The Importance of Documenting Commercial Transactions

When trust is high, paperwork often feels unnecessary — but as the case of Puntoriero v Higgins shows, relying on an oral agreement can leave you unprotected if things go wrong.

Our team ensures your agreements are properly documented so your rights are always protected.

On 8 July 2025, the New South Wales District Court delivered a judgement in Puntoriero v Higgins [2025] NSWDC 244 which provides a pertinent reminder of the dangers of relying on oral agreements and the importance of documenting and recording commercial transactions. 

Background to the case

• In May 2010, Francis Puntoreiro and Guiseppe Pangallo (Plaintiffs) entered into an oral agreement with Matthew Higgins (Defendant).
• Pursuant to this agreement, the Plaintiffs agreed to lend the Defendant an amount of $340,000.00 to assist him in purchasing a property.
• The Defendant was to pay interest on the amount at ten percent (10%) per annum which would become payable at the end of them term, bringing the total amount of the loan to $680,000.00 payable ten (10) years after the advance.
• In early June 2010, the Plaintiffs, the second Plaintiff’s son and the first Plaintiff’s father attended a meeting with the Defendant where a total of $340,000.00 cash was counted by the group and handed to the Defendant.
• This transaction was not documented and there is no money trail to provide evidence of the advance to the Defendant, as the amount was paid in cash.
• The Defendant denied the agreement with, and advance from, the Plaintiffs.
• Instead, the Defendant submitted that he had borrowed $280,000.00 from a friend, Trevor Lucantonio, to purchase the property.
• The Plaintiffs were aware of this loan from Trevor but understood their advance would be used to repay him.

Outcome of the Case

The Court dismissed the Plaintiffs’ claim as it was not satisfied on the balance of probabilities that the Plaintiffs had entered into the alleged agreement with, or had advanced any monies to, the Defendant.

In reaching this decision, the Court considered comments of the Supreme Court in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451, noting that an oral agreement must be proved to the “reasonable satisfaction” of the court.

This requires the court to “feel an actual persuasion” of the occurrence or existence of the oral agreement. Additionally, the court must be persuaded that any agreement reached was capable of forming, and intended by the parties, to be legal binding.

This highlights the threshold required to be reached in order to prove an oral agreement and the challenges that may arise when such threshold is not met. 

Why should you formalise a transaction or agreement in writing?

It is common to think that formal agreements may not be required or are not necessary when you are dealing with people you know and trust (such as family or long-standing business relations). However, things can go wrong and in the absence of a written agreement, enforcing your rights may become more challenging.

As such, formally documenting a transaction or agreement in writing has the following benefits: 

• Clarity: A written agreement clearly sets out the agreed terms, rights and obligations, so that each party knows what is expected of them.
• Enforceability: A document provides evidence of the terms of the agreement which can be used as evidence when seeking to prove the existence and enforceability of an agreement.
• Disputes: Formally recording the agreed upon terms minimises any risks of disputes arising as a result of misunderstanding, ambiguity or conflicting memories.
• Remedies: A written agreement sets out the mechanisms available for enforcing the terms and remedies for any subsequent breaches.

How can we help you?

The decision in Puntoriero v Higgins serves a reminder of the importance of ensuring that your commercial transactions are properly recorded so as to ensure legal enforceability to protect your rights and avoid any potential disputes or litigation. In light of this, you should consider seeking assistance with respect to the following:

• Advice on an existing oral agreement.
• Preparation of formal documentation to record an existing oral agreement.
• Preparation of documentation to formalise a commercial transaction that is currently being negotiated but has not yet been agreed upon or entered into.

If you would like advice or assistance in relation to any commercial law matters, please contact our Accredited Business Law Specialists and Partners Justin Thornton on jthornton@marsdens.net.au and Rahul Lachman on rlachman@marsdens.net.au or otherwise by calling them on (02) 4626 5077.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.