Godecke v Kirwan
(1973) 129 CLR 629
Godecke (purchaser) and Kirwan (vendor) entered into a written agreement for the sale of land which provided, in cl 6, that, if Kirwan required it, Godecke would execute a further agreement containing the terms of that agreement and any other as determined by Kirwan's solicitors (within reason). Kirwan subsequently refused to proceed with the sale. The TJ held the agreement was not binding.
Walsh J: A binding agreement may be made leaving some important matter to be settled by a third party or even, in most cases, by one of the parties. The parties set out all the principal terms governing the sale of land, including ‘an obligation to execute a formal contract’ and a promise by Godecke to ‘execute, if required …, a further agreement’. Walsh considered that requirement should be ‘limited to permitting the insertion of covenants and conditions not inconsistent with those contained in the offer’ and such additional conditions needed to be reasonable – in an objective sense. This was not an ‘agreement to agree’ on additional provisions – but an agreement by Godecke to accept additional provisions if reasonably required.
This was, therefore, not a case ‘in which all the terms of the contract had not been settled’. A binding agreement had been made. Appeal allowed.