Contractual Mistakes Act 1977

1: Short Title
This Act may be cited as the Contractual Mistakes Act 1977.
2: Interpretation
1: In this Act, unless the context otherwise requires,— court mistake
2: For the purposes of this Act, and without limiting the meaning of the term mistake of law, but subject to section 6(2)﻿(a)
3: There is a contract for the purposes of this Act where a contract would have come into existence but for circumstances of the kind described in section 6(1)﻿(a) Section 2(1) court substituted 19 December 2002 section 3 Contractual Mistakes Amendment Act 2002
3: Act to bind the Crown
This Act shall bind the Crown.
4: Purpose of Act
1: The purpose of this Act is to mitigate the arbitrary effects of mistakes on contracts by conferring on courts section 6
2: These powers are in addition to and not in substitution for existing powers to grant relief in respect of matters other than mistakes and are not to be exercised in such a way as to prejudice the general security of contractual relationships. Section 4(1) amended 19 December 2002 section 4 Contractual Mistakes Amendment Act 2002
5: Act to be a Code
1: Except as otherwise expressly provided in this Act, this Act shall have effect in place of the rules of the common law and of equity governing the circumstances in which relief may be granted, on the grounds of mistake, to a party to a contract or to a person claiming through or under any such party.
2: Nothing in this Act shall affect—
a: the doctrine of non est factum:
b: the law relating to the rectification of contracts:
c: the law relating to undue influence, fraud, breach of fiduciary duty, or misrepresentation, whether fraudulent or innocent:
d: the provisions of the Illegal Contracts Act 1970 sections 74A 74B
e: the Frustrated Contracts Act 1944
3: Nothing in this Act shall deprive a court Section 5(2)﻿(d) amended 1 March 2017 section 7(2) Property Law Amendment Act 2016 Section 5(3) amended 19 December 2002 section 5(a) Contractual Mistakes Amendment Act 2002 Section 5(3) amended 19 December 2002 section 5(b) Contractual Mistakes Amendment Act 2002
6: Relief may be granted where mistake by one party is known to opposing party or is common or mutual
1: A court may in the course of any proceedings or on application made for the purpose grant relief under section 7
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 1 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 into the contract by the same mistake; or
iii: that party and at least 1 other party (not being a party having substantially the same interest under the contract as the party seeking relief) were each influenced in their respective decisions to enter into the contract by a different mistake about the same matter of fact or of 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, which was, in all the circumstances, a benefit or obligation substantially disproportionate to the consideration therefor; and
c: where the contract expressly or by implication makes provision for the risk of mistakes, the party seeking relief or the party through or under whom relief is sought, as the case may require, is not obliged by a term of the contract to assume the risk that his belief about the matter in question might be mistaken.
2: For the purposes of an application for relief under section 7
a: a mistake, in relation to that contract, does not include a mistake in its interpretation:
b: the decision of a party to that contract to enter into it is not made under the influence of a mistake if, before he enters into it and at a time when he can elect not to enter into it, he becomes aware of the mistake but elects to enter into the contract notwithstanding the mistake.
7: Nature of relief
1: Where by virtue of the provisions of section 6
2: The extent to which the party seeking relief, or the party through or under whom relief is sought, as the case may require, caused the mistake shall be one of the considerations to be taken into account by the court in deciding whether to grant relief under this section.
3: The court shall have a discretion to make such order as it thinks just and in particular, but not in limitation, it may do 1 or more of the following things:
a: declare the contract to be valid and subsisting in whole or in part or for any particular purpose:
b: cancel the contract:
c: grant relief by way of variation of the contract:
d: grant relief by way of restitution or compensation.
4: An application for relief under this section may be made by—
a: any person to whom the court may grant that relief; or
b: any other person where it is material for that person to know whether relief under this section will be granted.
5: The court may by any order made under this section vest any property that was the subject of the contract, or the whole or part of the consideration for the contract, in any party to the proceedings or may direct any such party to transfer or assign any such property to any other party to the proceedings.
6: Any order made under this section, or any provision of any such order, may be made upon and subject to such terms and conditions as the court thinks fit.
8: Rights of third persons not affected
1: Nothing in any order made under this Act shall invalidate—
a: any disposition of property by a party to a mistaken contract for valuable consideration; or
b: any disposition of property made by or through a person who became entitled to the property under a disposition to which paragraph (a) applies— if the person to whom the disposition was made was not a party to the mistaken contract and had not at the time of the disposition notice that the property was the subject of, or the whole or part of the consideration for, a mistaken contract and otherwise acts in good faith.
2: Nothing in any order made under this Act shall affect the operation of subpart 5
3: In this section— disposition
a: any conveyance, transfer, assignment, settlement, delivery, payment, or other alienation of property, whether at law or in equity:
b: the creation of a trust:
c: the grant or creation of any lease, mortgage, charge, servitude, licence, power, or other right, estate, or interest in or over any property, whether at law or in equity:
d: the release, discharge, surrender, forfeiture, or abandonment, at law or in equity, of any debt, contract, or thing in action, or of any right, power, estate, or interest in or over any property; and for this purpose a debt, or any other right, estate, or interest, shall be deemed to have been released or surrendered when it has become irrecoverable or unenforceable by action through the lapse of time:
e: the exercise of a general power of appointment in favour of any person other than the donee of the power:
f: any transaction entered into by any person with intent thereby to diminish, directly or indirectly, the value of that person's own estate and to increase the value of the estate of any other person mistaken contract section 6(1)﻿(a) Section 8(2) amended 1 January 2008 section 364(1) Property Law Act 2007 Section 8(3) disposition substituted 3 December 2007 section 445 Insolvency Act 2006
9: Jurisdiction of
District Courts Section 9 repealed 19 December 2002 section 6 Contractual Mistakes Amendment Act 2002
10: Jurisdiction of Disputes Tribunals
Section 10 repealed 19 December 2002 section 6 Contractual Mistakes Amendment Act 2002
11: Amendment to Arbitration Act 1908
Section 11 repealed 1 July 1997 section 18 Arbitration Act 1996
11A: Act does not apply to contracts governed by foreign law
This Act does not apply to any contract, or any part of any contract, that is governed by a law other than New Zealand law. Section 11A inserted 19 December 2002 section 7 Contractual Mistakes Amendment Act 2002
12: Application of Act
This Act shall not apply to contracts entered into before the commencement of this Act.