The traditional notion of terminating a contract in the
event of a breach may not always be the best course of action in
agreements between resource companies and landowners.
This is because the relationship between a resource company and
a landowner will exist independently of any contract and will
continue for as long as both parties have rights over the same
Contracts between resource companies and landowners usually
refine or clarify the pre-existing relationship, adding in details
such as land access processes, rehabilitation standards,
indemnities and making available plant and equipment to the
landowner after operations finish.
These contracts inevitably provide a better deal for both
parties. If there is an ongoing relationship, traditional
termination rights may need to be seriously considered and even
Under common law, parties can terminate contracts where there is
a fundamental breach of that contract, regardless of whether there
is a specific clause that addresses the issue.
If an agreement is terminated, future rights may be lost, such
as loss of access by the resource company and loss of the right of
the landowner to benefit from indemnities or higher rehabilitation
For that reason, it will sometimes be better to exclude the
rights of either party to terminate a contract for breach.
Clear words are needed in any agreement to exclude any
termination rights. Removal of termination rights in an agreement
is not a licence for parties to breach a contract at will, as there
will still be consequences that flow from any breach.
Rather, it is a way to ensure that any contractually agreed
enhancements to the relationship endure for the benefit of both
If termination is not permitted, then other remedies such as
damages, review processes and dispute resolution may need to be
beefed up to ensure that both parties' interests are protected
and that an innocent party is not disadvantaged by a breach of the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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