New Zealand Contract Law Lecture Review

These vocabulary flashcards cover the fundamental principles, key cases, and legislative provisions of New Zealand Contract Law as discussed in the lecture notes, including formation, consideration, remedies, and remoteness.

Contract

A voluntary transaction and agreement between two or more parties involving a promise given for something in return that is intended to be enforceable by the state.

In personam

A legal right directed against a specific person rather than against a property or the world at large.

Corrective justice

A fundamental value in contract law aimed at correcting a wrongdoing and restoring equality between the promissor and the promissee after a breach.

Economic efficiency

A value determining that contracts generate prosperity by ensuring goods or services move to those who value them most, thereby creating a 'contractual surplus'.

Ad idem

A Latin term meaning 'of the same mind,' referring to the requirement that parties must have a meeting of the minds to form a contract.

The Objective Test

Established in Smith v Hughes (1871), it holds that a man is bound by the reasonable interpretation of his conduct and words, regardless of his subjective 'real' intention.

Invitation to treat

An indication of willingness to negotiate or consider offers, which is not a binding offer that can be accepted to form a contract (e.g., Boulder Consolidated Ltd v Tangaere).

Unilateral contract

A contract where the offeror is bound only if the offeree performs a specific act, such as the advertisement in Carlill v Carbolic Smoke Ball Co.

Process contract

A secondary contract (Contract A) often used in tenders that governs the procedure for how the primary contract (Contract B) will be awarded (Pratt Contractors Ltd v Palmerston North City Council).

Nudum pactum

A 'naked promise' given without consideration, which is generally not enforceable under contract law.

The Postal Rule

A default rule from Henthorn v Fraser stating that acceptance is complete and binding as soon as the letter is posted, provided the post is a contemplated means of communication.

Section 217 CCLA 2017

A provision of the New Zealand Contract and Commercial Law Act 2017 stating that electronic acceptance is communicated at the time the communication is received or reaches the information system.

Mirror image rule

A principle requiring that an acceptance must exactly match the terms of the offer; any addition or variation is a counteroffer that rejects the initial offer.

Presumption of fact (Domestic)

The legal starting point in domestic agreements (family) that parties do not intend to create legally binding relations, as seen in Jones v Padavatton.

Presumption of fact (Commercial)

The legal starting point that commercial agreements are intended to be legally binding, unless explicitly stated otherwise (Rose and Frank Co v JR Crompton & Bros Ltd).

Agreement to agree

An arrangement where parties promise to reach a contractual agreement in the future, which is generally unenforceable for being too uncertain.

Consideration

Something of value in the eyes of the law (a benefit to the promisor or detriment to the promisee) given in exchange for a promise.

Sufficiency vs. Adequacy

Refers to the rule that consideration must be of some value (sufficient), but the court will not investigate whether it is a 'fair' or equal trade (adequate).

Practical benefit

A concept from Williams v Roffey Bros where a promise to perform an existing contractual duty can be good consideration if it provides a practical advantage or avoids a disbenefit for the promisor.

Pinnel's Case rule

The principle that part payment of a debt is not sufficient consideration for a promise to forgo the balance of the debt (upheld in Foakes v Beer).

Section 27A Property Law Act 2007

A New Zealand statute allowing part payment of a debt to satisfy the whole debt if the person acknowledges the satisfaction in writing.

Promissory Estoppel

An equitable doctrine that prevents a party from going back on a promise intended to be binding and acted upon, where reliance makes it unconscionable to renege.

Privity of contract

The rule that only the parties to an agreement can sue or be sued on it, though modified in NZ by the CCLA 2017 to allow designated third-party beneficiaries to enforce benefits.

Escrow

A deed that is executed with a condition attached; it does not become a full deed until that condition is satisfied.

Restitution interest

A remedy aimed at restoring the injured party to the position they were in before the contract by taking back any benefit the breaching party gained.

Reliance interest

A remedy to compensate the injured party for losses or expenses incurred while relying on the expectation that the contract would be performed.

Expectation interest

The primary interest protected by contract law, aiming to put the injured party in the position they would have been in had the contract been performed.

Specific performance

A discretionary court order requiring a party to fulfill their specific contractual obligations, typically used for unique items like land.

Novus actus interveniens

An intervening act that breaks the chain of causation between the breach of contract and the resulting damage (Borealis AB v Geogas Trading SA).

Cost of cure

The amount of money required to physically fix a breach or finish a project to the contracted standard.

Mitigation

The duty of an injured party to take all reasonable steps to minimize the loss resulting from a breach of contract.

Remoteness

A doctrine from Hadley v Baxendale limiting damages to those arising naturally from the breach or those in the reasonable contemplation of the parties at formation.

Not unlikely

The test for remoteness in contract law established in The Heron II, denoting a degree of probability less than an even chance but not très unusual.

Assumption of responsibility

A concept from Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) stating that liability depends on whether the party can be taken to have accepted responsibility for that type of loss.

Liquidated damages

A genuine pre-estimate of loss agreed upon by parties at the time of formation to be paid if a breach occurs.

Penalty clause

An unenforceable provision that stipulates a payment 'out of all proportion' to the legitimate interests of the innocent party, intended to punish the breacher rather than compensate for loss.