Thorough drafting of contracts to avoid half-truth disclosures

Case

A recent Court of Appeal decision, 191 Bells Pty Ltd v WJ & HL Crittle Pty Ltd [2024] NSWCA 221, examines whether WJ & HL Crittle Pty Ltd (Vendor) engaged in misleading or deceptive conduct by failing to disclose contamination on the land, including material buried in the “Pits,” prior to entering the Option Deed with 191 Bells Pty Ltd (Purchaser).

The Purchaser claimed that the misleading or deceptive conduct arose from the Exclusivity Agreement and the due diligence period. In particular:

• the Vendor had a positive obligation or reasonable expectation to disclose all matters which were potentially relevant to the due diligence process; and

• the Vendor did not positively represent that it had disclosed there was no contamination, or other matters affecting the land.

Findings

The court dismissed the appeal and affirmed the primary judge’s interpretation of the Exclusivity Agreement and the Contract for Sale. It determined that the Vendor was not obligated to proactively disclose information to the Purchaser. Furthermore, the disclosures within the Contract for Sale neither created a reasonable expectation of further disclosure nor constituted a half-truth regarding contamination.

If the parties intended for the Vendor to disclose specific information, such a requirement would have been explicitly included in the Exclusivity Agreement.

Key Takeaway 

As highlighted in our previous article, contracts must be drafted with precision and clarity to accurately reflect the parties’ intentions and binding obligations. This is essential to minimise the risk of disputes and lengthy litigation.

A failure to explicitly address key obligations or expectations can leave room for differing interpretations, leading to unnecessary legal battles. Incorporating specific clauses tailored to the nature of the agreement ensures that both parties are clear on their respective responsibilities. Ultimately, well-drafted contracts save time, money and resources by reducing the likelihood of misunderstandings or disagreements.

For more assistance with drafting clear and effective contracts, please contact one of our people.

Ron Zucker 0410 590 111

Eollyn Cortes 0478 727 395

Sagang Chung 0431 435 333

Julia Zou 0426 670 202