“When Can A Nominee Sue On The Contract?”

A recent Federal Court decision concerning the sale of a licensed hotel illustrates some of the difficulties a nominee purchaser may confront when they try to sue on the contract.

In Avzur Hotels Pty Ltd v Ivanhoe Entertainment Pty Ltd¹ the Court determined, as a separate issue before trial, whether a nominee under a contract for the sale of a licensed hotel business could sue the vendor. The nominee claimed the vendor had breached certain warranties relating to the financial performance of the business.

The Court was asked to decide whether the contract of sale permitted the appointment of a substitute purchaser for, or in addition to, the named purchaser, or whether the nomination was no more than a direction to the vendor to transfer the business to the nominee.