Ether Holdings Pty Ltd & Ors v. Cut Price Deli Pty Ltd & Ors [1985] FCA 427

Ether Holdings Pty Ltd & Ors v. Cut Price Deli Pty Ltd & Ors [1985] FCA 427

The inability of the franchisor to deliver the right to use the agreed business name 'Cut Price Deli', which was central to the contract and its intended benefits, amounted to a fundamental breach preventing the franchisor from recovering any outstanding payments under the agreement.

Parties
First Applicant / First Cross Respondent: Ether Holdings Pty Limited; Second Applicant / Second Cross Respondent: Gregory Raymond Lillington; Third Applicant / Second Cross Respondent: Kerry Anne Lillington; Fourth Applicant / Second Cross Respondent: Gerald Hood; Fifth Applicant / Second Cross Respondent: Elizabeth Martin Hood; Sixth Applicant / Second Cross Respondent: Colin Edward Emanuel; Seventh Applicant / Second Cross Respondent: Robyn Margaret Emanuel; Respondent / Cross Claimant: Cut Price Deli Pty Limited
Jurisdiction
Australia
Judgment Date
12 August 1985
Procedural Posture
Cross Claim / Judgment After Hearing of the Cross Claim
Outcome
Cross Claim dismissed; costs awarded to cross respondents.
Legal Topics
Franchise Agreements, Fundamental Breach, Business Names, Goodwill Payments
Contract Law Commercial Law Franchising Franchise Agreements Fundamental Breach Business Names Goodwill Payments

Case Brief

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Parties

Ether Holdings Pty Limited

First Applicant / First Cross Respondent

Gregory Raymond Lillington

Second Applicant / Second Cross Respondent

Kerry Anne Lillington

Third Applicant / Second Cross Respondent

Gerald Hood

Fourth Applicant / Second Cross Respondent

Elizabeth Martin Hood

Fifth Applicant / Second Cross Respondent

Colin Edward Emanuel

Sixth Applicant / Second Cross Respondent

Robyn Margaret Emanuel

Seventh Applicant / Second Cross Respondent

Cut Price Deli Pty Limited

Respondent / Cross Claimant

Procedural Posture

Cross Claim / Judgment After Hearing of the Cross Claim

Legal Issues

  1. 1 Whether the inability of franchisor to deliver the agreed business name constituted a fundamental breach precluding recovery under the agreement
  2. 2 Whether the franchisor is entitled to recover outstanding payments and a share of goodwill if the business name could not be delivered

Ratio Decidendi

The inability of the franchisor to deliver the right to use the agreed business name 'Cut Price Deli', which was central to the contract and its intended benefits, amounted to a fundamental breach preventing the franchisor from recovering any outstanding payments under the agreement.

Court Disposition

Cross Claim dismissed; costs awarded to cross respondents.

Orders

  • The Cross Claim is dismissed.
  • The cross claimant is to pay to the cross respondents any costs incurred by them of the Cross Claim including any reserved costs.