Parties (clause)

Parties (clause)

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This precedent has been authored by Dr. Morris Averill, Solicitor, Averill Media Legal Services and updated by Dr. Gordon Hughes, Principal, Davies Collison Cave Law.

Introductory note

It is at times useful to specify the parties to a contract by way of a separate clause in order to eradicate doubt or confusion. This could be necessary where there are multiple parties or signatories, where joinder of parties is envisaged or where corporate or firm names need to be specified to comply with regulatory or court requirements.

It is fundamental to the enforceability of a contract that the parties be identified clearly and that they are the correct parties. Factors to consider include:

• the named parties may not necessarily be the parties that negotiated the contract;

• the named parties will be served with:

 o notices in relation to performance and termination; and

 o pleadings and notices in relation to any litigation;

• naming the contracting parties will disclose their legal identity;

• identification of the contracting parties may disclose the need to:

 o join other parties, such as related entities, to the contract; or

 o obtain letters of comfort or guarantees from related entities;

• a named party that enters into a contract on behalf of a company before it is registered may assume liability in certain circumstances (see Corporations Act 2001 (Cth) section 131);

• the number of parties to a contract may affect the documents to be filed together with originating process in any litigation. In New South Wales, a list of parties must be filed. (See Uniform Civil Procedure Rules 2005 (NSW) rule 4.2A) In the ACT, the names of the parties appear on the originating claim (Form 2.1) or the originating application (Form 2.7) but there is no freestanding requirement to file a list of parties (see Court Procedures Rules 2006 (ACT) rules 50 and 60);

• the full names of the parties should be set out at the beginning of the document. However, this may occur in a separate schedule at the end of the document in multi-signatory contracts such as an investment agreement.

• companies entering into contracts should identify the name of the company as registered, its liability (such as "Pty Ltd" or "Ltd"), its status if it is in liquidation or receivership or administration, the Australian Company Number and registered office address. The company’s ACN must be included when the company’s name is first used in the document (see Corporations Act 2001 (Cth) section153);

• contracts entered into by partnerships should identify each partner, unless the partnership operates by way of a firm name (see eg Partnership Act 1958 (Vic) section 10);

• incorporated limited partnerships and limited liability partnerships should disclose the full name of the firm, the registered number and registered office address;

• contracting individuals should include their full name and residential address;

• whether the obligations of the parties will specifically bind other parties who may succeed them; and

• it may be appropriate to consider if a party is a foreign person under the Foreign Acquisition and Takeovers Act 1975 (Cth).