Catley v Herbert

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Catley v Herbert
Coat of arms of New Zealand.svg
Court Court of Appeal of New Zealand
Full case nameCatley v Herbert
Decided14 August 1988
Citation(s)[1988] 1 NZLR 606
Court membership
Judge(s) sittingRichardson, Somers and Hardie Boys JJ

Catley v Herbert [1988] 1 NZLR 606 is a cited case in New Zealand regarding whether a contract illegal under law, can be subsequently validated under the Illegal Contracts Act 1970. [1]

Illegal Contracts Act 1970 Act of Parliament in New Zealand

The Illegal Contracts Act [1970] is a New Zealand law that manages how contracts are deemed illegal under either common law or under Statute.

Contents

Background

Catley and Herbert were joint shareholders in a company, and had agreed that Herbert would buy out Catley's shares. This sale entailed the selling of some of the company property in order to purchase his shares. The law saw this as financing the purchase of a company's own shares, which was illegal under section 62 of the Companies Act 1950.

As a result, Herbert refused to pay Catley, on the basis that to do so would be illegal. Catley sought validation of the contract in the court.

Held

Validation of the contract was ordered.

Footnote: This case is often discussed with NZI Bank Ltd v Euro-National Corp Ltd [1992] 3 NZLR 528, where a similar transaction that also contravened section 62(1) was not validated

<i>NZI Bank Ltd v Euro-National Corp Ltd</i>

NZI Bank Ltd v Euro-National Corp Ltd [1992] 3 NZLR 528 is a cited case in New Zealand regarding whether a contract illegal under law, can be subsequently validated under the Illegal Contracts Act 1970.

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References

  1. Chetwin, Maree; Graw, Stephen; Tiong, Raymond (2006). An introduction to the Law of Contract in New Zealand (4th ed.). Thomson Brookers. p. [ page needed ]. ISBN   0-86472-555-8.