Fletcher Challenge Fletcher Challenge was a multinational corporation from New Zealand. It was formed in 1981 by the merger of Fletcher Holdings, Challenge Corporation and Tasman Pulp and Paper. It had holdings in construction, forestry, building, and energy, ini ...

Energy Ltd v

Electricity Corporation of New Zealand The Electricity Corporation of New Zealand Ltd (ECNZ) is a New Zealand state-owned enterprise (SOE) formed on 1 April 1987, as a transition entity in the process of deregulating the New Zealand electricity market. Most of ECNZ's remaining liab ...

Ltd

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2 NZLR 433 regarding certainty in contract formation.

Background

Western Mining Corporation was selling its 40% stake in the Kupe gas field, for which Fletcher Challenge Energy and Electricity Corporation were interested in buying. ECNZ was particularly interested as it was planning to convert the Huntly power station with gas. Both companies entered into an agreement that if one of them purchased the WMC share, that they would split the gas between them. The contract was called a Heads of Agreement (HoA), but it left several matters unresolved, "to use all reasonable endeavors to agree to a full sale and purchase agreement within 3 months of the date of this agreement". Later however, after a substantial drop in power prices, ECNZ decided to not convert the power plant. As a result, FCE applied successfully to the High Court to make ECNZ enter into an agreement with them. ECNZ defended the issue on the basis that there was lack of certainty making the contract unenforceable.

Held

The court of appeal ruled that there was not a legally binding contract

References

Court of Appeal of New Zealand cases New Zealand contract case law 2001 in case law 2001 in New Zealand law {{NewZealand-case-law-stub