Beware The Risks Of Interpreting Contracts
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IntroductionDo you know the principles the Courts apply when interpreting contracts? These principles were recently considered by the Court of Appeal in GTV Holdings Ltd v Harris [2018] NZCA 95, a case involving the sale of a business. The same principles apply to other contracts but are often misunderstood and lead to conflict.The IssueThe dispute concerned the sale of Greenstone TV, a specialist reality TV production company that produced well known shows such as Serious Crash Unit, Border Patrol and Highway Cops. The agreement contemplated the retention of a significant portion of the purchase price after settlement and with an adjustment depending on whether Greenstone entered into an expected contract with Seven Network in Australia. If Greenstone did not secure the contract, or licenced less than the number of episodes produced, then there would be an adjustment to the purchase price. Alternatively, if Greenstone did licence the full series, there would be no adjustment and the full price was payable.
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