Power That Can Be Used Against You
What Renard Constructions shows about control, fairness, and hidden risks.
This case shows how one party can follow every clause in a contract and still breach the law, because power without accountability can be exercised in ways no contract ever intended.
Home › Case Studies › Case Law Library › Commercial & Business Cases › Contract Interpretation & Fairness › Minister for Public Works v Renard Constructions (ME) Pty Ltd (1992) HCA S44
Published: 10 November 2025 | Reviewed: 5 December 2025
(3-minute read)
What Happened in the Case
In Minister for Public Works v Renard Constructions (ME) Pty Ltd (1992) HCA S44, a NSW government department issued directions, withheld approvals, and ultimately terminated a construction contract after performance disputes. Renard argued that the termination was wrongful and claimed payment for the fair value of the work performed.
The New South Wales Court of Appeal examined two structural questions that still shape Australian contract law today:
whether a party with broad contractual discretion must exercise it reasonably
whether the contractor’s restitution claim could exceed the contract price when the contract had broken down
Justice Priestley’s judgment became the turning point. He held that contractual powers are not pure freedom, they carry an implied obligation to act honestly, reasonably, and for the purpose for which the power was granted. Even a clause that appears absolute is limited by what the law considers fair dealing.
The court concluded that where a party uses its discretion harshly, capriciously, or without proper regard to the contract’s purpose, that exercise of power can be unlawful even if the contract technically allows it.
The Legal Principle
Renard is one of Australia’s foundational authorities for the principle that:
legal power must be exercised for a proper purpose and with objective fairness.
This is now understood as part of the broader duty of good faith in contract performance. Courts expect parties to:
act consistently with the contract’s purpose
avoid leveraging discretion to secure unfair advantage
maintain transparency when exercising rights that significantly affect the other side
use termination powers proportionately and with reason
Renard shifted Australian law from a purely literal reading of contracts to a structural view: power, once given, must not become a tool for unfairness.
Why This Matters for Australians Today
Most people believe that “if it’s in the contract, it’s allowed.” Renard shows that belief is dangerously incomplete.
Contracts often give one side more control over:
timing
approvals
progress payments
variations
termination rights
When those powers are exercised without transparency, the weaker party can lose bargaining power, financial stability, or the ability to finish the work — even if they did nothing wrong.
The lesson is both legal and practical:
control is lawful only when used fairly. Once discretion becomes a lever, the courts may intervene.
How Problems Like This Quietly Happen
Power imbalances do not announce themselves. They emerge through structure:
one party controls timing while the other bears the cost
approvals or extensions depend on a single decision-maker
silence or delay becomes a form of pressure
a contractual right becomes a practical weapon
decisions appear “permitted” but operate to undermine the agreement
People often describe the experience the same way:
“Everything looked fair until I realised the other side controlled every step.”
This is the same structural dynamic that can arise in professional services, legal retainers, financial agreements and commercial contracts of all kinds.
The Structural Fix: Cost Safety (One-Path Funding)
Renard’s core warning is about unchecked discretion. In legal matters, that risk appears when one practitioner controls multiple lanes of work and the timing, scope, and cost of each.
That is why Clean Law separates the roles.
Under Cost Safety (One-Path Funding):
clients fund one legal path at a time
cost exposure cannot quietly expand
timing and scope do not depend on a single, blended decision-maker
escrow oversight ensures authority stays with the client at every step
This protection matters when a dispute risks becoming unbalanced through structural discretion, exactly the danger Renard exposed. When roles and powers are separated, discretion stops being a lever and becomes a controlled, transparent part of the process.
See how One-Path Funding keeps client authority at the centre
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Hidden Risks in the Traditional Model
Reflection
Renard is more than a construction dispute. It is a warning about what happens when power is given structure but not accountability. The decision reshaped Australian law because it identified a universal truth: fairness is not created by wording alone, it requires boundaries around how power is exercised.
Clean Law’s model builds those boundaries into every matter. Decisions affecting cost, timing, or strategy cannot drift into a single unchecked role. Authority stays visible. Discretion stays accountable. And clients remain protected from the very imbalance Renard identified decades ago.
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Minister for Public Works v Renard Constructions (ME) Pty Ltd (1992) HCA S44
By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.
Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.
