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  • Parties are bound to an agreement in the manner in which they have previously agreed to become bound, unless there is an outward manifestation of intention to become bound in some other manner.
  • Lawyers generally have authority to negotiate the terms of an agreement on behalf of their clients, but not to bind their clients to the agreement. ‘Clear and cogent evidence’ is required to show that a lawyer has authority to bind a client in contract.
  • There is an exception to the general rule in the context of litigious proceedings, where lawyers have an implied authority to bind their clients to an agreement compromising those proceedings. This exception only applies where there are actual proceedings on foot.

Every lawyer spends a vast amount of time negotiating one sort of agreement or another on behalf of clients. The extent to which a lawyer is able to bind his or her client in contract is therefore an extremely important consideration for the profession as a whole.

The recent NSW Court of Appeal judgment in Pavlovic v Universal Music Australia [2015] NSWCA 313 is arguably the most authoritative statement of the relevant principles since the High Court decision in Pianta v National Finance & Trustees [1964] HCA 61; (1964) 180 CLR 146. The judgment also contains an interesting consideration of the principles relating to how parties can bind themselves in contract.

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