Q&As

Is a dispute resolution clause still binding between the parties when a contract terminates?

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Published on LexisPSL on 25/01/2018

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Is a dispute resolution clause still binding between the parties when a contract terminates?

Is a dispute resolution clause still binding between the parties when a contract terminates?

This Q&A focuses on whether a dispute resolution clause is binding between the parties in the event of a breach of contract leading to termination.

Generally, whether or not a contractual term operates after termination is a question of construction (Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Australia) Pty Ltd). If the parties expressly provide that a particular term is, or is not, to be enforceable when a contract terminates, the parties’ agreement will be enforceable. See Precedent: Survival of termination clause which allows parties to select clauses in an agreement that will survive termination of the agreement as a whole.

When there is no express agreement, the courts will be left to decide what the parties must have intended. For a summary of the principles used by the courts when interpreting the meaning of contracts, see Practice Note: Contract interpretation—the guiding principles.

Clauses which can be considered procedural in nature are generally intended by the parties to be enforceable notwithstanding termination. Clauses of this nature will remain in full force and in effect when a contract terminates (Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Australia) Pty Ltd). A dispute resolution clause is an example of a procedural clause as the intention is that the parties resolve disputes outside of

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