Hawkes Bay olive grower Matapiro Olives was liable under a ‘take or pay’ contract to pay Wairarapa processor Olive Press a $129,300 processing fee for 2019 harvest even though no crop was delivered for processing that year.
The High Court was told Matapiro negotiated a three year processing contract with Olive Press Ltd for the 2018-2020 seasons. Matapiro was committed to consigning a minimum quantity of olives each season for processing at a set price. The three year deal did not get off to a good start. There were grizzles over late payment for the 2018 season. The following year, Matapiro sold its entire crop to a third party, delivering no olives to Olive Press for processing.
Olive Press sued. It was entitled to charge Matapiro an agreed 2019 processing charge for the 250 tonnes minimum delivery contracted, Olive Press said. Wages and contractor fees for each season are fixed; ‘take or pay’ covered these fixed costs, it said. Matapiro said Olive Press had suffered no loss; no damages were payable even if it was in breach of contract, it said.
‘Take or pay’ contracts seek to allocate up-front costs, Associate judge Johnston said. A contracting party can elect to ‘take’ or ‘pay’; or more appropriately in this case: ‘use’ or ‘lose.’ Having chosen not to use Olive Press’ facilities for the 2019 year, Matapiro was contractually obliged to still pay the agreed minimum fee.
Matapiro Olives (2008) Ltd v. The Olive Press Ltd – High Court (4.05.20 & 19.06.20)
20.107