Contracts: Don’t assume the missing pieces will be filled in later

Kealeigh Barker – Special Counsel

Introduction

When you’re running a business, it’s easy to focus on getting the deal done. A new customer, supplier, investor, business partner or landlord presents a contract, you skim through it, it looks reasonable, and everyone is keen to get started.

The problem is that many business owners make assumptions about what a contract must mean, or what the other party should do, without checking whether those obligations are actually written down.

A recent New South Wales Supreme Court decision (Les & Zelda Investments Pty Ltd v Whitehaven Coal Ltd (No 4) [2026] NSWSC 107) is a timely reminder that courts generally will not step in later and add terms simply because one party expected them to be there. While that case involved sophisticated commercial parties and valuable mining assets, the lesson applies equally to smaller businesses entering commercial leases, supply agreements, service contracts, shareholder arrangements and development transactions.

The assumption trap

Business owners regularly make assumptions about contracts that can cause serious problems. For example, they may assume:

1. .the other party will act reasonably;
2. .both sides will work together to achieve a shared outcome;
3. .approvals will be pursued promptly;
4. .opportunities will be actively developed;
5. .a party will spend money to get a project moving; or
6. .everyone will act in good faith.

These assumptions might seem commercially sensible. The problem is that sensible assumptions do not necessarily become enforceable contractual obligations. When disputes arise months or years later, courts generally determine parties’ rights by looking first at what the contract actually says, not what one party assumed would happen.

What the court decided

In Les & Zelda, one party argued that the other should have taken active steps to progress certain mining projects so that valuable commercial benefits, in the form of share conversions, would flow to them.

The Court disagreed. The contract gave one party discretion about how it conducted its business, and the Court was not prepared to rewrite the agreement by imposing obligations that had never been included, including obligations to act in good faith, use reasonable endeavours, or take positive steps towards a shared commercial outcome.

In simple terms, the Court’s position was this: the parties agreed to this contract; if a particular obligation was important, it should have been included.

Why this matters for growing businesses

Unlike large corporations, smaller businesses often enter contracts without dedicated in-house legal teams. Many are focused on winning work, managing cash flow and keeping operations moving. Contracts can feel like administrative paperwork rather than a risk management tool. Unfortunately, the biggest problems often arise from the things that were never properly documented.

Common examples of assumptions that regularly cause disputes include:

1. .assuming a landlord must approve alterations if they are reasonable;
2. .assuming a supplier must prioritise stock for a long-standing customer;
3. .assuming a business partner must actively promote or grow a shared venture;
4. .assuming a purchaser must take all steps to obtain regulatory approvals;
5. .assuming a party must negotiate in good faith; or
6. .assuming a counterparty must spend money to achieve a particular outcome.
7. Unless the contract clearly says so, those assumptions may not be enforceable.

The cost of getting it wrong

Poorly drafted contracts don’t just create legal issues – they create commercial problems. They can lead to:

1. .expensive litigation;
2. .loss of anticipated revenue;
3. .project delays;
4. .disputes between business owners or shareholders;
5. .strained business relationships;
6. .uncertainty regarding responsibility for costs and risks; and
7. .substantial legal fees that could have been avoided at the outset.

In many cases, the cost of fixing a contract problem is far greater than the cost of obtaining advice before signing.

Questions to ask before signing

Before entering any significant contract, ask yourself:

1. .What outcome am I expecting from this arrangement?
2. .What actions do I expect the other party to take?
3. .Are those actions expressly required in the contract?
4. .What happens if they don’t do it?
5. .Who carries the risk if things don’t go as planned?
6. .Does the contract reflect the commercial deal I think I’ve agreed to?

If you’re unsure, that is often the best time to seek advice. And don’t assume good faith will fill the gaps. Courts will not necessarily imply broad good faith obligations into commercial agreements. If you want specific conduct from the other party, it is generally better to state it expressly in the contract.

Key takeaways

1. .Courts will not readily imply obligations into commercial contracts.
2. .Good faith is not a universal default obligation in Australian commercial contracts.
3. .Courts are reluctant to impose duties to spend money, pursue approvals, develop projects or achieve outcomes unless those obligations are expressly stated.
4. .Commercial assumptions are not a substitute for clear contractual drafting.
5. .Small and growing businesses should not assume a court will fix gaps in a contract after the event.
6. .Early legal review can be one of the most cost-effective risk management steps a business can take.

Conclusion

A contract is not just a record of a deal. It is the rulebook that governs what happens when expectations are no longer aligned.

Courts are generally reluctant to fill gaps, create obligations or rewrite bargains after the event.

For business owners, the lesson is simple: don’t assume the contract says what you think it says. Make sure it does.

A quick legal review before signing can often save significant time, money and stress later. If you would like advice on any aspect of your contracts or commercial arrangements, please contact Kealeigh Barker or your usual Lavan adviser.

Disclaimer

This publication is intended only to provide a summary and general overview. It is not intended to be comprehensive, nor to constitute legal advice. You should seek legal advice specific to your circumstances before acting or relying on any of the content.