Plain language law

New Zealand law explained for everyone

Contract and Commercial Law Act 2017

Contracts legislation - Frustrated contracts - Insurance

66: Money payable under contract of insurance

You could also call this:

“Insurance money and frustrated contracts: When it counts and when it doesn't”

When a court is deciding if someone should get money back or keep money after a contract is frustrated, they have to follow certain rules. You need to know that a frustrated contract is one that can’t be completed because something unexpected happened.

If you have insurance that pays you because of the same thing that frustrated the contract, the court won’t consider that insurance money when making their decision. This means the insurance money won’t affect whether you get to keep or return money from the frustrated contract.

However, there’s an exception to this rule. If the contract that was frustrated said you had to have insurance, or if a law said you had to have insurance, then the court will consider the insurance money in their decision.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844153.

Topics:
Business > Fair trading Money and consumer rights > Consumer protection
Previous

65: Estimates of expenses, or

"Courts can count extra costs when deciding how much money was spent on a contract"

Next

67: Court must give effect to provision in contract, or

"The court must follow special rules in your contract when things go wrong"

Part 2 Contracts legislation
Frustrated contracts: Insurance

66Money payable under contract of insurance

  1. This section applies when a court considers whether an amount ought to be recovered or retained under sections 61 to 64 by a party to the contract.

  2. The court must not take into account any money that has become payable to the party under a contract of insurance if the money is payable because of the circumstances that gave rise to the frustration of the contract.

  3. Subsection (2) does not apply if there was an obligation to insure that was imposed by an express term of the frustrated contract or by or under any enactment.

Compare