The Case Of An Mou ( Icon ) And Their Subsidiary Jakabar Pty Ltd
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An MOU (‘Memorandum of Understanding’) was entered into between the defendants, Icon Energy Ltd (Icon) and their subsidiary Jakabar Pty Ltd and the second plaintiff, Southern Fairway Investments Pty Ltd (Fairway). An MOU describes a bilateral or multilateral agreement between two or more parties that expresses a convergence of will between them, indicating an intended common line of action. This pre-contractual document stipulated that the parties would enter into negotiations for a GSA (Gas Supply Agreement). However no GSA was ever agreed to between the parties. The second plaintiff then proceeded to sue the defendants on the grounds that they had breached the terms of the MOU by failing to adhere to their promise to negotiate. The…show more content… The MOU contained clauses that the parties would ‘use their reasonable endeavors to negotiate a GSA’ by a specified date. Clause 2(b) stated that ‘each party must work in good faith to progress the GSA in the manner contemplated.
However, Schedule 2 contained customary language that the terms did not constitute an offer capable of acceptance, and that the ‘terms and conditions are indicative only and are submitted as a means of encouraging discussion’. As no GSA was concluded the plaintiffs initiated proceedings that the defendants had not negotiated as promised. They also were seeking damages for the lost opportunity of concluding the GSA, which they estimated to total $221 million and an additional claim for damages of $750,000 associated with expenses incurred in performing the MOU. Mr. Baldwin also submitted a claim for breach of the promises contained with Clause 2(a.).
4. Defendants’ Argument
In response to the plaintiff’s claim the defendants made three key arguments. Firstly, they argued that their claim for damages for breach of the MOU was unsustainable as the agreement to negotiate was uncertain and therefore unenforceable. Secondly, the matters pleaded would not constitute a case for breach of MUO even if it was enforceable. Thirdly, that the plaintiff’s alleged estimate for damages is defective as the ‘facts by which the alleged loss or loss were sustained are [were] not pleaded’. Despite that the plaintiffs maintained