February 28, 2023

In Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39, the High Court of Australia was required to construe the terms of an informal oral agreement.

The case concerned the terms of an agreement between Hardingham, a professional residential property photographer, and real estate agencies to whom he and his company REMA supplied photographs and floor plans for marketing campaigns.

The central question was whether Hardingham agreed that the real estate agencies could sub-licence the use of his copyright materials, to the Realestate.com.au (REA) platform:

  •    on the standard terms that REA required for all advertising submissions, which included a perpetual licence and ability to sub-licence, thereby allowing REA and a sub-licensee RP Data Pty Ltd (RP Data) to store and publish the materials indefinitely; or
  •    on terms that permitted this only for the duration of the marketing campaign.

This required the High Court of Australia to consider the terms of the informal oral agreement. All judgments reinforced the objective approach to contract construction, and recognised the enduring application of the major authorities in this area.

However, despite all finding that Hardingham’s licence to the real estate agencies permitted them to sub-licence to REA in accordance with REA’s standard terms, there were different approaches:

  •    Kiefel CJ and Gageler J held that it was necessary to have regard to the parties’ words and conduct, in identifying what a reasonable person would conclude were the terms of their agreement. Because there was no evidence that Hardingham had said anything about the terms of the sub-licence to REA, in circumstances where Hardingham knew a key purpose of the agreement was for photographs and floor plans to be marketed on its website, there was a ‘tacit understanding’ that REA and RP Data could continue to use Hardingham’s materials after the relevant campaign.
  •    Similarly, Gordon J found that Hardingham’s knowledge of the agreement between REA and RP Data and the terms on which agencies uploaded materials to REA, demonstrated the terms of the licence which expressly formed part of the oral informal contract between Hardingham and the real estate agencies.
  •    In contrast, Edelman and Steward JJ warned against an approach which treated informal contracts as being subject to different rules or principles from formal contracts. They observed that for all contracts, the exercise must be to identify the express terms (which can only be identified in words, whether written or oral) before considering the existence of implied terms. They concluded that since Hardingham and the agencies had not discussed limitations that would apply to the licence, the “natural and obvious implication” in their agreements was that the agencies had a licence to use the photographs and floor plans on the standard terms and conditions applying to contracts between the agencies and REA.

The full decision can be found here.

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