A Reminder Why Certainty In Contracts Is So Important

In the recent New South Wales Court of Appeal decision Port Macquarie-Hasting Council v Diveva, the Court considered the contractual interpretation of a renewal clause. The clause was phrased in general terms and did not specify by whom the clause was exercisable.

This case has important implications for the interpretation of renewal clauses which you should be aware of when drafting or entering into contracts.

Background – facts of the case

Diveva, a construction company specialising in the asphalt works, had an ongoing relationship with Port Macquarie-Hastings Council as the result of being the successful bidder for tenders from the Council in 2005, 2008 and 2011.

The 2011 agreement contained a clause which said: