Contract law update

Is the literal interpretation of a contract always the correct interpretation?

How should a contract be construed when the literal interpretation leads to a result that is uncommercial and, presumably, unintended? Many contract law disputes during 2020, as in previous years, were a product of the tension that often arises between:

• a literal interpretation of the particular words used in the contract; and
• an interpretation that is more commercial and more consistent with the likely intention of the parties.

Numerous cases summarised in this year's Contract Law Update involve Australian appellate courts considering different means for trying to resolve this tension. We examine the most significant recent judgments of Australian appellate courts in the following areas with their relevant cases:

• Interpretation of contracts

  • HDI Global Specialty SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296
  • James Adam Pty Ltd v Fobeza Pty Ltd [2020] NSWCA
  • Pilbara Iron Ore Pty Ltd v Ammon [2020] WASCA 92
  • Kay v Playup Australia Pty Ltd [2020] NSWCA 33
  • Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234
  • Macquarie International Health Clinic Pty Ltd v Sydney Local Health District
  • Wagners Cement Pty Ltd & Anor v Boral Resources (Qld) Pty Limited & Anor [2020] QCA 289

• Implied terms

  • Adaz Nominees Pty Ltd v Castleway Pty Ltd [2020] VSCA 201
  • Wellington & Ors v Huaxin Energy (Aust) Pty Ltd (formerly Cuesta Coal Limited) & Anor [2020] QCA 114
  • Macquarie International Health Clinic Pty Ltd v Sydney Local Health District
  • Glencore Coal Queensland Pty Limited v Aurizon Network Pty Ltd & Ors; Yarrabee Coal Company Pty Ltd & Ors v Aurizon Network Pty Ltd & Ors [2020] QCA 182

• Termination, relief against forfeiture and penalties

  • Neptune Hospitality Pty Ltd v Ozmen Entertainment Pty Ltd [2020] FCAFC 47
  • Kay v Playup Australia Pty Ltd [2020] NSWCA 33

• Damages

  • Berry v CCL Secure Pty Ltd [2020] HCA 27
  • Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234
  • Leeda Projects Pty Ltd v Zeng [2020]
  • Tincknell & Anor v Duthy Homes Pty Ltd & Anor; Duthy Home Pty Ltd & Anor v Tincknell & Anor [2020] SASCFC