Last Updated on 29/10/2025 by Damin Murdock
In the realm of commercial contracts, courts have long recognised an implied duty of cooperation between parties. This duty ensures that both parties act in ways that enable each other to receive the intended benefits of the contract and do not hinder its performance. While not always expressly stated, this duty is implied by law where necessary to give business efficacy to a contract.
Legal Foundation and Key Case Law
The landmark case of Mobile Innovations Limited v Vodafone Pacific Limited & Ors [2003] NSWSC 166 provides a foundational analysis of the duty. In that case, the Supreme Court of New South Wales held that the duty of cooperation can be implied based on the presumed intentions of the contracting parties. The rationale is to ensure that the contract works as intended and that each party can enjoy the benefits it was promised.
The duty operates in both a positive and negative manner:
- A party may be required to take active steps necessary to facilitate the performance of the contract.
- A party must refrain from actions that would hinder the other party’s ability to perform or fulfil conditions precedent to the contract.
Scope and Application
Fundamental Obligations
The duty of cooperation is more readily implied when it relates to fundamental obligations under the contract. As clarified in SSABR Pty Ltd v AMA Group Ltd [2023] NSWSC 1551, when a party would not have entered into the contract without the expectation of strict or substantial performance, the law is more willing to imply such a duty.
In these cases, the duty is considered integral to the performance and enforcement of core terms of the contract, requiring no further detailed analysis to be implied.
Non-Fundamental Obligations
However, the courts are more cautious in extending the duty to non-fundamental obligations, those not essential to the contract’s primary purpose. In SSABR, and in Reliance Developments (NSW) Pty Limited v Lumley General Insurance Limited [2008] NSWSC 172, it was noted that where a party’s actions merely relate to receiving contractual benefits (rather than performance itself), it becomes more difficult to imply the duty without clear justification.
Reasonableness and Limitations
The scope of the duty is not unlimited, and cooperation must be reasonable in light of the express terms and commercial context of the agreement.
Important limitations on the duty include:
- It does not require parties to assume extraneous risks or liabilities beyond the contract’s scope.
- It does not compel a party to take on excessive burdens that are disproportionate to the benefits received.
- It does not require a party to coerce or compel third parties to act.
- It does not mandate cooperation where it may be used for detrimental or adversarial purposes.
Practical Considerations
The court’s decision to imply a duty of cooperation will heavily depend on the contractual context and expressed intentions of the parties. Each contract is considered on its own facts, and implications are drawn only when necessary to make the agreement functional and effective.
Importantly, the duty of cooperation does not override a party’s right to act in its own commercial interest. A party is not obligated to assist the other if doing so would significantly compromise its own position or objectives.
This duty often operates alongside other implied contractual obligations, such as:
- The duty to act in good faith in performing contractual obligations;
- The duty to not prevent the fulfilment of the contract’s purpose.
Conclusion
The implied duty of cooperation plays a vital role in upholding the integrity and effectiveness of commercial contracts. While it is not a blanket obligation, it ensures that parties do not act in ways that render the contract ineffective or deprive the other of its benefits.
At Leo Lawyers, we assist clients in both drafting and enforcing contracts that align with these established principles, ensuring that their commercial relationships are protected and strategically sound.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
