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Business owners and employers in New Zealand know the importance of contracts in their day-day business. Without them, most business transactions will fail. This is because contracts outline the rights and obligations of both parties and are crucial to ensure they uphold these. The popularity of contracts is due to their legal enforceability. Either party can go to court to enforce a provision of a legally binding contract. Alternatively, if one party has suffered a loss due to a breach of contract, they can claim damages from the other party. The potential consequences of a contractual breach is one of many reasons why you should always consult a contract lawyer. This article will outline the other reasons to engage a contract lawyer in New Zealand.

1. To Check if a Contract Is Legally Binding

Even if you sign an agreement with another party, a contract may not always be legally binding. This is because several elements must first be met before a contract is legally binding. The table below outlines what those elements are and how they relate to a contract.

Offer

There must be a clear offer from one party to the other. The party receiving the offer must understand what the agreement entails.

Acceptance

The party receiving the contract accepts it in a way that the contract permits. If the party accepts the contract differently, then it may not be legally binding.

Consideration

Each party must either receive a benefit or detriment from the contract. It cannot be a one-sided transaction.

Intention

Both parties must intend for the contract to be binding when they form it. If one party thought they were entering into a non-binding contract, the courts would likely rule it legally unenforceable.

Certainty 

The terms of the contract must be certain and unambiguous. There must not be any confusion in the provisions. 

A lawyer will be able to read through a contract and check whether it is legally binding. They may also ask you questions relating to the formation of the contract and how each party has acted on it.

2. To Cancel a Contract

Another of the reasons to engage a contract lawyer is to help you leave a legally binding contract. There may be a situation where a contract is no longer viable for your business. The first step that they would recommend is for you to consult your contracting party. They may be willing to end the contract or vary it in such a way that makes it viable for you. If they are not able to do this, then you may need to think about termination. Your contract may have a clause that allows you to end the contract for a specific fee. This fee will be high as your contracting party will need compensation for you ending the contract early. 

Lastly, if there is no termination clause, then you will have to repudiate the contract. Repudiation is a situation where you do not uphold your obligations under a contract. Once this happens, the other party can either choose to enforce or terminate the contract. Be aware that if the other party chooses to terminate the contract, they can still claim compensation in court for any loss incurred through your repudiation.

3. To Vary a Contract

Another situation in which you would benefit from professional advice is if you want to vary the contract. Varying a contract means you are altering a provision in it. You can usually vary a contract with the consent of both parties. However, there may be specific clauses that do not allow you to vary a contract. One of these clauses is a ‘no oral variations clause’. As the name suggests, it prevents any variation of the contract made orally. However, a lawyer may get around this as the courts can sometimes void this clause. These clauses can be displaced if there is strong evidence that both parties intended to vary the clause orally.

Key Takeaways

Evidently, there are several reasons to engage a contract lawyer. Contracts are a central element of a business’ transactions, and many use them in their daily lives. Ensuring that your contract is enforceable and binding is essential to ensure your agreements are legally underpinned. Contracts are enforceable if they meet all the elements of a binding contract. However, a contract lawyer can help you with a variety of contractual issues. These include helping you:

  • figure out if your contract is enforceable;
  • cancel a contract; or
  • vary a contract.

If you need any legal assistance with contracts, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Can a contract be binding if it only meets some of the elements?

No, a contract must satisfy all the requirements for it to be legally binding. This ensures that both parties intended for it to be binding in court when they formed the contract.

Does cancelling a contract incur any further penalties?

If you cancel a contract in the correct way specified by the contract, then it will not incur any further penalties than stated in the contract. However, if you repudiate a contract, you can be liable for a breach of contract.

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