Decided 10 October 2001 End date October 10, 2001 | Citation(s) [2002] 2 NZLR 433 | |
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Full case name ELECTRICITY CORPORATION OF NEW ZEALAND LIMITED Appellant v FLETCHER CHALLENGE ENERGY LIMITED Respondent Transcript(s) Court of Appeal judgment Ruling court Court of Appeal of New Zealand Judge sittings Ivor Richardson, Clarence Thomas, Kenneth Keith, Peter Blanchard, John McGrath | ||
Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd [2002] 2 NZLR 433 regarding certainty in contract formation.
Contents
Background
Western Mining Corporation was selling it's 40% stake in the Kupe gas field, for which Fletcher Challenge Energy and Electricity Corporation were interesting 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 certaincy making the contract unenforceable.
Held
The court of appeal ruled that there was not a legally binding contract