Plain language law

New Zealand law explained for everyone

Contract and Commercial Law Act 2017

Contracts legislation - Illegal contracts

72: Breach of enactment

You could also call this:

“Contracts stay legal even if they break rules, unless the rules say otherwise”

If you enter into a contract that is legal, it won’t become illegal or impossible to enforce just because carrying it out breaks a rule or law. This is true unless the rule or law specifically says that it will make the contract illegal, or if that’s clearly what the rule or law is meant to do.

Here’s an example to help you understand: Let’s say there are traffic rules that say a car must have a current warrant of fitness when it’s sold. If someone sells a car without a warrant of fitness, they’re breaking these rules. But the main reason for these rules is to make sure cars are safe, not to protect people who are buying cars. So, even though the seller broke the rules, the contract to sell the car is still legal. Keeping the contract in place doesn’t go against what the traffic rules are trying to do.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844166.

Topics:
Business > Fair trading Money and consumer rights > Consumer protection
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71: Illegal contract defined, or

"What makes a contract illegal?"

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73: Illegal contracts have no effect, or

"Contracts that break the law don't count and can't be used"

Part 2 Contracts legislation
Illegal contracts

72Breach of enactment

  1. A contract lawfully entered into does not become illegal or unenforceable by any party because its performance is in breach of an enactment, unless the enactment expressly so provides or its object clearly so requires.

    Example

    Certain traffic regulations require a car to have a current warrant of fitness when it is sold.

    A person sells a car without a warrant of fitness in breach of the regulations.

    The object of the regulations relates to promoting safety rather than protecting consumers.

    The contract is not an illegal contract. Upholding the contract does not frustrate the object of the regulations.

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