The dispute concerned a contract for the sale of coal mining rights and whether a performance payment had become payable. The parties disagreed about how the payment trigger should be interpreted and what surrounding evidence could be used.
Selected cases
Supreme Court of New Zealand · [2021] NZSC 85
Bathurst Resources Ltd v L & M Coal Holdings Ltd
The Supreme Court of New Zealand dealt with contract interpretation in a coal mining rights sale dispute.
Supreme Court of New Zealand14 July 2021
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Quick read
- If a payment or milestone trigger matters, draft it so an outsider can apply it without reconstructing months of negotiations.
- The Supreme Court of New Zealand dealt with contract interpretation in a coal mining rights sale dispute.
Use this to check
- Define milestone triggers precisely
- Keep negotiation records organised
- Use examples for complex earn-outs or royalty-style payments
Decision snapshot
What happened
- The dispute concerned a contract for the sale of coal mining rights and whether a performance payment had become payable.
- The parties disagreed about how the payment trigger should be interpreted and what surrounding evidence could be used.
What the court had to decide
- The issue was how New Zealand courts should approach contractual interpretation, including the use of pre-contract negotiations and post-contract conduct.
What the court decided
- The Supreme Court clarified that relevant contextual evidence can be admissible for interpretation in New Zealand.
- The decision is important for drafting payment triggers and commercial milestones.
Practical impact
Practical read
- If a payment or milestone trigger matters, draft it so an outsider can apply it without reconstructing months of negotiations.
- Context may help, but clear drafting is still cheaper than litigation.
Useful next steps
- Define milestone triggers precisely
- Keep negotiation records organised
- Use examples for complex earn-outs or royalty-style payments
How businesses should read it
If a payment or milestone trigger matters, draft it so an outsider can apply it without reconstructing months of negotiations. Context may help, but clear drafting is still cheaper than litigation.
Key takeaways
- Define milestone triggers precisely
- Keep negotiation records organised
- Use examples for complex earn-outs or royalty-style payments