This matter concerned an appeal from the decision of the Queensland Supreme Court. Wagners Cement and Boral Resources had entered into a formal agreement concerning the purchase of cement products over a fixed term. Critically, the formal agreement contained a price adjustment provision (requiring the issuance of a pricing notice by Boral) that could either be accepted or rejected by Wagners following the issuance of a suspension notice, suspending the supply of cement.
The dispute between the parties, both at trial and on appeal, concerned the validity of several pricing notices and suspension notices. It ultimately centred on the proper construction of the contract. On appeal, Boral’s March Pricing Notice was invalid, not enlivening Wagners’ election rights. However, the April Pricing Notice was deemed valid, Wagners’ power to elect to commence the suspension period was enlivened, entailing that Wagners’ May Suspension Notice was validly created. The October Pricing Notice was deemed valid by Fraser JA on the basis that the proper construction of the provision was to reflect the commercial purpose of Boral being able to take advantage of the fluctuating market price, despite being in a valid suspension period.
This case reiterates the importance of clear and effective contract drafting, particularly of price adjustment provisions in long term supply contracts and of following notice requirements under contracts.
David Chesterman (with J McKenna QC) appeared for the appellants, instructed by Norton Rose Fulbright.
The  QCA 289 judgment is published here.
The  QCA 79 judgment is published here.