Cancellation

CCLA ss 43 - 49

Availability of relief

CCLA s 40

Common laws can still apply in cancellation

Worsdale (NZ 1981)

P only paid part of deposit on time. V validly cancels and sells to P2. V used part of P1's deposit to pay the real estate agent, and pocketed the rest. No automatic right to restitution.

Taylor (NZ 1985)

Threatened to find another buyer. Equivocal conduct consistent with contract remaining in force.

Mainzeal (NZCA 1991) (CCLA)

s 36 (repudiation) and s 37 (Misrep or breach) are not mutually exclusive

Other ways of ending contracts (CCLA s 59)

1. Part 3 Sale of Goods Act 2. Consumer Guarantees Act

Kumar (NZSC 2014) (Common law rule)

A contract cancelled for insufficient reason will be justified if a sufficient reason existed at time of cancellation even though the cancelling party wasn't aware of it

Meaning of CCLA s 34

A contractually agreed remedy covering circumstances which occur will predominate over any discretionary power the court may have under s 43 - 48 (Garratt v Ikeda)

Synge v Synge (UKQB 1894)

Agreement to sell and purchase a house, just before settlement, vendor sells house to another party. Performance made impossible by vendors breach, repudiation is clear

Mana Properties (NZSC 2010)

An essential term is one that the cancelling party would more probably than not have declined to enter into the contract without it (Affirmed in Kumar)

Availability of relief (CCLA ss 43 - 49)

Broad purpose is to relieve against particular injustice or hardship caused by the operation of ss 41 - 42. From the perspective of both parties. Need to prove some special feature for relief to apply. (Garratt v Ikeda)

Gray (NZ 1922)

Buyer received a plot of land smaller than he thought he contracted for, though he still continued to pay installments. Buyer demanded compensation. Held installments conveyed to the vendor that they were willing to continue with the contract

Te Kaha Hotel (NZHC 1989)

Cancellation communicated by a third party may be effective.

Ingram v Patcroft (NZSC 2011)

Cancelling party must be ready, willing and able to perform

North Harbour Builders (NZHC 2001)

Cancelling party's request for specific performance, coupled with their desire to continue building was held as an affirmation of the contract

Batchelor Peas (UK 1938)

Effect not breach must be substantial

Mainzeal (NZCA 1991) (Essential terms)

Equity permits that notice can make a term essential (dangerous here- in the interests of certainty)

Speedy Parcels (NZ 1990)

Failure to turn up for work after employer repudiated employment contract. Adequate notice of cancellation.

CCLA s 41

For cancellation to be effective there needs to be notice, either expressly or, when not practical or the other party cannot reasonably expect notice, intention can be shown though some clear means

Le Page (NZHC 1990)

Instruction to builder to stop work and send a final account. Adequate notice of cancellation.

CCLA s 38

No cancellation if the contract is affirmed

Garratt v Ikeda (NZCA 2002)

P only paid part of deposit on time. V notified P and gave P time, then cancelled. P argued that the rest of the deposit didn't have to be paid. s 42(1) (s 8 (3)(a)) only applies to obligations that are owed in the future. P did have to pay remainder of deposit.

Consumer Guarantees Act 1993

Remedy depends on whether breach is substantial. If so, a consumer can: • Reject goods which automatically revests title in the property in the supplier; or • Cancel the contract supplying services which automatically entitles the consumer to a refund of money paid unless otherwise ordered.

Refusal to perform contract before time for performance

Repudiation (s 36(1)) and/or anticipatory breach (s 27(1)(c)) + essential term or substantial effect (s 37(2))

Refusal to perform contract after time for performance

Repudiation (s 36(1)) and/or breach (s 27(1)(b)) + essential term or substantial effect (s 37(2))

CCLA s 36

Repudiation = making it clear that you don't intend to perform or complete your obligations under contract

Kumar (NZSC 2014) (Repudiation)

Repudiation = manifesting expressly or by inference a clear intention to not perform either part or the whole contract. Threshold for inference: if there is persistent refusal to perform until the other party accepts additional onerous terms which are inconsistent with the contract, believing there was never a contract.

Auckland Waterbed Co (NZHC 1984)

Statement made that cheque was being stopped in response to the other's breach. Adequate notice of cancellation.

Mainzeal (NZCA 1991) (Substantial consequences)

Substantially reduces benefit to cancelling party or substantially increase burdens on cancelling party Application: Substantiality is a matter of fact degree and impression (significant or considerable) and to be assessed objectively.

Part 3 Sale of Goods Act (now CCLA)

Terms are categorised. Remedy depends on category: • Conditions - If breached, the buyer may reject the goods and terminate the contract, but right to reject lost if goods have been "accepted" as defined in the SOGA. • Warranties - If breached, the buyer can sue for damages but not end the contract.

CCLA s 34

When a remedy is provided in contract for misrep, repudiation or breach then that provision functions in line with the relevant sections