Cancellation Flashcards

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1
Q

What are the four ways in which a contract can end?

A
  • performance
  • agreement
  • cancellation
  • frustration
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2
Q

When can a party cancel?

A
  • CCLA s 36 repudiation
  • CCLA s 37 breach or misrepresentation
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3
Q

Actual vs Anticipatory breach

A
  • Actual = Failure to perform without lawful excuse when performance is due
  • Anticipatory breach = Unwilling or unable to perform without lawful excuse before performance is due
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4
Q

What is repudiation?

A

An actual or anticipatory breach by one party. An unwillingness or inability to perform + no lawful excuse.

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5
Q

For repudiation, why do you not have to wait for actual breach to cancel?

A
  • When it is clear the breaching party intends to breach their obligations, it would be a waste of time and resources to require other party to fulfil their obligations
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6
Q

When can somebody be said to have “made it clear” that they will not perform obligations

A

Kumar
- Fundamental question is reasonable inferrence of intention
- Assessment is fact based against the background of a high threshold
- Must look at circumstances of the case

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7
Q

CCLA s 38

A

No cancellation if contract is affirmed.
A party is not entitles to cancel the contract is, with full knowledge of the repudiation, misrepresentation, or breach, the party has affirmed the contract.

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8
Q

Effect of affirmation

A

Affirming party looses their right to cancel.
It must be shown that the electing party made a firm and settled choice and does not intend to go back on it.

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9
Q

What is the procedure for cancellation?

A

S 41 When cancellation may take effect

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10
Q

Why is notice of cancellation important?

A

Schmidt v Holland [1982] 2 NZLR 406

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11
Q

Does a wrongful cancellation amounts to repudiation?

A

Yes.

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12
Q

What is the two step process for breach - s 37?

A
  1. misrepresentation / actual breach / anticipatory breach of contract
    AND
  2. Breached term essential or has substantial consequences
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13
Q

How to know if something is an essential term?

A
  1. may say expressly
    OR
  2. The cancelling party would more probably than not have declined to enter the contract if there had been no agreement that the term in question was essential
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14
Q

How to know if something substantially reduces benefit under s 37?

A

Look at the effect not the breach!

Aerial Advertising Co v Batchelor’s Peas
- No exact test – court has lots of discretion
- Matter of evaluating facts of each case

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15
Q

What if a party cancels a contract for insufficient reason when sufficient (unknown) reason also exists?

A

Kumar
- Cancellation still valid
- Sometimes a party may cancel for a wrong reason
- But if there was a valid reason, the cancellation should be valid

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16
Q

Which section provides for affirmation?

A

S 38 CCLA

17
Q

S 38 CCLA

A

A party is not entitles to cancel the contract is, with full knowledge of the repudiation, misrepresentation, or breach, the party has affirmed the contract.

18
Q

What is the affect of affirmation?

A

Affirming party looses their right to cancel

19
Q

What kind of evidence do you need of affirmation?

A

It must be shown that the electing party made a firm and settled choice and does not intend to go back on it. - Jansen v Whangamata Homes Ltd 2002

An unequivocal choice - BFT

20
Q

What amounts to adequate notice of cancellation?

A

S 41 (2)
- The cancellation may be made known by words or by conduct showing an intention to cancel, or both. It is not necessary to use any particular form of words, so long as the intention to cancel is made known.

Eg phone call or email will surfice

21
Q

What is the effect of cancellation?

A

Set out in Worsdale v Polgase
1. Cessation of further future performance (CCLA S 42 (1)(a))
2. Money and property remain where they are
3. Court has discretion to grant relief if 2. makes it unfair

22
Q

When may a court grant relief?

A

S 43
- if just and practicable

23
Q

If parties don’t get relief what can they do?

A

They can still sue in other damages - s 42
BUT
If the court has rated relief, the value of such relief should be taken into account when calculating damages.