Contract Law Act Nz

25 Sep , 2022   David  

Contract Law Act NZ: Understanding the Basics

If you`re in the business of buying, selling, or providing services, dealing with contract law is part of your day-to-day activities. The Contract Law Act of New Zealand is a set of rules that govern the formation and performance of contracts between parties. This article will provide you with an overview of the essentials of the Contract Law Act in New Zealand.

What is a Contract?

In general, a contract is an agreement between two or more parties which creates legal obligations that the parties are bound to perform. There are three essential elements of a contract: offer, acceptance, and consideration.

Offer – An offer is a proposal made by one party to another that is intended to create a legal obligation when accepted.

Acceptance – Acceptance occurs when the offeree communicates their intention to be bound by the terms of the offer made by the offeror.

Consideration – Consideration is something of value that is promised or given in exchange for something else.

Formation of a Contract

For a contract to be legally binding, certain requirements must be met. The Contract Law Act of New Zealand specifies that a contract must be:

1. Consensual – Both parties must agree to the terms of the contract freely.

2. Intention to create legal relations – Both parties must intend to enter into a legally binding agreement.

3. Capacity – The parties must be legally capable of entering into a contract.

4. Certainty of terms – The terms of the contract must be clear and certain.

5. Form – In some cases, a contract must be in writing.

Performance of a Contract

Once a contract is formed, the parties must perform their obligations in accordance with the terms of the contract. If one party breaches the contract, the other party may be entitled to damages or other remedies.

There are three types of breaches of contract:

1. Material breach – A material breach occurs when one party fails to perform a significant term of the contract.

2. Minor breach – A minor breach occurs when one party fails to perform a minor term of the contract.

3. Anticipatory breach – An anticipatory breach occurs when one party communicates their intention not to perform their obligations under the contract.


The Contract Law Act of New Zealand provides a framework for the formation and performance of contracts between parties. Understanding the basics of contract law is essential for any business owner or service provider, as contracts are a fundamental part of doing business. By familiarizing yourself with the requirements for formation and performance of contracts, you`ll be better equipped to navigate the complex world of contractual relationships.