NIRAD PTY LTD v COMMONWEALTH BANK OF AUSTRALIA [1988] NSWCA 104

NIRAD PTY LTD v COMMONWEALTH BANK OF AUSTRALIA SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

McHuGH, SAMUELS and Hope JJA 7 June 1988, 17 November 1988 [1988] NSWCA 104

CONTRACT — forward exchange contract — instruction by customer to bank to purchase US dollars at rate of 0.6626 = $1.00 — instruction accepted by bank officer — bank's foreign exchange dealer had to confirm the rate to another officer who had to prepare written forward exchange contract for signature by customer — bank intending to sell at rate of 0.6606 $41.00 — written contract containing rate of 0.6606 sent to customer — not signed — Held: no contract between parties.

McHugh JA This appeal is brought by Nirad Pty Ltd against an order made by Yeldham J sitting in the Commercial List of the Supreme Court. His Honour held that Nirad was obliged to pay the respondent, Commonwealth Bank of Australia (the Bank), damages for breach of a contract made on 26 June, 1985 by which Nirad agreed to buy from the Bank the amount of $1,514,610.10 in US Dollars.

The question in the appeal is whether in the circumstances of the case the statement, "Hedge the full amount for one month" and the reply "I will arrange that for you" constituted an immediately binding contract between the parties.

The nature of the proceedings

In 1985 the Bank agreed to provide Nirad with a "Bills acceptance and discount facility" for the United States dollar equivalent of $2,300,000. This money was required by Nirad to discharge a debt owed to a foreign creditor. Under the agreement, the facility was to be reduced by the United States equivalent of $1,500,000 within three months of the date of the first draw-down and the balance was to be repaid twelve months after that payment. The agreement also made provision for earlier repayments. On 28 June the first and only draw-down occurred. The amount involved was the United States equivalent of $2,260,612.10.