LAWS3135(Land(Dealings(
(
((
Intention'to'Contract'for'Land'
'
G"R"Securities"Pty"Ltd"v"Baulkham"Hills"Private"Hospital"(1986)(40NSWLR631(
(
Intention(is(the(decisive(test(to(establish(whether(a(land(contract(was(formed(by(the(parties((
'
Air"Great"Lakes"Pty"Ltd"v"K"S"Easter"(Holdings)"Pty"Ltd"(1985)(2NSWLR309(
(
Three(questions(are(to(be(considered(when(establishing(‘intention’(
((
(1)'Did'the'parties'reach'a'Common'Intention?(–(Consensus(Ad"Idem(
(
The(intention(of(the(parties(must(be(objectively(assessed(from(the(words(used(in(the(light(of(the(
surrounding(circumstances.(Evidence(is(admissible(to(show(that(the(parties(agreed(to(contract(or(
not(to(contract.(Factors(relevant(to(establish(consensus(of(intention:(amount(of(details(in(the(
contract,(the(party’(conduct(after(the(supposed(contract,(payment(of(deposit,(failure(to(follow(
exchange(of(the(standard(form(for(residential(sale((failure(to(follow(the(customary(method(is(strong(
evidence(showing(no(common(intention(to(be(committed),(not(having(the(contract(in(writing(can(
show(lack(of(intention.(
"
(2)'Is'the'Consensus'sufficient?(–Uncertainty(&(Incompleteness((
(
Incompleteness:(If(a(contract(does(not(have(essential(terms(complete,(the(court(will(not(enforce(it.(
A(contract(is(complete(if(the(parties(agree(that(certain(terms(are(to(be(determined(on(a(future(date.(
Where(one(party(has(a(discretion(to(determine(the(price(at(the(future(date,(it(is(still(a(valid(contract((
and(will(not(fail(on(completeness(because(the(term(is(not(left(for(further(agreement(between(the(
parties((although(it(may(fail(due(to(illusory(consideration(i.e(if(the(party(had(an(unfettered(
discretion(when(setting(the(price(–(free(from(an(objective(machinery).(
(
Meehan"v"Jones((1982)(149CLR353:(Significance:(This(case(is(about(an(agreement(appointing(one(of(
the(parties(to(settle(further(terms.(The(term(was(a(condition(that(the(contract(would(proceed(upon(
securing(finance.(For(the(issue(of(Completeness,(the(court(held(that(the(obtaining(finance(was(a(
precedent(to(performance,(not(a(precedent(to(contract.(Therefore,(the(vendor(could(not(withdraw(
himself(from(the(contract(because(it(had(been(completed.(If(it(were(to(have(been(a(condition(
precedent(to(contract(then(he(could(withdraw(because(the(contract(would(be(incomplete(and(with(
illusory(consideration.((
(
Uncertainty:(When(a(term(of(the(contract(is(ambiguous,(and(the(court(feels(it(is(incapable(of(having(
the(meaning(the(parties(intended(the(court(can(sever(it(from(the(contract.(If(the(term(is(vital(to(the(
contract,(the(court(can(strike(down(the(contract((for(example,(if(the(parties(do(not(set(a(price,(they(
must(at(least(provide(an(objective(standard(to(determine(the(price).(There(are(a(few(grounds(that(
usually(render(a(contract(to(be(uncertain:(
(
((((((((((A)'Finality'of'Intention'to'be'Committed:(The(test(is(whether(a(reasonable(bystander(would(
think(the(contract(showed(a(final(intention(to(be(committed(based(on(the(words(and(conduct(of(the(
parties.(The(court(can(look(at(the(offer(and(acceptance(made(by(the(parties(because(testing(for(it(
simultaneously(tests(for(finality(of(intention(–(the(offer(proposes(an(exchange(and(the(acceptance(
shows(an(intention(of(finality(
(
((((((((((B)'Illusory'Consideration:(Although(parties(can(intend(to(be(bound(and(have(dealt(with(
essential(matters,(one(party(could(have(a(qualification(to(remove(all(commitment(to(the(contract,(for(
example,(through(an(unfettered(discretion.(
(
LAWS3135(Land(Dealings(
(
((
Meehan"v"Jones((1982)(149CLR353:(Significance:(All(4(ways(of(establishing(uncertainty(were(tried(
but(were(unsuccessful,(the(Vendor(of(the(property(wanted(to(pull(out(before(the(Purchaser(got(loan(
approval((subject(to(the(purchaser(being(satisfied(of(the(loan(terms).(Mason(J:((A)(There(was(no(lack(
of(finality(of(intention(because(both(parties(were(committed(to(the(sale,(the(loan(was(not(a(condition(
precedent(to(the(sale,(the(loan(was(a(separate(term(and(not(related(to(the(essential(term(of(price.((B)(
There(was(no(absence(of(meaning(in(the(terms(for(loan,(the(court(ruled(it(could(interpret(whether(
the(Purchaser(should(be(‘satisfied’(with(the(terms(C)(There(was(no(uncertainty(of(terms(because(the(
purchaser(being(‘satisfied’(did(not(mean(that(the(price(or(terms(of(contract(were(uncertain.((D)(It(
was(not(an(unfettered(discretion(for(the(Purchaser(to(decide(a(loan(agreement(upon(his(
‘satisfaction’(because(the(court(can(police(whether(the(Purchaser(acts(genuinely(in(saying(the(terms(
are(not(satisfactory.(
(
Australia:(Hall"v"Busst:(Facts:(Busst(enters(into(an(agreement(to(sell(an(island(to(Hall(with(a(
provision(stating(that(if(Hall(ever(wanted(to(sell(the(island,(it(would(need(to(be(offered(to(him(first(
for(the(same(price,(plus(improvements(and(minus(depreciation.(Fullagher,(Dixon(and(Menzies(win(3a
2.(Fullagher:(There(is(intention(to(enter(into(the(contract(with(the(buy(back(provision.(It(is(also(
possible(for(the(court(to(imply(meaning(to(the(provision(and(determine(the(value(of(additions.(
However,(it(should(be(up(to(the(parties(to(decide(the(price(for(a(sale(of(land,(parties(are(not(free(to(
quote(‘reasonable(price(or(fair(market(price’(without(providing(a(mechanism,(because(that(is(not(
settling(a(vital(matter(of(the(contract.(Dixon(and(Menzies:(The(parties(have(specified(the(value,(the(
problem(is(they(cannot(give(meaning(to(‘fair(value(of(additions’(because(they(are(dealing(with(a(
unique(property((an(island).((
(
England:(Sudbrook"Trading"Estates"Ltd"v"Eggleton"[1983](1AC444:(Facts:(There(is(a(lease(between(
the(parties(with(an(option(to(purchase.(Option(is(exercised(and(there(is((an(existing(machinery(to(
work(out(the(sale(price((If(parties(fail(to(negotiate(a(price(no(less(than($75,000(then(they(both(
appoint(a(valuer,(if(they(do(not(agree(on(the(value,(the(valuers(both(appoint(an(umpire).(The(parties(
fail(to(agree(on(a(price,(so(the(purchaser(appoints(a(valuer(but(the(vendor(refuses(to(appoint(one.(
House(of(Lords:(The(machinery(failed,(but(the(parties(intended(that(the(price(be(a(fair(market(price(
so(the(court(is(justified(in(appointing(its(own(valuer(to(get(a(fair(market(price.(COMPARISON,(This(
case(differs(from(Hall"v"Busst"because(machinery(exists(to(work(out(the(price,(the(contract(is(
complete(because(they(have(intended(to(be(bound(and(agreed(upon(that(machinery(to(result(in(a(
price(independent(to(themselves.(
(
Australia:(Booker"Industries"Pty"Ltd"v"Wilson"Parking"(QLD)"Pty"Ltd"(1982)(149CLR600:(The(Tenant(
exercised(an(option(to(reanew(the(lease.(The(parties(could(not(agree(on(amount(so(the(provision(
allowed(an(arbitrator(to(determine(the(amount.(The(landlord(refused(to(join(in(a(request(for(an(
arbitrator.(No(arbitrator(could(be(appointed(unless(both(parties(made(the(request.(High(Court:(An(
option(to(reanew(is(binding.(There’s(nothing(incomplete(about(the(contract,(the(landlord’s(failure(to(
coaoperate(can(be(fixed(through(a(court(order(for(specific(performance(to(request(an(arbitrator.(
COMPARISON,(this(case(follows(Sudbrook"in(that(the(court(CAN(imply(a(‘reasonable(price’(but(only(
for(cases(of(rent(or(for(sale(of(goods(because(precedent(of(Busst"does(not(allow(it(for(contracts(of(
sale.((
(
(3)'Did'the'parties'intend'their'Consensus'to'result'in'a'later'contract?(
(
Parties(usually(agree(on(some(essential(terms(but(provide(that(some(condition(needs(to(be(fulfilled(
before(their(agreement(becomes(a(binding(contract((condition(precedent(to(contract)(or(that(their(
agreement(is(not(binding(until(further(formal(documentation.(
(
Masters"v"Cameron:(Significance:(The(High(Court(created(3(categories(for(situations(where(parties(
reach(an(agreement(but(envisage(a(future(formal(document.(What(will(be(decisive(is(whether(the(
parties(intended(the(informal(agreement(to(be(binding(or(whether(they(intended(not(to(be(bound(
LAWS3135(Land(Dealings(
(
((
until(the(formal(document(was(signed.((
(
((((((((((Category'1:(Parties(have(made(an(arrangement(that(is(intended(to(be(immediately(binding(and(
the(parties(merely(consider(a(prospective(formal(contract(at(some(future(time((the(formal(contract(
may(never(come(into(being(and(until(it(does,(the(terms(of(the(informal(agreement(govern(the(legal(
relationship)(i.e(Branca"v"Cabarro:(The(agreement(between(the(parties(had(the(term(“this(is(a(
provisional(agreement(until(a(fully(legalised(agreement(is(drawn(up”.(The(Court(found(that(the(
parties(intended(to(be(immediately(bound(by(the(provisional(agreement(and(the(payment(of(the(
deposit(also(showed(a(strong(intent(to(be(committed.(Development"Underwriting"(W.A)"Pty"Ltd"v"
Lombardo:"Purchaser(made(an(offer(of($85,000(and(paid(a(deposit(of($29,000(upon(acceptance.(The(
Vendor(accepted(but(there(was(a(special(condition:(‘a(binding(contract(of(sale(shall(be(prepared(by(
the(purchasers(at(their(cost(embodying(the(terms(set(out(above(for(this(purchase’.(Court:(There(is(
evidence(to(show(they(intended(to(be(bound(and(merely(consider(a(prospective(formal(contract(at(
some(future(time(that(will(substitute(the(informal(agreement.(The(words(would(not(have(
outweighed(suggestions(of(an(intention(to(be(bound.(Words(not(as(strong(as(‘subject(to’(as(in(M"v"C.((
(
((((((((((Category'2:(These(agreements(are(different(because(they(have(the(presence(of(a(promise(
(susceptible(to(specific(performance)(to(enter(into(a(formal(contract(or(even(a(promise(to(fulfill(
some(condition(before(entering(a(formal(contract(i.e(Godecke"v"Kirwan"(1973)(129CLR629:(Both(
parties(sign(a(document(with(conditions(for(the(sale(of(land.(An($8,000(deposit(is(paid(based(on(this(
document(which(also(states(that(the(purchaser(will(pay(an(extra($32,000(upon(signing(a(formal(
document(of(the(agreement(within(28(days(and(be(able(to(take(possession((normally(not(able(to(
take(possession(until(full(price(is(paid(and(title(is(transferred).(Court:(The(purchaser(promises(to(
pay($32,000(in(the(agreement(and(take(possession(upon(signing(the(formal(document.(The(parties(
clearly(intended(to(be(bound(on(the(outset(but(made(some(of(the(terms(due(upon(formal(signing(of(a(
formal(document.(Therefore(there(was(a(contract(and(the(court(can(require(specific(performance.(
South"Sydney"Council"v"Royal"Botanic"Gardens:(Sydney(City(Council(entered(an(agreement(via(
correspondence(between(officials(of(both(parties(to(build(a(carpark(on(land(belonging(to(the(
Trustees(of(the(Royal(Botanic(Gardens(and(have(a(lease(lasting(50(years(at(a(nominal(rate.(There(
was(an(issue(that(arose(on(whether(the(trustees(had(power(to(lease(land(they(held(on(trust(for(the(
public(upon(which(negotiations(ceased.(20(years(later,(legislation(was(passed(to(allow(Trustees(to(
enter(the(lease.(Was(there(a(prior(agreement(to(enter(the(contract?(The(parties(had(negotiated(but(
envisaged(a(formal(lease(to(be(executed(and(intended(to(be(bound.(High(Court(ruled(it(was(a(
category(2(case(because(the(Trustees(impliedly(promised(to(get(approval(to(enter(into(the(contract.(
Although,(it(appears(more(to(be(a(category(1(case(where(they(intended(to(be(immediately(bound(
until(a(further(formal(contract.(
(
((((((((((Category'3:(These(agreements(make(it(clear(that(the(parties(have(reserved(their(assent(to(the(
bargain(pending(the(making(of(a(formal(agreement.(It(is(a(question(of(construction(from(the(
language(used(by(the(parties(and(from(all(the(circumstances(of(the(case.(However,(the(phrase(
‘subject(to(contract’(is(almost(always(a(signal(to(the(courts(that(the(parties(do(not(intend(to(be(bound(
until(they(have(made(a(formal(contract(in(the(usual(or(customary(manner(i.e(Masters"v"Cameron:(
Violet(Cameron(decided(to(sell(her(farm(to(Norm(Masters(and(the(terms(were(put(into(a(
memorandum.(Violet(insisted(that(the(memorandum(have(the(terms(“this(document(is(subject(to(
preparation(of(a(more(formal(contract”.(Both(parties(acted(upon(the(agreement,(Masters(moving(his(
things(into(the(house(and(Cameron’(sons(fixing(the(fence.(Masters(was(unable(to(procure(the(funds(
to(complete(the(contract(and(argued(that(the(term(“subject(to(contract”(meant(their(agreement(was(
not(binding.(Based(on(their(actions(alone,(it(would(be(clear(that(they(intended(to(be(bound.(High(
Court:(The(phrase(“subject(to(formal(contract”,(raises(a(strong(presumption(that(there(is(no(
intention(to(be(committed(until(that(formal(contract.(EXCEPTIONS:(In(some(cases,(agreements(with(
the(phrase(‘subject(to(contract’(have(been(found(to(be(valid(contract(because(they(were(found(to(be(
a(‘mere(surplus’(of(words(i.e(Michael"Richards"Pty"Ltd"v"Corporation"of"Wardens"of"St"Saviour’s"Parish,"
Southwark:(The(Wardens(chose(to(sell(a(church(building(and(called(for(tenders.(Richards(put(in(a(