Chapter ESM0507

CourtHM Revenue & Customs
Published date07 March 2016
Record NumberESM0507

Establishing the terms of a contract

Where there is a comprehensive written contract (that is, a contract which contains all the terms of the agreement between the parties) the Courts will decide employment status based on the written contractual terms - viewed in the factual matrix that existed when the contract was made. They will not normally refer to evidence other than that of the written contract (for example, they will not refer what the parties did in practice).

In the case of Narich Pty Ltd v The Commissioners of Payroll Tax: Privy Council (see ESM7090), it was held that

‘…where there is a written contract…a Court is confined, in determining [status], to a consideration of the terms, express or implied, of that contract in the light of the circumstances surrounding the making of it; and it is not entitled to consider also the manner in which the parties subsequently acted in pursuance of such contract.’

Exceptions to this are where:

* the contract is not comprehensive (other terms and conditions then have to be established from other evidence)
                * one or more of the written terms have been varied by agreement
                * one or more of the written terms are a sham

What the true terms of an agreement are is ultimately a question of fact. If a written contract appears to be comprehensive it should not normally be challenged except where it is apparent that the parties might not have...

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