King & Wood Mallesons

Asia-Pacific 100 position: 3

Contract law update: Schwartz v Hadid [2013] NSWCA 89

In this decision, the New South Wales Court of Appeal considered the principles relating to the construction and interpretation of contracts, specifically whether recourse may be had to prior proposals and negotiations in interpreting a contract.

This case makes clear that ambiguity in the language of the contract must be identified before the court can have regard to evidence of the surrounding circumstances of a contract. Accordingly, parties to contracts must ensure that the written contract is clear and covers all relevant issues between the parties, as pre-contractual negotiations and discussions will often be inadmissible in interpreting a contract.

This decision related to appeals in two separate proceedings: the joint venture proceedings and the loan proceedings. This note will focus only on the joint venture proceedings…

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