Introduction

This review covers significant developments in the law of contract since the last NZLS contract law review presented by Professor John Burrows QC,  NZLS seminar: Update on Contract (Oct, 2003).

Generally, contract disputes which reach the courts tend to reflect three questions which are often asked of advisers:

(a)      What does this provision of the contract mean?

(b)     Can we cancel the contract? Or is there a ground on which to say that we are not obliged to perform under the contract?

(c)      If we bring a claim for breach of the contract, what is the claim worth?

For lawyers, the questions translate into issues of interpretation, cancellation or avoidance and, the recoverability and quantification of damages. After an initial consideration of some decisions concerning formation of contract, the review is largely taken up with these areas.

Since the last review, the noteworthy procedural development within the New Zealand court system has been the establishment of the Supreme Court. From the time when the Court was established in January 2004, it has granted leave and heard a number of appeals in contract cases. In examining some of the cases, this review will attempt to identify any trends in the approach of the Court to issues in the law of contract.

In discussing new cases and developments in the contract area, it is important to keep in mind that radical changes in the law of contract are rare. Most disputes and reported cases concern the application of well established fundamental principles to particular sets of circumstances. Contract law is the foundation of transactional activity and a largely settled set of principles is necessary if certainty in commercial dealings is to be maintained.