You web browser may not be properly supported. To use this site and all its features we recommend using the latest versions of Chrome, Safari or Firefox

Invoices, quotations and purchase orders – for many businesses it’s probably referred to as ‘paperwork’. But in the absence of a written contract between two parties this paperwork can take on extra importance, and the wording within could be assessed in a dispute.

Commercial disputes often arise from contracts where one party alleges that the contract they signed did not reflect the agreement reached. Often a contract is ambiguous, in some cases the only real evidence of a contract is the invoice or purchase order. In high volume or high turnover businesses, it can be critical to ensure that the wording on quotations, invoices or purchase orders is detailed and accurate.

When a dispute arises around the terms of a contract, there are accepted ways any ambiguity on terms will be resolved. In the first instance the court will look to the text of the contract and not at any extrinsic material such as emails or other documents.

Given the primary importance of the terms of what’s written in the contract, careful attention must be taken in the day-to-day running of your business to avoid disputes arising from even simple contractual transactions based off an invoice or quotation.

The High Court in the recent case of Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37 confirmed that if a dispute arises around the terms of a contract, the following matters may be considered:

  1. If the terms of a contract are clear, evidence of surrounding circumstances cannot be used to contradict the plain meaning of those terms.
  2. If a contract is unclear, events, circumstances and other factors external to the contract may be necessary to identify the commercial purpose of the contract or to give clarity to the terms of the contract.
  3. Only events, circumstances and factors external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction are admissible.
  4. A commercial contract should be interpreted so as to avoid it "making commercial nonsense or working commercial inconvenience". This means where the terms are unclear, a court will not favour an interpretation that would clearly be at odds with the standard industry practice.

In short, parties to a contract will be bound by the written language of the contract. However, where there is ambiguity, the circumstances of the particular contract or industry custom and practice may be important to determine what the parties intended. To avoid these contractual disputes, care should be taken to document an agreement even where the contractual terms are contained in documents as simple as quotations and invoices.

The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.

Thank you for your feedback.

Related blog posts

Consumer and the Law
Liar loans: how mortgage brokers are putting clients at risk

The term ‘liar loans’ has been coined on the back of the Banking Royal Commission. This is because studies have shown almost 40 per cent of loan applications completed through mortgage brokers contained at least one factually incorrect statement. Whether mortgage brokers are providing lenders with incorrect information, or information that is out-of-date, they are putting themselves – and their clients – at risk. A recent study conducted by the Consumer Credit Legal Centre in New South Wales identified some mortgage brokers were breaking the law when filling out loan applications for their clients. Common examples included brokers suggesting their clients provide a different answer...

Planning desk close up documentresize
Consumer and the Law
How to lodge a complaint with Australian Financial Complaints Authority

The Australian Financial Complaints Authority (AFCA) acts as the middleperson between financial firms and consumers or small businesses, offering free and independent dispute resolution services. It deals with complaints about financial advice, insurance, banking and superannuation products and services. While the time limit to lodge a complaint to AFCA is usually between two and six years, the Australian Government recently created the opportunity for those with complaints up to 10 years old to come forward. This means consumers and small businesses have until 30 June 2020 to lodge complaints dating back to 1 January 2008. To lodge a complaint, you must follow AFCA’s process. It is...

How to lodge a complaint with Australian Financial Complaints Authority
Business Law
Proposed Changes to the Franchising Code of Conduct

Franchising is big business in Australia, with approximately 1,120 franchise systems and 79,000 franchise units operating nationally1. As franchising is a diverse sector with characteristics that are unique from other business models, franchises are governed by a mandatory Franchising Code of Conduct (Franchising Code).2 The Parliamentary Joint Committee on Corporations and Financial Services recently completed an inquiry into the operation and effectiveness of the Franchising Code and has released the Fairness in Franchising Report (Report).3 Some of the key findings and recommendations of the report are discussed below. The Committee recommends that the Australian Government establish an...

Waitress In Black Apron Upload

We're here to help

Start your online claim check now. Or, if you have a question, get in touch with our team.