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Meates v Westpac Corp, The Times (5 July 1990)

Intention to create legal relations in the formation of contracts with governmental bodies.

Facts

Mr. Meates was a businessman who supported the campaign of the leader of the New Zealand Labour Party in 1972. Throughout the elections in 1972 and extensive discussions in 1973, the Government presented arrangements for projects to establish new industrial undertakings, as well as conversations with Mr. Meates, pursuant to which he took out loan capitals. A 1974 press release re-affirmed the Government’s assured creditors and shareholders of their interests being safeguarded in respect of the projects. Following failures of the Government, Mr. Meates brought an action against the Government for his outstanding liabilities.

Issue

The question arose as to whether the dealings between the Parties constituted an intention to create legal relations so as to have implicitly formed a binding contract through (1) the negotiations and conversations, and (2) governmental press releases.

Held

The Court stipulated that, as a general rule, governments and large corporations are only held to have the intention to be bound solely by formal written agreements, which are often reached pursuant to extensive reflections and negotiations. On the facts, firstly, the negotiations and dealings throughout 1972-1974 to guarantee the indebtedness of parties to the project were merely a “hypothetical percipience,” (p 7) that did not extend to constructing a contract between the persons who neither intended nor indicated an intention to make one. Secondly, the press announcement in 1974 by the Government was not capable of construction, as a legally-binding obligation to safeguard all interests of unsecured creditors. Further, the Government cannot be held to have the intention to be bound allegedly implied terms from conversations and press statements to the denial of otherwise formal written documents. Thus, the Government was not held to have formed contractually-binding obligations through the dealings.

Word Count: 297


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