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Contract and Commercial Law Act 2017

Contracts legislation - Contractual privity

14: Variation or discharge of promise may require beneficiary’s consent

You could also call this:

“You might need permission to change or cancel a promise made to someone else”

If someone makes a promise that is covered by section 12, they might not be able to change or cancel that promise without getting permission from the person who was supposed to benefit from it. This happens in three situations:

First, if the person who was meant to benefit from the promise has changed what they’re doing because they believed in the promise. This is true even if they didn’t know exactly what was promised.

Second, if the person who was supposed to benefit has won a court case about the promise.

Third, if the person who was supposed to benefit has won an arbitration case about the promise.

When we talk about winning a court case or arbitration, we consider it won as soon as the decision is announced. This is true even if some paperwork still needs to be done, or if the decision gets changed a bit later. But if the decision gets completely thrown out later, then we act like it never happened at all.

Remember, there are some exceptions to these rules in sections 15 and 16.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844066.

Topics:
Business > Fair trading Money and consumer rights > Consumer protection
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13: Section 12 does not apply if no intention to create obligation enforceable by beneficiary, or

"Section 12 doesn't work if the contract wasn't meant to give someone special rights"

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15: Variation or discharge by agreement or in accordance with express provision, or

"Changing or ending promises: when everyone agrees or when it's allowed"

Part 2 Contracts legislation
Contractual privity

14Variation or discharge of promise may require beneficiary’s consent

  1. A promise to which section 12 applies and the obligation imposed by that section may not be varied or discharged without the consent of a beneficiary if—

  2. the position of the beneficiary has been materially altered by the reliance of the beneficiary or any other person on the promise; or
    1. the beneficiary has obtained against the promisor judgment on the promise; or
      1. the beneficiary has obtained against the promisor the award of an arbitral tribunal on a submission that relates to the promise.

        1. Subsection (1)(a) applies whether or not the beneficiary or other person has knowledge of the precise terms of the promise.

        2. For the purposes of subsection (1)(b) and (c),—

        3. an award of an arbitral tribunal or a judgment must be treated as having been obtained when it is pronounced even if—
          1. some act, matter, or thing needs to be done to record or perfect it; or
            1. on application to a court or on appeal, it is varied:
            2. if an award of an arbitral tribunal or a judgment is set aside on application to a court or on appeal, the award or judgment must be treated as having never been obtained.

              1. This section is subject to sections 15 and 16.

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