Breach of contract – implied term in contract – misleading and deceptive conduct
This case turned on its own facts. McGill J applied the settled principles of breach of contract and implied terms in contract. It was held that handing over a brochure for a product in response to a request for a product with particular characteristics was a representation that the product had the general characteristics identified in the brochure.
Higgins Coatings Pty Ltd (plaintiff) contracted with the body corporate for a town house development in Brisbane (head contract). The head contract required the plaintiff to subcontract for application of a coating sealer to concrete to produce a particular effect.
The plaintiff approached Cure-It Chemical Applicators Pty Ltd (defendant) and was handed a brochure for a product called 'Euco Diamond Hard' (Product). The defendant recommended the Product.
The plaintiff and defendant entered into a subcontract for the supply and application of a coating sealer with the effect required by the head contract. The defendant had not seen the head contract.
The Product did not have the effect required by the head contract for two reasons: first, the defendant did not apply the Product properly, and second, the surface to which the Product was applied was not appropriate for use of the Product. This meant the plaintiff was in breach of the head contract. The body corporate refused to pay the plaintiff. The plaintiff sought to recover damages for breach of contract against the defendant.
The court found in favour of the plaintiff and ordered the defendant pay $74,116, plus interest.
McGill J held the defendant had breached the subcontract by not using due care and skill in applying the Product. It had also breached the term in the subcontract requiring that the defendant not do anything to put the plaintiff in breach of the head contract. The defendant's argument, that the terms of the head contract could not be incorporated into the subcontract where the defendant had not seen the head contract prior to entering the subcontract, was rejected. It was held that, where the head contract is referred to in a subcontract, effect should be given to its terms.
The plaintiff's argument that there was an implied term in the contract that the Product would have the effect specified in the brochure was rejected as no such term was necessary to give business efficacy to the contract.
His Honour found that, while the defendant represented that the Product would have the effect set out in the brochure, this was not false or misleading. The defendant gave the plaintiff the brochure in response to a request for a product with a particular effect. However, this representation was about the general effect of the Product when applied properly to the right surface. In this case, the Product had not been applied properly, or to the right surface.