of Goods Act 1896 (Q), s 33(2); Sale of Goods Act 1895 (WA), s 31(2); Sale of Goods Act 1896 (Tas), s 36(2); Sale of Goods Act (NT), s 34(2); Sale of Goods Act 1954 (ACT), s 35(2).
 See eg Contractual Remedies Act 1979 (NZ), s 7(2), (3), (4).
 McGregor, Contract Code Drawn Up on Behalf of The English Law Commission, (1993) at 71-85; cf Ellinghaus and Wright, An Australian Contract Code, Law Reform Commission of Victoria Discussion Paper No 27, (1992) at 25.
 See Arts 7.3.1, 7.3.3.
 Peel, The Law of Contract, 12th ed (2007) at 889 [18-048]; cf joint reasons at .
 Peel, The Law of Contract, 12th ed (2007) at 889 [18-048] citing The Hansa Nord  QB 44.
 Peel, The Law of Contract, 12th ed (2007) at 888 [18-048]; cf Carter, Peden and Tolhurst, Contract Law in Australia, 5th ed (2007) at 694 [30-34] (stating that the "problem of classification is largely, but not entirely, academic").
  NSWCA 291 at .
 Oceanic Sun Line Special Shipping Company Inc v Fay  HCA 32; (1988) 165 CLR 197 at 252.
 Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Aust ed (2007) at 1032 [21.22] (citations omitted).
 cf joint reasons at .
 cf Al-Kateb v Godwin  HCA 37; (2004) 219 CLR 562 at 609  per Gummow J.
 Joint reasons at .
 Joint reasons at -.
 Joint reasons at -.
 Joint reasons at , .
 cf joint reasons at -. The text of cl 16.5(a) is set out in the joint reasons at .
 cf joint reasons at .
 Joint reasons at .
 I previously accepted that the Hongkong Fir approach introduced flexibility into the classification of contractual terms: see Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689 at 697-698. However, as I have shown, there are other and preferable ways to achieve a flexible result.
 Joint reasons at .}}