Lloyd's Maritime and Commercial Law Quarterly
THE NEW ZEALAND CONTRACTUAL MISTAKES ACT: A LESSON IN LEGISLATION
Andrew Beck *
Contract law in New Zealand today has a very different face from that displayed two decades ago; this is the result of an active legislative programme, the ambit of which has already been well documented.1 Several of the reforms introduced have been extremely successful and have apparently caused little controversy. One of the statutes, however, has caused a number of problems, potentially altering the fundamental basis of contract.2 This is the Contractual Mistakes Act 1977.
The Act was the result of a study made by the Contracts and Commercial Law Reform Committee. From the Report produced by this Committee,3 it is apparent that the aim of the reform was to prevent unjust enrichment in a situation where there is only apparent agreement and where it would be unfair to hold the impoverished party to the contract. In order that these aims might be realized, the Act has two basic jurisdictional requirements: (a) the mistake must be one falling within certain specified categories; and (b) there must be a significant inequality of exchange involved.
The jurisdictional section of the Act is s. 6, which reads as follows:
6(1) A Court may in the course of any proceedings or on application made for the purpose grant relief under section 7 of this Act to any party to a contract—
(a) If in entering into that contract—
(i) That party was influenced in his decision to enter into the contract by a mistake that was material to him, and the existence of the mistake was known to the other party or one or more of the other parties to the contract (not being a party or parties having substantially the same interest under the contract as the party seeking relief); or
(ii) All the parties to the contract were influenced in their respective decisions to enter the contract by the same mistake; or
(iii) That party and at least one other party (not being a party having substantially the same interest under the contract as the party seeking relief) were influenced in their respective decisions to enter the contract by a different mistake about the same matter of fact or law; and
(b) The mistake or mistakes, as the case may be, resulted at the time of the contract—
(i) In a substantially unequal exchange of values; or
(ii) In the conferment of a benefit, or in the imposition or inclusion of an obligation,
* Senior Lecturer in Law, University of Otago.
1. Burrows, “Contract Statutes: The New Zealand Experience” [1983] Statute L.R. 76; Dawson, “The New Zealand Contract Statutes” [1985] 1 LMCLQ 42.
2. See the comments by Dawson 11 N.Z.U.L.R. 282 (1985); Dukeson [1985] N.Z.L.J. 40; Cato, “Mistakes and Restitution: a Defence of Conlon v. Ozolins” [1985] N.Z.L.J. 172; McLauchlan, “Mistake as to Contractual Terms under the Contractual Mistakes Act 1977” 12 N.Z.U.L.R. 123 (1986); Chen-Wishart, “The Contractual Mistakes Act 1977 and Contract Formation” 6 Otago L.R. 334 (1986).
3. Report on the Effect of Mistakes on Contracts (1976).
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