Commercial contracts—Australia—Q&A guide
Commercial contracts—Australia—Q&A guide

The following Commercial practice note provides comprehensive and up to date legal information covering:

  • Commercial contracts—Australia—Q&A guide
  • 1. Is there an obligation to use good faith when negotiating a contract?
  • 2. How are ‘battle of the forms’ disputes resolved in your jurisdiction?
  • 3. Is there a legal requirement to draft the contract in the local language?
  • 4. Is it possible to agree a B2B contract online?
  • 5. Are there any statutory or other controls on parties’ freedom to agree terms in contracts between commercial parties in your jurisdiction?
  • 6. Are standard form contracts treated differently?
  • 7. What terms are implied by law into the contract? Is it possible to exclude these in a commercial relationship?
  • 8. Is your jurisdiction a signatory to the United Nations Convention on Contracts for the International Sale of Goods (the Vienna Convention)?
  • 9. Is there an obligation to use good faith when entering and performing a contract?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to commercial contracts in Australia published as part of the Lexology Getting the Deal Through series by Law Business Research (published: June 2020).

Authors: Baker McKenzie—Adrian J. Lawrence; Caitlin Whale

1. Is there an obligation to use good faith when negotiating a contract?

There is no general principle in Australian contract law to use good faith when negotiating a contract.

Australian courts have held that an express contractual obligation to negotiate a matter in good faith can be enforceable. However, an express obligation to negotiate in good faith needs to be drafted carefully to ensure the clause is capable of being given meaning.

A requirement to negotiate a contract in good faith has been imposed by law in select circumstances. The Franchising Code of Conduct requires the parties to a franchise agreement to act in good faith towards each other, including in negotiating the franchise agreement.

Although not a good faith obligation, it is important to note that legislation prohibiting misleading and deceptive conduct is also often relevant to contract negotiations. The Australian Consumer Law prohibits a person in trade or commerce engaging in conduct that is misleading or deceptive or likely to mislead or deceive. These laws apply regardless of the contract value or types of supplies. Silence can be misleading. Contract disputes between commercial parties often include claims that a

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