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510 Lecture 6 Contract

This document provides an overview of contract law in New Zealand. It discusses the essential elements of a contract including offer and acceptance, capacity, intention to create legal relations, consideration and/or form, legality, and consensus. It then examines common problems that arise in contracts such as limited capacity, uncertainty of intention to create legal obligations, insufficient consideration, required contractual form, illegality, and lack of consensus. The document outlines how statutes and common law have addressed these issues. It also discusses remedies for non-performance including damages, cancellation, and application of frustration of purpose principles.

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165 views

510 Lecture 6 Contract

This document provides an overview of contract law in New Zealand. It discusses the essential elements of a contract including offer and acceptance, capacity, intention to create legal relations, consideration and/or form, legality, and consensus. It then examines common problems that arise in contracts such as limited capacity, uncertainty of intention to create legal obligations, insufficient consideration, required contractual form, illegality, and lack of consensus. The document outlines how statutes and common law have addressed these issues. It also discusses remedies for non-performance including damages, cancellation, and application of frustration of purpose principles.

Uploaded by

api-3728516
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 26

Law for New Zealand

Business

contract: overview and review

Law for New Zealand Business 1


Law for New Zealand
Business
 What is a contract?
 Legally binding agreement between
two or more legal persons

Law for New Zealand Business 2


Therefore: what are the
essential elements?
 Offer and acceptance- before any
contract can possibly be enforced.
 However, there are other
essentials as well.

Law for New Zealand Business 3


What are they?
 Capacity
 Intention to create legal relations
 Consideration and/or form
 Legality
 Consensus
 (execution according to the
agreement)
Law for New Zealand Business 4
So what problems arise
and how are they dealt
with?
 Remember:
 Contract law is based on common law
 New Zealand has codified significant
aspects of contract law
 Attempts have been made to resolve
some of the confusion with common
law
 Most changes have happened since
1969
Law for New Zealand Business 5
Just an initial point about
terms
 Contracts can be:
 Valid and enforceable
 Valid but unenforceable
 Voidable
 Void and of no effect

Law for New Zealand Business 6


Problem 1
 What happens if the person you
are dealing with turns out to have
limited capacity?
 Age
 Nationality
 State of mind
 Nature of personality

Law for New Zealand Business 7


Resolution
 Common law: Freedom of contract but
with certain limitations where capacity
is limited
 Statutory changes:
 Minors’ Contracts Act 1969
 Various pieces of legislation relating to
ability of aliens to buy land, operate
businesses etc
 Protection of Personal and Property rights
Act 1988
 CompaniesLaw Act
for 1993
New Zealand Business 8
Problem 2

 Are all agreements made between


two or more persons with legal
capacity enforceable?

Law for New Zealand Business 9


Resolution
 Common law presumptions
 The special case of advertisements
 Pharmaceutical Society of Great
Britain v Boots Cash Chemist
 Fair Trading Act 1986
 The ability of others to enforce it-
Contracts’ Privity Act 1982

Law for New Zealand Business 10


Problem 3
 Do you always need consideration
(the price of a promise)?
 Is the consideration (or the price)
sufficient particularly if it does not
reflect market value or where it is
not money or money’s worth?

Law for New Zealand Business 11


Resolution
 Normal rule: to be valid and enforceable
under contract law a contract requires
consideration (CF a deed- more about
that later)
 However, normally consideration only
needs to be sufficient not adequate
 Value in law
 Adequate where the party giving the
promise is vulnerable- minors etc

Law for New Zealand Business 12


Problem 3- cont
 Question of form- what happens of
a contract is required to be in a
particular form?-If it is not, is it
valid?

Law for New Zealand Business 13


Resolution
 Four classes of contract
 Those that must be in a particular form to
be valid (deeds)- consideration is NOT
required
 Those that must be in a particular form to
be enforceable by the person relying on
them (egs, HP, Controlled Credit Contracts)
 Those that must be evidenced by writing-
no particular form to be enforced (Contracts
Enforcement Act 1956)
 Those that do not require a particular form
to be valid and enforceable
Law for New Zealand Business 14
Problem 4
 What happens if the contract
involves a breach of the law?

Law for New Zealand Business 15


Resolution
 Illegal Contracts Act 1970
 Two classes of contract, validity
depends on what class it falls into
 Fundamentally illegal
 Technically illegal- can be saved by the

Court but only if it would not contravene


public policy

Law for New Zealand Business 16


Problem 5
 What happens if a party to the
contract claims that they did not
agree to what the other party is
saying they did- that is, they are
saying there was no consensus?

Law for New Zealand Business 17


Resolution
 Enforceability may be decided by:
 Contractual Mistakes Act 1977
 Provides for Court discretion where there is a
substantially unequal exchange of values arising
from:
 Unilateral mistake
 Common mistake
 Mutual mistake
 Common law- non est factum, duress
unconscionable bargains and undue
influence
 Contractual Remedies Act 1979- remedies
for misrepresentation
Law for New Zealand Business 18
Problem 6
 What happens if one of the parties
fails to carry out their part of the
contract or fails to live up to
promises?

Law for New Zealand Business 19


Resolution
 Depends on why

Law for New Zealand Business 20


Resolution
 The contract does not come into
force unless a particular event
happens or the contract’s
continuance depends on a certain
event and that has not happened
(conditions precedent and
subsequent)
 No enforceability unless satisfied

Law for New Zealand Business 21


Resolution cont.
 Promises are made during negotiations
and the other party relies on them
(misrepresentations)
 Contractual Remedies Act 1979
 If the truth was essential OR
 Made the contract substantially different to what
it would have been
 THEN the innocent person may cancel the
contract and seek relief and damages
 Otherwise, damages only

Law for New Zealand Business 22


Resolution cont.
 Terms agreed to are not complied
with (breach or repudiation)
 Contractual Remedies Act 1979
 If the performance was essential OR
 Made the contract substantially different

to what it would have been


 THEN the innocent party may cancel the

contract and seek relief and damages


 Otherwise, damages only

Law for New Zealand Business 23


Resolution cont.
 A change to circumstances outside
the party’s control- egs
 Death or illness
 A change to the law
 Destruction of the subject matter
 Change to surrounding circumstances
 Frustrated Contracts’ Act 1944- rules for
balancing loss

Law for New Zealand Business 24


So that is contract in a
nutshell
 Just a reminder:
 New Zealand is a common law
country BUT
 Contract law has been modified
extensively
 New Zealand looks to other jurisdictions

for guidance or new approaches, not just


Britain
 British law is moving more towards

European models. Therefore the gap is


likely to Law
grow bigger
for New Zealand rather
Business than smaller 25
Therefore
 Perhaps it is time we cut our ties
and ended appeals to the Privy
Council!!??

Law for New Zealand Business 26

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