Introduction

What is the purpose of contract law? Is it just a set of rules—like the rules of a game—with which parties must comply or face the consequences? Or is it primarily a means for trying to ensure a just outcome consistent with the parties' agreement? Contract law does, of course, have elements of both purposes, and sometimes there is tension between them. For example:

• Do the rules of 'offer and acceptance' allow for any flexibility if the acceptance does not exactly match the offer?
• What happens if the parties' contract includes a mechanism that doesn't work? Is that just bad luck, or can the court step in to fix the problem?
• What happens if a notice under a contract fails to comply with a contract in an immaterial manner? Is the notice invalid because it 'breaches the rules', or can the court consider the underlying reason for requiring a notice?
• If there are many parties to a contract, and two parties agree to vary a term that only affects those parties, does that infringe a 'rule' that every party must agree to the variation?
• Does the rule that 'past consideration is not good consideration' invalidate a contract where, in substance, parties have in fact each given something to the other?
• Does an agreed variation to a contract have no effect if it fails to comply with a clause requiring variations to be signed?

Each of these issues was considered by Australian appellate courts during 2025 and, on each occasion, the court applied principles of contract law in a manner that gave priority to upholding the parties' intention, rather than applying rules for the sake of rules. These outcomes emphasise the flexibility of the common law of contract to achieve a just outcome on a principled basis—a flexibility that can be harder to achieve when contract law is sought to be reduced to a code.

Please read on to see how the courts applied principles of contract law to achieve these outcomes, and to see what other contract law issues attracted the attention of Australian appellate courts in 2025.