What have I signed up for? A recent exercise by the Court of Appeal in contractual interpretation

Where one has a purported deed or a ‘heads of agreement’ type of document, when might that document be binding and when might it fall short? And when might someone who has not signed the document still be a ‘party’ to it?

Nurisvan Investment Ltd & Anor v Anyoption Holdings Limited [2017] VSCA 141


The facts

One of the applicants, Nurisvan Investment Ltd (Nurisvan), and the respondent, Anyoption Holdings Limited (Anyoption), were companies registered in Cyprus. Nurisvan was sole shareholder of the other applicant, FIBO Australia Pty Ltd (FIBO).

In late 2014, the parties entered into negotiations with a view to Anyoption purchasing all of Nurisvan’s shares in FIBO. To that end, Anyoption and FIBO executed a document titled ‘Binding Heads of Agreement’. Nurisvan was named as a party to the Heads of Agreement but did not sign the document. The Heads of Agreement provided for the parties to subsequently enter into a share sale agreement.

Anyoption and FIBO (but not Nurisvan) executed the Heads of Agreement in December 2014, and the parties began negotiating the terms of the share sale agreement.

Negotiations came to a halt in late 2015 when Nurisvan indicated to Anyoption that it did not consider itself bound by the Heads of Agreement. Anyoption, seeing things differently, commenced proceedings seeking specific performance of either the Heads of Agreement or a draft version of the subsequent share sale agreement. The primary judge found in Anyoption’s favour and ordered specific performance of the share sale agreement.

The decision on appeal

The Court of Appeal allowed the appeal. In so doing, it considered, amongst other things, the following questions:

  1. Whether Nurisvan was party to and purportedly bound by the terms of the Heads of Agreement notwithstanding that Nurisvan had not executed that document.
  2. Whether the Heads of Agreement, If Nurisvan was a party to it and purportedly bound by its terms, was binding and enforceable in its own right or whether it was merely an ‘agreement to agree’ in the future, with respect to the later share sale agreement.

In answering the first question in the affirmative, Osborn, Santamaria and Kaye JJA in a joint judgment said generally of a heads of agreement:

‘In an appropriate commercial context, in which the parties have clearly attached themselves to such a document, it would be incongruous if such a document should not be treated as part of the contractual arrangements between parties’: [57].

The issue of whether the Heads of Agreement bound a party who had not executed it was somewhat more complicated. Nurisvan had not executed the Heads of Agreement and, indeed, there was no provision on the face of the document for it to do so. In considering whether Nurisvan was party to it, the Court noted that ‘[the] question must be determined objectively, by an evaluation of the contractual document and the circumstances in which it was executed’: [71].

Although the Court held that ‘there is no settled view in the authorities whether post-contractual conduct may be relied on to found or support an inference as to the identity of a party to the contract’ (at [77]), their Honours nonetheless identified circumstances in prior cases where the conduct of parties, subsequent to entry into a contract, constituted an admission by a particular party that it was party to the contract.

Their Honours considered that Nurisvan was ‘plainly a necessary party to any contract’ for the sale of shares and that there could be no valid share sale contract unless Nurisvan was party to the Heads of Agreement, being the document paving the way for the later share sale contract: [84]. The Court considered:

‘[T]he post-contractual conduct of the parties was relevant to the issue, not only of the identity of the parties to the contract, but also, necessarily, to the existence of the contract itself. … [I]n a case such as this, the question whether a contract was formed necessarily involves the question whether it was formed between Anyoption and Nurisvan, since contracts do not exist in the abstract’: [84], emphasis added.

The Court identified a number of emails passing between the parties during the negotiations for the share sale agreement so as to infer that Nurisvan had accepted its role as party to the earlier Heads of Agreement.

In answering the second key question — whether the Heads of Agreement bound the parties to then enter a share sale agreement — the Court was guided by the principles in Masters v Cameron[1] and looked to the objective intention of the parties in entering the Heads of Agreement. The Court considered the language of the Heads of Agreement and held that it ‘constituted no more than a contract between the parties to negotiate, in good faith, with respect to entering into an agreement … for the sale of … shares’: [113]. The Court considered the following qualities of the Heads of Agreement, amongst others, to be relevant to that conclusion:

  • the use of expressions such as ‘wish’ and ‘intention’ in the document with respect to subsequently entering into a share sale agreement;
  • the presence of terms which would otherwise be superfluous if the document were itself to be a binding agreement to sell shares, such as a clause forbidding the parties from negotiating with any third party about the sale of shares.

The Court also referred to the draft of the share sale agreement itself — the version on which Anyoption had sought specific performance — which showed that a number of terms had yet to be negotiated.

The Court concluded that the Heads of Agreement did not bind the parties to sell the shares. For that reason, the appeal succeeded and the primary judge’s order for specific performance fell away.


The Court’s approach in Nurisvan Investment Ltd & Anor v Anyoption Holdings Limited makes it clear that evidence of post-contractual conduct can be admitted when identifying the parties to a contract. The weight given to that evidence might be greater in circumstances where, as a matter of logic, the conduct with respect to one agreement would be expected to bear upon another, related agreement. Such was the case here with the parties’ draft share sale agreement and its relationship to the prior Heads of Agreement.

The decision also provides a good illustration of how the principles of contractual interpretation can apply when ascertaining whether one document binds parties to another document or course of action, and highlights the need for parties to choose their (written) words carefully.

[1] (1954) 91 CLR 353.

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