¹ I use the word 'contract' in the lawyer's sense of a legally enforceable agreement. The word is used by public administration scholars in a much broader way to cover any arrangement between two bodies (which may not be separate legal entities) under which one entity is required to do things or achieve outcomes for the other entity. Thus the word is used in a purchaser-provider model where the purchaser and provider may be entities within the one government or may even be employees working for the same employer.

² There are exceptions. In relation to disposal of Crown lands, it is a constitutional requirement that such a contract must be authorised by legislation. See, eg, the discussion in Cudgen Rutile (No 2) Ltd v Chalk [1975] AC 520, 533 (Lord Wilberforce) of this constitutional requirement in Queensland. Another exception is that under the Financial Management and Accountability Act 1997 (Cth) s 37 the Commonwealth cannot borrow money without specific legislative authorisation. See below, text accompanying n 27.

³ Commonwealth v Colonial Combing, Spinning and Weaving Co Ltd (1922) 31 CLR 421.

⁴ (1934) 52 CLR 455.

⁵ Kidman v Commonwealth (1925) 37 CLR 233; New South Wales v Bardolph (1934) 52 CLR 455.

⁶ Auckland Harbour Board v The King [1924] AC 318; Commonwealth v Burns [1971] VR 825; Commonwealth v Thomson (1962) 1 CCR (Vic) 37; Attorney-General v Gray [1977] 1 NSWLR 406; Sandvik Australia Pty Ltd v Commonwealth (1989) 89 ALR 213; Brown v West (1990) 169 CLR 195, 205.

⁷ Nicholas, Seddon, Government Contracts: Federal, State and Local (2nd ed, 1999) [3.20]Google Scholar. See also Vass v Commonwealth (2000) 96 FCR 272, 287–8.

⁸ See ibid [4.36]–[4.37].

⁹ In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 389–93 (McHugh, Gummow, Kirby and Hayne JJ) the distinction between directory and mandatory was rejected in favour of asking whether it was parliament’s intention to render the relevant transaction invalid if it was made in breach of the legislation. This test is no improvement on the old directory–mandatory distinction. Synonyms used by the courts for 'directory' have been 'modal', 'facultative' and 'permissive'.

¹⁰ Examples are Australian Broadcasting Corporation v Redmore Pty Ltd (1989) 166 CLR 454 (in which the ABC failed to comply with a requirement in the Australian Broadcasting Corporation Act 1983 (Cth) that certain contracts be approved by the Minister, but the contract was held to be valid); Commonwealth v Crothall Hospital Services (Aust) Ltd (1981) 36 ALR 567, 582–3; Northern Territory v Skywest Airlines Pty Ltd (1987) 48 NTR 20; Coogee Esplanade Surf Motel Pty Ltd v Commonwealth (1976) 50 ALR 363, 383 (Glass JA).

¹¹ Kent v Minister of State for Works (1973) 2 ACTR 1.

¹² See, eg, Commonwealth v The Australian Commonwealth Shipping Board (1926) 39 CLR 1; Corporation of the City of Unley v South Australia (1996) 67 SASR 8. This case was successfully appealed on a different point which made the ultra vires question no longer relevant: Corporation of the City of Unley v South Australia (1997) 68 SASR 511. See also Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1 involving void contracts entered into by a local council.

¹³ Corporations Act 2001 (Cth) ss 124–5. In some state and territory government-owned corporations legislation, the ultra vires rule has been abolished but the position is patchy: see Seddon, above n 7, [2.20].

¹⁴ General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 which has been followed in a number of later cases. See CEA Technologies Pty Ltd v Civil Aviation Authority (1994) 122 ALR 724; Chapmans Ltd v Australian Stock Exchange Ltd (1994) 12 ACLC 512; Hutchins v Deputy Commissioner of Taxation (1994) 123 ALR 133; Giorgas v Federal Airports Corp (1995) 37 ALD 623.

¹⁵ This argument is now well established in the case law, though it was initially the subject of criticism. See, eg, Margaret, Allars, 'Private Law but Public Power: Removing Administrative Law Review from Government Business Enterprises' (1995) 6 Public Law Review 44, 62–3Google Scholar.

¹⁶ Hawker Pacific Pty Ltd v Freeland (1983) 52 ALR 185; Dardak v Minister for Regional Services, Territories and Local Government (2001) 182 ALR 419.

¹⁷ Dixon v Attorney-General (1987) 15 FCR 338, 343–4 (Jenkinson J).

¹⁸ New South Wales v Bardolph (1934) 52 CLR 455, 474–5 (Evatt J); Building and Construction Employees and Builders Labourers Federation of New South Wales v Minister for Industrial Relations (1986) 7 NSWLR 372.

¹⁹ See Seddon, above n 7, ch 2.

²⁰ I explore the possible limits to the Commonwealth's power to enter into contracts: ibid. Even if there is a limit, it is very unlikely that anyone would mount a legal challenge because it would be a constitutional, and therefore expensive, case. Running such a case would also be uncertain in outcome because of the controversy about what the limits actually mean in practical application.

²¹ See Seddon, above n 7, [3.8]–[3.12].

²² See ibid [5.12]–[5.13].

²³ See ibid [5.10]–[5.11].

²⁴ See ibid [5.14]–[5.15].

²⁵ See Casino Control Act 1991 (Vic). Note in particular s 128P (now repealed) which gave the Minister power to suspend legislation. The section was the subject of criticism in Audit Review of Government Contracts, Contracting, Privatisation, Probity & Disclosure in Victoria 1992–1999: An Independent Report to Government (2000) vol 2, [5.1.2].

²⁶ See Melbourne City Link Act 1995 (Vic).

²⁷ See above, n 2.

²⁸ Australian National University v Burns (1982) 43 ALR 25. Very limited bases for review of decisions made under a contract were recognised by the Privy Council (on appeal from New Zealand) in Mercury Energy Ltd v Electricity Corporation of New Zealand Ltd [1994] 2 NZLR 385.

²⁹ The English case of R v Lord Chancellor; Ex parte Hibbit & Saunders (a firm) (The Times, 12 March 1993) exemplifies this approach. But contrast this case with R v Legal Aid Board; Ex parte Donn & Co (a firm) [1996] 3 All ER 1.

³⁰ [1995] 2 VR 121.

³¹ [2000] ACTSC 89 (Unreported, Higgins J, 18 October 2000).

³² Terence, Daintith, 'Regulation by Contract: The New Prerogative' (1979) 32 Current Legal Problems 41Google Scholar.

³³ Janet, McLean, 'Government to State: Globalization, Regulation, and Governments as Legal Persons' (2003) 10 Indiana Journal of Global Legal Studies 173Google Scholar.

³⁴ One of the most spectacular examples being the Melbourne CityLink contract which is for 34 years or a longer period in certain circumstances. Admittedly this contract was put in place by legislation but the general point is still valid: the Victorian government will, in twenty years' time, still be having to shape policy around this contract, rather than despite it.

³⁵ The decision of the United States Supreme Court in United States v Winstar Corporation, 518 US 839 (1996) demonstrates this. This case is extensively discussed by McLean, above n 33. Another illustration is Lumber Specialties Ltd v Hodgson [2000] 2 NZLR 347 in which a government change of policy did not constitute a breach for most of the contracts relevant to that case because they contained force majeure clauses, but one contract did not and the government had to pay damages. See also Wells v Newfoundland [1999] 3 SCR 199. In Australia it has been suggested that a government that resorts to the doctrine of executive necessity to get out of a contract should pay damages: see Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54, 76–7 (Mason J); L'Huillier v Victoria [1996] 2 VR 465, 478 (Callaway JA). In addition, at Commonwealth level (and only at Commonwealth level) legislation taking away contract rights will be invalid under the Constitution s 51(xxxi) if it amounts to a taking of property without compensation.

³⁶ Michael, Taggart, 'The Province of Administrative Law Determined?' in Michael, Taggart (ed), The Province of Administrative Law (1997) 1, 3Google Scholar. For a similar comparison of clashing values see John, Wightman, Contract: A Critical Commentary (1996) 118–19Google Scholar where the author expresses a hope that contract will take on the values of citizenship.

³⁷ Yes, contract has drawn the line at fraud! It is not possible, for example, to draft an exemption clause that effectively excludes liability for fraud.

³⁸ See the rejection in New Zealand of adoption of a common law principle of prime necessity, championed by Michael Taggart, applicable to control the activities of monopoly public utilities: Vector Ltd v Transpower New Zealand Ltd [1999] 3 NZLR 646.

³⁹ Australian Law Reform Commission and Administrative Review Council, Open Government: A Review of the Federal Freedom of Information Act 1982 (ALRC Report No 77/ARC Report No 40, 1995) [15.12]; Administrative Review Council, The Contracting Out of Government Services (Report No 42, 1998) [4.6], [5.20], [6.17]; Senate Finance and Public Administration References Committee, Parliament of Australia, Contracting Out of Government Services — Second Report (1998) 5–7; House of Representatives Standing Committee on Family and Community Affairs, Parliament of Australia, What Price Competition? A Report on the Competitive Tendering of Welfare Service Delivery (1998) [4.12]; Electoral and Administrative Review Commission (Queensland), Report on Freedom of Information (1990) [3.36], [8.60]–[8.61]; Auditor-General (South Australia), Report of the Auditor General for the Year Ended 30 June 1998 (1998) A.3-16.

⁴⁰ Much has been written on this topic. For some references and discussion of the issues see Seddon, above n 7, [1.4], [1.12]–[1.13], [1.21], [1.24]–[1.25]. See also Mark, Freedland, 'Government by Contract and Public Law' [1994] Public Law 86Google Scholar.

⁴¹ Different measures have been adopted by different governments. The most radical was that of the Bracks government in Victoria following a report on government contracting under the previous administration. With limited exceptions, entire contracts have to be posted on the internet. See Audit Review of Government Contracts, above n 25, vol 1 ch 3. The Commonwealth government is required by a Senate Order to post on the internet a list of contracts over $100 000, stating whether they contain confidentiality clauses, with guidelines that stress that confidentiality should be the exception rather than the rule. The process is monitored by the Australian National Audit Office. See, eg, Australian National Audit Office, The Senate Order for Departmental and Agency Contracts (Autumn 2003), Audit Report No 5 2003–2004 (2003). See also Government Procurement Act 2001 (ACT) Part 3.

⁴² Lord, Steyn, 'The Intractable Problem of the Interpretation of Legal Texts' (2003) 25 Sydney Law Review 5Google Scholar.

⁴³ The decision of the House of Lords in Pepper v Hart [1993] AC 593 was the focus of Lord Steyn's attack, framed in terms of the erosion of important constitutional principles.

⁴⁴ Justice Michael, McHugh, 'Tensions between the Executive and the Judiciary' (2002) 76 Australian Law Journal 567Google Scholar.

⁴⁵ Ibid 569 (footnotes omitted).

⁴⁶ See above n 41.