Australian contract law Research Paper Example | Topics and Well Written Essays - 1500 words

Australian contract law - Research Paper Example Subsequently however, Big Oil Ltd transferred its ownership to an associated company, Best Oil Ltd, in which it has 40% interest and the Portland Council reacted by withdrawing the 50% concession earlier agreed. The issue here is whether or not the Council of Portland is bound by the agreement between Big Oil Ltd and the Victorian Government with respect to the prerogative of Big Oil Ltd to transfer its ownership to another company in which it has at least 40% interest. Under the law, only the parties to a contract have the right to enforce its terms and be conferred a right or be obligated under it.1 This is referred to as the principle of the privity of contracts, which was first established in Australia in the case of Tweedle v Atkinson.2 A strict application of this doctrine in the herein case would mean that Best Oil Ltd cannot enforce the 50% rating concession as against the Council considering that it was not a party to the contract between Big Oil Ltd and the Council of Portland. It is with respect to that contract only a third party. Nonetheless, the doctrine of privity is not a cut-and-dried rule the way recent cases have allowed exceptions to it. In Trident General Insurance Co Ltd v McNiece Bros Pty Ltd, 3 for example, the High Court allowed a third party in an insurance contract to claim against the insurer, but this is because a corresponding provision in the insurance law specifically grants this right.45 However, the privity doctrine is still enforced in the Australian legal jurisdiction and it is not clear under what particular exception Best Oil Co can invoke it. Best Oil’s argument is that it has a right to the 50% rating concession by reason of an implied term because of the stipulation under the contract with the Victorian Government allowing it to transfer its interest to a company in which it has at least 40% interest in. On the other hand, the Portland Council also invoked implied term in terminating