Insight

Is an unsigned contract enforceable?

Things were going great: you had just won an important tender with a big new customer, and it was going to take your business to the next level.

07 June 2024

Insight

What is the effect of making time of the essence in a contract?

Sometimes a contract will provide that ‘time is of the essence’ either in relation to some or all of the obligations under the contract.

24 May 2024

Insight

Is there an implied right to sublicense software?

You have entered into a licence agreement with a software provider to use a brand-new contract automation tool for your business.

17 May 2024

Insight

What is the Ipso Facto rule?

You are in the midst of negotiations with a supplier for some business critical software. The supplier isn’t one of the bigger players in the market but they offer a market leading software product for a specific function in your business.

07 May 2024

Insight

Is a variation valid if no new monetary consideration is provided?

For a variation to be contractually binding, the variation itself must satisfy all of the legal requirements to form a valid contract, including through the provision of valuable consideration by each party.

15 December 2023

Insight

What is the difference between a liquidated damages clause and a penalty clause?

A customer under an IT contract may want the supplier to pay a pre-determined amount for certain types of breaches, such as a service credit where they fail to meet an agreed service level or an amount of liquidated damages if they fail to achieve an important project milestone by the due date.

08 December 2023

Insight

What is the difference between a ‘binding’ and a ‘non-binding’ memorandum of understanding?

An MOU can help the parties to ensure they are ‘on the same page’ before investing time and effort in negotiating a formal contract.

01 December 2023

Insight

Is a service provider entitled to be paid if they start work before a contract is finalised?

In a highly competitive market, IT service providers are often very motivated to secure new customer mandates even if it means working to exceedingly ambitious deadlines set by the customer.

24 November 2023

Insight

What is the difference between ‘gross’ negligence and ‘normal’ or ‘mere’ negligence under Australian law?

It is common for the parties to an IT contract to want to limit or exclude their liability under the contract in some way.

13 November 2023

Insight

When can a contract be terminated at common law?

When considering options to end a contract, it is important to consider rights to terminate the contract at law in addition to any specific termination rights that may apply under the negotiated terms of the contract. Rights at law are also important to consider during the negotiation and drafting of the contract, as it may be appropriate to exclude rights at law so that the rights in the contract itself are in effect exhaustive.

08 September 2023

Insight

When can a related entity bring a claim under a contract?

It is common for IT contracts to be entered into for the benefit of a corporate group. In such arrangements, the contract will in effect purport to confer rights on third parties that are related to the contracting entity. However, privity of contract may prevent the related entity from directly enforcing the contract. In these cases, various other enforcement options may need to be considered.

01 September 2023

Insight

What is the difference between force majeure and frustration?

In situations where a party to a contract is prevented from performing its contractual obligations by an event beyond their control, the concepts of force majeure and frustration come into play. However, there are key differences in:

25 August 2023

Insight

What is indirect and consequential loss?

An important function of many IT contracts is to allocate liability for certain types of loss between the parties. For these purposes, contractual liability provisions commonly distinguish between ‘direct’ losses and ‘indirect’ or ‘consequential’ losses. From a supplier perspective, a typical default position under an IT contract is that the supplier will only be liable for direct losses, and then subject to overarching liability caps and exclusions set out in the contract. Suppliers are generally less willing to accept liability for indirect or consequential losses. The rationale for this position is that anything beyond the direct impact of a breach by the supplier is a business risk that should remain with the customer and not be transferred by contract to the supplier.

18 August 2023

Insight

What additional protection does an indemnity provide?

Indemnities are often included in IT contracts as a way of allocating liability between the customer and the supplier. Depending on how it is drafted, an indemnity can offer broader protection and certainty to the indemnified party compared to simply relying on a claim for damages under a breach of contract. For example, an indemnity claim may not be limited by principles of causation, remoteness, and mitigation in the same way as a breach of contract claim would. Indemnities may also be used to allocate liability where there would be no underlying breach of contract (i.e. where there would otherwise be no basis to bring a claim to be compensated for loss or damage that has been incurred).

10 August 2023

Insight

What is proportionate liability?

Questions about proportionate liability arise where loss or damage is caused by more than one wrongdoer. Proportionate liability deals with the ways in which liability can be allocated between different defendants who have all contributed to a plaintiff’s loss. For example, this may arise in a multi-vendor environment where there are a number of contractors working on the same IT project and the overall outcome of the project is adversely impacted by different failures by different contractors. In this case, laws on proportionate liability will determine what loss and damage the principal is able to recover from each contractor.

04 August 2023

Insight

What is the difference between ‘reasonable endeavours’ and ‘best endeavours’?

If the achievement of a particular outcome is not entirely within a party’s control (e.g. because it may depend on the actions of an independent third party), then that party may naturally be reluctant to accept an absolute contractual obligation to achieve that outcome. In these cases, the party in question may be more comfortable undertaking to use ‘reasonable endeavours’ or ‘best endeavours’ (or some similar permutation, such as ‘reasonable efforts’ or ‘best efforts’) to achieve that outcome. However, it is not always clear what the difference between these standards is.

28 July 2023