Baldwin & Anor v Icon Energy Ltd & Anor
The decision of Baldwin & Anor v Icon Energy Ltd & Anor  QSC 12 which was decided in the Supreme Court of Queensland highlights the uncertain effect of clauses in pre-contractual documents such as MOUs requiring the parties to negotiate agreements in good faith or using reasonable endeavours.
In June 2008, the second plaintiff, Southern Fairway Investments Pty Ltd, entered into a Memorandum of Understanding (MOU) with the defendants Icon Energy Pty Ltd and Jakbar Pty Ltd. The second defendant, Jakbar Pty Ltd, was a subsidiary of the first defendant, Icon Energy Pty Ltd. Under the MOU, the parties agreed to negotiate towards entering into a gas supply agreement (GSA) however, no GSA was ever concluded between the parties. Consequently, Southern Fairway Investments Pty Ltd initiated proceedings against the defendants alleging that they had breached the MOU by failing to perform the promise to negotiate towards concluding a GSA. The plaintiff company alleged that it had suffered damages of over $220 million due to the lost opportunity of concluding the GSA.
The MOU contained a requirement that its signatories were to use their “reasonable endeavours” to negotiate a GSA, and that each party must “work in good faith” to progress negotiations towards a concluded GSA, as well as a schedule which listed the key matters to be negotiated between the parties.
The first plaintiff, Ronald Baldwin, alleged that his contract with Icon