In Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd [2025] VSC 125, the Victorian Supreme Court considered (among other things) whether GM Holden was in breach of dealer agreements by failing to supply new Holden branded motor vehicles.

In January 2018, GM Holden entered into dealer agreements with Beecham Motors and each group member (together, the plaintiffs). The agreements were for a five year term (expiring 31 December 2022) and entitled the plaintiffs to sell and service new Holden branded motor vehicles. In February 2020, General Motors Company, the parent of GM Holden, announced that it was shutting down the Holden brand and exiting the Australian market by 2021.

Beecham Motors commenced an action against GM Holden as a group proceeding under Part 4A of the Supreme Court Act 1986 (Vic) on behalf of a group of Holden dealers who had entered into dealer agreements with GM Holden. The plaintiffs alleged that GM Holden had promised to supply group members with new Holden branded vehicles throughout the term of the dealer agreements, and, in breach of the agreement, had ceased doing so in 2020.

The plaintiffs’ contended that the dealer agreements would be commercially non-sensical if GM Holden had no obligation to supply Holden branded vehicles during the term. The plaintiffs alleged that GM Holden’s failure to ensure the supply of new Holden branded vehicles throughout the term was a breach of clause 9.1(g) of the dealer agreements which provided:

Holden agrees to comply with Holden’s Wholesale Standards as contained in the Manual.

The plaintiffs relied on various sub-clauses of the ‘Holden Wholesale Standards’ to support this contention including:

7.17.14.3               Holden will endeavour to supply dealers with a sufficient quantity of vehicles that will allow                                        achievement of sales evaluation guide (SEG) or meet reasonably anticipated demand.

7.17.14.4               Holden delivers new vehicles to dealerships in a time scale which satisfies both dealers and                                       customers subject to capacity and logistic constraints.

GM Holden denied that any such obligation existed, asserting that:

• The dealer agreements were premised on an expectation, and not a promise of, a mutually beneficial business relationship for the term.
• An obligation on GM Holden to ensure a supply of vehicles was not commercially viable for GM Holden as it:
  • did not build Holden branded cars in Australia, rather it was a distributor of Holden branded products which had a complex supply chain; and
  • as a consequence, it could not ensure vehicle supply, particularly where there was only one source of supply for Holden branded vehicles.

The central issue before the Court was whether the provisions in the Manual, when read with clause 9.1(g) of the dealer agreements, were contractual promises, and if so, their proper construction.

In considering the matter, Nichols J observed that whilst the expression in clause 9.1(g) of the dealer agreements that “Holden agrees to comply…” is, on its face, a promise to comply with the Holden Wholesale Standards, what it means to comply with the standards will ultimately depend upon the nature of the standard(s) in question.

Her Honour explained that standards may be promissory in nature, such that they are clear, and compliance can be objectively ascertained or non-promissory in that they are vague, and an agreement to comply with that standard cannot be construed as a commitment to a sufficiently certain course of action.

Her Honour found that:

• Whilst sub-clause 7.17.14.3 of the Manual was promissory in nature, in that it obliged GM Holden to use its endeavours to supply dealers with vehicles, the plaintiffs had not established that GM Holden had breached this obligation.
• GM Holden’s ‘endeavour obligation’ required it to exert itself to attempt to supply a sufficient quantity of vehicles to allow its dealers to meet SEG or reasonably anticipated demand. Having regard to:
  • the nature of the product to be supplied, which was ultimately controlled by General Motors, and not GM Holden;
  • the various distribution agreements GM Holden had in place to obtain vehicles to supply the dealers; and
  • the fact that GM Holden did not have control over General Motors’ decision to shut down the Holden brand,

the Court was satisfied that GM Holden had prima facie satisfied its endeavours obligation.

• The remaining standards were merely descriptive of Holden’s business and therefore not promissory in nature.

It is common for commercial contracts to include schedules which contain the details of the technical and/or operational requirements and obligations a contractor must satisfy. This decision is a reminder to parties of the importance of ensuring that such obligations and requirements are clearly drafted in both the main contract and the schedules, such that compliance with those obligations and requirements can be objectively ascertained.

The full decision can be found here.