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Fullerton Nominees v Darmago - Doyles Arbitration Lawyers

FULLERTON NOMINEES PTY LTD V DARMAGO [2000] WASCA 4

Court of Appeal of WA – 21 January 2000

FACTS

Fullerton wanted to win a contract with an Indonesian company to construct and commission an abattoir in Indonesia.

Darmago was engaged by Fullerton to act as an agent to assist in obtaining the abattoir contract. The written contract between the parties provided that Fullerton was to pay Darmago “invisible costs” which were not to exceed 20% of the price paid to the Indonesian company. It was also understood by the parties but not expressly written that the “invisible costs” were moneys to be used bribing Indonesian officials to facilitate the progress of the contract. Fullerton only paid Darmago $81,000.00 instead of the $180,000 commission and $360,000.00 invisible costs owing. Darmago sued for unpaid agency fees and Fullerton counter sued for the $81,000.00 paid to Darmago.

ISSUES

Was the “invisible costs” clause in the contract illegal and therefore unenforceable?

If the “invisible costs” clause was illegal, could the clause be severed from the agency contract with the rest of the contract being enforceable?

Could Fullerton recover the $81,000.00 it had paid to Darmago?

FINDING

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