AN AMBIGUOUS CLAUSE WITH TEETH

In a recent Queensland case Parkinson -v- Mackay Sugar [2018] QSC168 the Court looked at the meaning of the words “in consultation with”.

In dispute were the terms of a cane supply and processing agreement which contained a clause to deal with prices. The clause provided a mechanism for a change in price by the processor “in consultation with” the cane growers.

Unilaterally and by deed poll, the processor changed the price it paid for sugar (by imposing a levy) and the growers were only consulted after the event.

Whilst the Court acknowledged that the clause was ambiguous, it made no commercial sense that one party could unilaterally decide the price to be paid for its inputs.

Further the Court held that consultation after the event was insufficient and that the clause implied, to give it something to do, that consultation and any change in price should occur in combination (i.e. at the same time) rather than two distinct steps of (a) consultation and then, (b) price setting.

This is an example of the importance of clear contractual language that reflects the intentions of the parties.