LWN301 Principles of Australian Contract Law

Task:

NQL is a contractor operating in Queensland.  It entered into a contract to purchase a tunnel boring machine from CPPL. It was agreed that CPPL would deliver to Bradfield Downs a CPPL-X built to NQL specifications for a total price of $20 million.  The contract included the following:

• $5 million payable on procurement of the electric motors
• $10 million on delivery to site
• $5 million on successful commissioning of the machine

It was a term of the agreement that the machine was to be delivered on or before 1 September and time was of the essence.

The electric motors were procured by CPPL and delivered to its Ipswich factory and NQL made the first payment. CPPL commenced work and had completed 50 % of the build when staff were reallocated to an urgent job. On 8 June CPPL advised NQL that it was behind in its schedule and that a review would be conducted to determine which

of CPPL’s current orders would be completed and when but that in a “best case scenario” the CPPL-X ordered by NQL would be delivered no earlier than 1 December.

1. Can NQL immediately terminate the contract on 8 June?

1. Assuming that NQL can terminate the contract immediately, is NQL obliged to pay the balance of the contract price or any amount for work done under the contract. In your answer also consider whether NQL is entitled to recover any payments it has already made under the contract.