Contract and Commercial Law Act 2017

Contracts legislation - Illegal contracts - Illegal contracts have no effect

74: Protection of persons who acquire property in good faith and without notice

You could also call this:

“Protection for innocent people who receive property from illegal contracts”

If you get something that doesn’t belong to you because of an illegal contract, you might still be able to keep it in certain situations. This can happen if you weren’t part of the illegal contract, you didn’t know the item came from an illegal contract, and you acted honestly when you got it.

This protection applies in two main cases. The first is when someone who was part of an illegal contract gives you something valuable. The second is when you get something from a person who got it from someone involved in an illegal contract.

When we talk about giving something to someone else, we call it a “disposition”. This can mean selling, giving away, or transferring ownership of property in any way.

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 It might be out of date or be missing some parts.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=DLM6844169.


Previous

73: Illegal contracts have no effect, or

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


Next

75: Who may be granted relief, or

"The court can help you if you're in a tricky situation with an illegal contract"

Part 2 Contracts legislation
Illegal contracts: Illegal contracts have no effect

74Protection of persons who acquire property in good faith and without notice

  1. Nothing in section 73 invalidates a disposition of property referred to in subsection (2) if the person to whom the disposition was made—

  2. was not a party to the illegal contract; and
    1. had not, at the time of the disposition, notice that the property was the subject of, or the whole or any part of the consideration for, an illegal contract; and
      1. otherwise acted in good faith.
        1. The dispositions are—

        2. a disposition of property by a party to an illegal contract for valuable consideration:
          1. a disposition of property made by or through a person who became entitled to the property under a disposition to which paragraph (a) applies.
            1. See section 9 (which defines disposition).

            Compare