Book Review: Long Term Contracts

Unsurprisingly, Long Term Contracts addresses aspects of the law relating to contracts of a long duration.

The essays in the book are drawn from papers presented at a conference held in Perth in 2012 which brought together members of the judiciary and bar, academics, and legal practitioners, mainly from Western Australia, to consider the commercial and legal issues arising under contracts of extended duration.

As observed in a Foreword by the Hon Justice Gummow, it is difficult in Australia to think about long term contracts without also thinking of resource and energy contracts. And indeed the contributions in this edited collection of papers approach the topic of long term contracts through the framework of resource and energy contracts. Nevertheless, many of the problems addressed by the contributors are not confined to contracts of that kind, and are common to long term contracts of all varieties including franchise agreements, commercial leases, and agency agreements.

Long term contracts, though they present special difficulties in the application of received doctrine, have not produced a distinct body of doctrine. Despite this circumstance, in an interesting section, former Federal Court Justice Paul Finn explores the impact of a contract’s duration on contractual doctrine, good faith and fiduciary obligations.

Topics dealt with by other contributors include questions posed by the prospect of changed circumstances, the difficulty in predicting potential contingencies that can arise over the term of a long term contract, and limitations in the common law’s response to unexpected events in the context of force majeure clauses.

Francis Douglas QC and Colin Lockhart (author of The Law of Misleading or Deceptive Conduct which is now in its third edition) examine competition law aspects of long term contracts, noting that de-risking long term energy and resource contracts commonly involves exclusive dealing provisions and price setting regimes.

Attention is given to the problems of price adjustment mechanisms, focusing on re-determination and re-negotiation processes, and termination clauses. The status of State Agreements (whether statutory or contractual or both) is examined. The book concludes with sample price adjustment and force majeure clauses.

The book presents a mix of theoretical analysis and practical perspectives by experienced resources practitioners, both transactional lawyers and litigators.

As can be expected, decisions of the Queensland courts contribute strongly to the case law in the area of long term contracts in the energy and resource sectors.

This collection, in the current phase of the local resources and general financial cycle, is undeniably a smart and effective showcase for the depth of experience of our ‘western’ brothers in the area of resource and energy contracts.

Charles Wilson

Chambers

26 August 2013