Hubris?

Well, the Prime Minister believes that the leadership of the liberal party is the unique gift of the elected parliamentarians and that "any member of the parliamentary Liberal Party who forgets that is indulging hubris and arrogance."

As a suburban solicitor maybe John Howard is better placed to understand "contract" (which is what we mean by an agreement) than I, but my interpretation of the sequence of events is that Howard made an offer to Peter Costello, "for your consideration of not standing for the Leadership, I undertake to resign the position of Leader after one and a half terms". While the negotiation of that position may have been still going into late December, it doesn't mean that when Costello did decide not to stand that he wasn't accepting the offer, unless Howard expressly repudiated the offer.

Now, I don't think you can contract over something like agreeing to resign, but the discussions have all the hallmarks of "agreement" as would seem to be required under law.

And I don't think I've ever heard Costello actually claim that the PM has to resign for Costello. I'm sure Costello is well aware that if the PM resigns it would be open to any member to nominate. I think Costello can reasonably expect Howard to support his candidacy, and certainly not to work against it. But at no stage has Costello suggested that no one else can challenge him.

I had to get in on this early - cause hopefully there will be more to follow after Cabinet.