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CISG CASE PRESENTATION

New Zealand 2 July 1998 Court of Appeal (Commercial property lease)
[Cite as: http://cisgw3.law.pace.edu/cases/980702n6.html]

Primary source(s) of information for case presentation: Case abstract

Case Table of Contents


Case identification

DATE OF DECISION: 19980702 (2 July 1998)

JURISDICTION: New Zealand

TRIBUNAL: Court of Appeal

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 1 NZLR 33

CASE NAME: Tri-Star Customs and Forwarding Ltd v Denning

CASE HISTORY: Unavailable

SELLER'S COUNTRY: [-]

BUYER'S COUNTRY: [-]

GOODS INVOLVED: Commercial property lease


UNCITRAL case abstract

NEW ZEALAND: Court of Appeal of New Zealand 2 July 1998
(Tri-Star Customs and Forwarding Ltd v Denning )

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/131]
CLOUT abstract no. 1260

Reproduced with permission of UNCITRAL

Abstract prepared by Petra Butler, national correspondent

The appellant and respondent had entered into a written agreement under which the respondent agreed to lease a commercial property to the appellant. Clause 4.1 of the agreement provided the appellant with an option to purchase the property for a price of $720,000 with no mention of GST. The respondents argued that as previous draft offers and agreements were “plus GST” they mistakenly believed they would receive net $720,000 instead of $720,000 less the payable GST incidence. The High Court therefore awarded the respondents relief based on a mistake under s 6 of the Contractual Mistakes Act 1977. The issue before the Court Appeal was whether relief under that section required the appellant to have actual knowledge of the existence of the mistake, or merely constructive knowledge based on an objective assessment of the facts.

The starting point is the use of the word “known” in s 6.[30] The Court found no justification for requiring anything other than actual knowledge by the use of that word in the section. An extended meaning which captures constructive knowledge is only possible where legislation expressly includes words such as “knew or ought to have known”.[31] For example Articles 2(a), 9(2), 38(3) and 49(2) of the Sale of Goods (United Nations Convention) Act 1994 (which incorporates the CISG into domestic New Zealand law)[32] use the words “knew or ought to have known” to clearly capture constructive knowledge. Therefore where the word “known” is intended to have a meaning extending beyond its ordinary one, the legislature can be expected to spell that out.[33]

In this case, it could only be shown that the appellant had constructive knowledge of the respondents’ mistake, not actual knowledge as required by the word “known” in s 6.[34] The respondents were therefore not entitled to relief under s 6.[35]

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FOOTNOTES
30. At [38].
31. At [38].
32. Sale of Goods (United Nations Convention) Act 1994, preamble.
33. At [38].
34. At [39].
35. At [41].

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Classification of issues present

APPLICATION OF CISG: No (Case mentioned CISG to emphasize concept of “knowledge”)

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 2(a) ; 9(2) ; 38(3) ; 49(2)

Classification of issues using UNCITRAL classification code numbers:

2A [Purchases for personal, family or household use (art. 2(a))];

9B ; 9B1 [Implied agreement on international usage; standards (art. 9(2)) ; Parties' knowledge or obligation to know];

38C1 [Compliance with requirements specified in art. 38(3)];

49B ; 49B1 [Buyer's loss of right to declare avoidance after delivery (art. 49(2)) ; Failure to avoid within periods specified in art. 49(2)(a)&(b)]

Descriptors: Knowledge

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (English): Unavailable

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Pace Law School Institute of International Commercial Law - Last updated July 12, 2013
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