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Contract and Commercial Law Act 2017

Contracts legislation - Frustrated contracts - Other provisions relating to application

68: Court must treat performed part of contract that can be properly severed as separate contract

You could also call this:

“Court can split contracts into finished and unfinished parts when something goes wrong”

If you have a contract that can’t be completed because something unexpected happened, the court might look at it in parts. They will check if any part of the contract was finished before the problem occurred. If a part was finished, or almost finished except for a payment that can be worked out, the court will treat that part differently.

The court will consider this finished part as if it were a separate contract that wasn’t affected by the problem. They will apply the rules about unfinished contracts only to the rest of the contract.

This helps to make sure that the work that was already done is still recognised, even if the whole contract couldn’t be completed.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844156.

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

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

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69: This subpart does not apply in certain circumstances, or

"Sometimes this part of the law doesn't count for certain agreements"

Part 2 Contracts legislation
Frustrated contracts: Other provisions relating to application

68Court must treat performed part of contract that can be properly severed as separate contract

  1. This section applies if—

  2. the court considers that a part of a contract to which this subpart applies can properly be severed from the remainder of the contract; and
    1. that part of the contract was—
      1. wholly performed before the time of discharge; or
        1. wholly performed before the time of discharge except for the payment, in respect of that part of the contract, of money that is or can be ascertained under the contract.

        2. The court must treat—

        3. the part of the contract described in subsection (1) as if it—
          1. were a separate contract; and
            1. had not been frustrated; and
            2. sections 60 to 66 as applying only to the remainder of the contract.

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