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  • The High Court confirms that the purpose of a contract and context in which it was reached are highly relevant to contractual interpretation.
  • It may be appropriate for some contracts which could be affected by regulatory change to include a ‘change of law’ clause that allows review of the contract if such a change eventuates.

Contracts between governments and private sector bodies are a major feature of the business landscape in Australia.

It is also not uncommon for such a contract to provide for compensation to be payable if, for example, governmental measures adversely affect the regulatory environment in which private bodies operate. A recent High Court decision, Victoria v Tatts Group Ltd [2016] HCA 5 (2 March 2016) (‘Tatts) addresses an instance in which major legislative amendments had a direct impact on just such a contract.

(Another decision, Tabcorp Holdings v Victoria [2016] HCA 4, that was handed down on the same day dealt with a similar matter arising solely under legislation, not under contract. For reasons of brevity, this casenote addresses only the Tatts judgment).

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