Savvy Vineyards 3552 Ltd v Kakara Estate Ltd - The Supreme Court considers assignment of a contract

In Savvy Vineyards 3552 Ltd v Kakara Estate Ltd, the Supreme Court considered whether an incorrectly executed deed of assignment was sufficient to novate the agreement – i.e. to release a contracting party from the agreement and substitute them with another party.

Goldridge entered a contract for vineyard management with Kakara.  As permitted under the contract, Goldridge assigned their role to a new company, Savvy.  Savvy sent the assignment document to Kakara, requesting it be signed and returned – which never happened.  This relationship between Kakara and Savvy continued successfully for a year, until problems arose and Kakara challenged the legality of the assignment to Savvy.  The Court found that the actions of the parties demonstrated that Goldridge’s contractual position was fully replaced by Savvy, even though the deed of assignment was not fully executed.

This case has several implications for contract law:

  1. Firstly, it shows that what is agreed to in writing does not conclusively define the nature of a contracted relationship.  A court can look at the conduct the parties, and from observing that conduct, determine the relationship.

  2. Secondly, a signature on the dotted line is not the only way in which a contract can be accepted.  In this case, even though the contract was not properly executed, the Court found a contract had been formed.

Savvy Vineyards 3552 Limited v Karaka Estate Limited [2014] NZHC 121.