A signed contract is legally binding in New Zealand when all the elements of an enforceable agreement have been satisfied. If one of these elements is missing, the contract will be deemed null and void by the courts. Therefore, you can usually not change a contract once it has been signed. However, there are certain situations where you can change a term on a signed contract. This article will explain what those situations are and what needs to be considered.
When Can a Term on a Signed Contract Be Changed?
It is important to remember that when dealing with contracts, both parties must agree to any changes. If you try and change your contract without the permission of your contracting party, you could be in breach of the contract. In addition, this could lead to being sued and being liable for damages for any loss incurred. Therefore, you should always ensure you change your term in alignment with the requirements of a binding contract.
Creating a Binding Contract
The biggest issue with changing a term on a signed contract is making sure you change it in a way that satisfies the requirements of a binding contract. Therefore, you should follow the following steps when changing a term on a signed contract.
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Enter an offer |
When changing a term on a contract, write to your contracting party with the term and the change you wish to alter. This should be unambiguous. In addition, you should state why you want to change and if you are open to a counter offer. |
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The party receiving the offer must validly accept it |
Your contracting party must then accept the change you have proposed. This must also be done clearly and in the same medium that the offer was made. If the acceptance is not via an approved method, the courts could find this unenforceable. |
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Consideration is given in writing |
The premise of a contract is that both parties either benefit or face a detriment due to the contract. Therefore, the term that is changed cannot mean that nothing is given to one of the parties. If consideration is not satisfied, the contract will not be binding. |
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Intention to change the term |
There must also be a clear intention from your contracting party that they wanted to change the term. This is why it is vital that your propose any changes in writing as it records your intention to vary terms. |
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Certainty in the proposed changes |
The proposed change must also have certain terms. This means it should not include any ambiguity so that the courts can enforce it in a dispute. |
Can I Change a Term Due to a Mistake?
Sometimes contracts are formed and signed with mistakes in them. This may mean that you have to change the contract. There are different types of contractual mistakes. These are:
| Common |
A common mistake is when both parties to the contract suffer the same mistake. This mistake must influence their reasoning for coming into the contract. |
| Mutual | A mutual mistake is when both parties made a mistake that influenced them to enter into a contract. However, this mistake is where the mistakes were different but were based on the same type of law. |
| Unilateral/ Known | This is the type of mistake that influences your decision, and your contracting party knows this. A typical example is if you made a mistake about a building and the other entity knew about this. |
What Can Be Done If I Identify a Mistake?
If the courts are satisfied that either one of these mistakes has been made, they can change the contract’s wording to better reflect both parties’ intention when the contract was formed. However, there must have been a disproportionate exchange of values or benefits between the parties for this to happen due to the mistake.
Key Takeaways
It is common for contracts to change once you have signed them. This may happen due to an unforeseen set of circumstances or if there has been a mistake in the contract. If you want to change a term on a signed contract, ensure you follow the above process. This process aligns with the elements of a binding contract to be legally enforceable in court. If you believe you have made a mistake on your contract, the courts can give effect to the proper intention that both parties intended when they formed the contract. However, this will only be the case if there has been a disproportionate distribution of benefits because of the mistake.
If you need any legal assistance with changing terms, LegalVision’s experienced contract lawyers can help. Call us today on 0800 005 570 or fill out the form on this page.
Frequently Asked Questions
No, this change will not be valid, and the court may find you to have breached the contract.
No, they will only do this if it causes an imbalance between the parties.
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