termination

Frustration – definition

Supervening event without fault makes performance radically different from what was undertaken → contract ends automatically.

Frustration – test (Planet Kids v Auckland Council 2013 NZSC)

Multi-factorial: terms; context; parties' knowledge/expectations/assumptions esp. as to risk; nature of event; reasonable calculations as to future performance; demands of justice. Core: "radically different" (Davis Contractors). Main purpose must be defeated.

Planet Kids – facts and outcome

Settlement of Public Works dispute: Council to pay compensation for childcare business closure and lease surrender; building burned before settlement, ending lease. Not frustrated – main purpose (certainty of outcome, timing, compensation) achieved on signing; Council got land sooner; surrender document a technicality.

Taylor v Caldwell

Music hall hired for concerts burned down → frustrated (subject matter destroyed).

Krell v Henry

Room hired to watch coronation procession, cancelled → frustrated (known purpose gone).

Rayneon v Fraser

New regulations banned dentist's neon sign → frustrated (supervening illegality) – "for interest only, not needed for exam".

Not frustration – more expensive/difficult

Davis Contractors (job took longer, cost more); Tsakiroglou (Suez closure, longer route) – not radically different.

Not frustration – self-induced

Maritime National Fish (chose not to licence chartered boat); Super Servant Two (chose to use remaining vessel elsewhere) – also "not lightly invoked", ends automatically.

Frustration – effect (CCLA ss 60–64)

Contract ends; s 61 money paid recoverable / ceases to be payable; s 62 allowance for expenses; s 63–64 just sum for valuable benefit.

Cancellation – structure (Kumar)

(1) Ground: s 36 repudiation or s 37 breach/misrep (2) common law rules (3) affirmation s 38 (4) notice s 41 (5) effect s 42 (6) relief ss 43–49.

Repudiation – s 36

By words or conduct, clear intention not to perform; high threshold (Kumar); genuine dispute about construction ≠ repudiation.

Synge v Synge / Schmidt v Holland

Synge – selling property to another = repudiation by conduct. Schmidt – merely asking to get out ≠ repudiation; vendors' failure to give cancellation notice meant their resale was itself repudiation.

s 37 – two stages

(1) Qualifying event: misrep, actual or anticipatory breach; (2) essential term (s 37(2)(a)) OR substantial effects (s 37(2)(b)).

Essential term test (Mana v James Developments 2010 NZSC)

Objectively, would the cancelling party have declined to enter the contract without it? Express words or context. Time not impliedly essential in land sales.

Mana v James Developments – facts

Minimum land area clause (cl 18.3) essential, title came in short; but no time essential – James cancelled without settlement notice → cancellation invalid; Mana fixed title later.

Macindoe v Mainzeal (1991 NZCA)

Buyers of Kitchener Towers units missed instalments after crash; Mainzeal made time of essence by notice, then cancelled validly. Term can be made essential after formation by reasonable notice; "substantial" = significant.

Substantial effects – Batchelor Peas

Banner flown during Armistice Day two minutes' silence – minor breach, disastrous effect → cancellation justified; it's the effect that must be substantial.

Kumar v Station Properties (2015 NZSC)

Queenstown apartment investors; side agreements (furniture, management) essential; Station refused them → not ready and willing → couldn't cancel. Investors' refusal (genuine dispute) not repudiation; cancelling for wrong reason ok if valid reason existed.

Affirmation – s 38

Can't cancel if affirmed with full knowledge (White & Carter v McGregor; Gray v Thomson – kept paying instalments).

Notice – s 41

Must be made known by words/conduct showing clear intention. Adequate: Auckland Waterbed ("cheque being stopped"), Speedy Parcels, Le Page, Andas (agent). Not: McLachlan v Taylor (equivocal threat).

Effect – s 42

Future obligations end; accrued rights stay (Garratt v Ikeda – unpaid deposit); no automatic restitution (Worsdale v Polgase).

Relief – ss 43–49

Court may order what's just (Thomas v Rankin; Newmans Tours v Ranier); s 49 damages still available, relief taken into account.