LAWS OF TONGA
1988 Ed.]
CHAPTER 26

CONTRACT

ARRANGEMENT OF SECTIONS

SECTION

1. Short title.
2. Contracts by Tongans enforceable.
3. Goods supplied.
4. Money lent.
5. Executory contracts.
6. Form of agreement.
7. Registration of agreement.
8. Priority of agreements.
9. Fees for registration of agreements.
10. Refusal to register agreement.
11. Remedies for breach of agreement.
12. Interest limited to 10 per cent.
13. No claim for refusal to register agreement.
14. Power of cabinet to exempt Tongans.
15. Application.

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Acts Nos. 5 of 1921, 13 of 1927, 14 of 1927,
6 of 1929, 20 of 1930, 3 of 1953, 6 of 1968,
17 of 1974, 14 of 1978, 48 of 1988

AN ACT TO REGULATE DEALINGS UPON CREDIT WITH TONGAN SUBJECTS

[24 August, 1921]

Short title.

1. This Act may be cited as The Contract Act.

Contracts by Tongans enforceable.

2. Subject to the provisions of this Act, all contracts entered into by Tongans aged 16 years and upwards for goods supplied or to be supplied, money lent or to be lent, or services to be rendered shall be enforceable by action.

Goods supplied.

3. (1) In the case of goods supplied not exceeding $500 in value, no action shall be maintainable for the price thereof unless there is produced to the Court at the hearing a written statement or invoice signed at the time of sale by the defendant or his agent in that behalf and containing a list of the various articles supplied and the price charged for each.

(2) Whenever as the result of one or more transactions the total indebtedness of a Tongan to another person for goods supplied exceeds $500, no action to recover the price of such goods shall be maintainable for an amount exceeding $500 unless there is produced to the Court at the hearing a written agreement in respect of each transaction by which the defendant's indebtedness to the plaintiff was increased beyond the amount of $500. Such agreement shall be executed in duplicate at the time of each such transaction and shall contain a list of the various articles supplied and the price charged for each and shall be stamped and registered as hereinafter required.

Nothing in this section shall be construed to preclude the plaintiff in any action mentioned in this subsection from obtaining judgment therein for an amount not exceeding $500 provided that an invoice or statement as required by subsection (1) has been produced to the Court. (Amended by Acts 20 of 1930, 3 of 1953 and 6 of 1968.)

Money lent.

4. (1) In the case of money lent not exceeding $500 in the aggregate, no action for the recovery thereof shall be maintainable unless there is produced to the Court at the hearing a receipt for the amount of the loan signed by the defendant at the time such loan was made.

(2) In every case where as the result of one or more loans the total indebtedness of a Tongan to another person for money lent exceeds $500, no action for the recovery thereof shall be maintainable for an amount exceeding $500 unless there is produced to the Court at the hearing a receipt for the amount of each loan by which the defendant's indebtedness to the plaintiff was increased beyond the amount of $500. Such receipt shall be signed in duplicate by both the lender and the borrower and by at least one witness aged 21 years or upwards and shall in respect of registration conform to the requirements of this Act in regard to agreements.

Nothing in this section shall be construed to prevent the plaintiff in any such action as is mentioned in this subsection from obtaining judgment therein for an amount not exceeding $500 provided that the evidence required by subsection (1) has been produced to the Court at the hearing.

Executory contracts.

5. No action shall be maintainable upon any contract for goods to be supplied, money to be lent, or services to be rendered where the consideration moving from either party exceeds $500 in value unless there is produced to the Court at the hearing a written agreement executed in duplicate and registered according to the requirements of this Act.

Form of agreement.

6. In every case where by this Act a written agreement is required, such agreement shall be in the form contained in the Schedule hereto with such modifications as circumstances require and shall be executed in duplicate in the presence of and be attested by at least one witness aged 21 years or upwards.

Registration of agreement.

7. The agreement and duplicate thereof together with the appropriate registration fee prescribed by this Act shall be forwarded to the magistrate of the district where the agreement was executed and such magistrate shall on receipt thereof register such agreement by indorsing on the back of same and of the duplicate the registered number of such agreement together with the date upon which the same was received for registration. The magistrate shall keep and file the agreement thus registered in his office and shall return the duplicate indorsed with the memorandum of registration to the person by whom the agreement was forwarded for registration.

Priority of agreements.

8. All agreements shall have priority according to the date of their Priority of registration and not according to the date of their execution.

Fees for registration of agreements.

9. The following fees for the registration of agreements under this Act shall be payable in advance to the several clerks of the Magistrates' Courts who shall issue official receipts for same and shall pay all such fees into the Treasury-

For registration of an agreement where the
consideration does not exceed $2000	2.00	
For registration of an agreement where the		
consideration exceeds $2000 but does not
exceed $4000	3.00	
For registration of an agreement where the
consideration exceeds $4000	5.00	
	
(Amended by Acts 6 of 1968 and 17 of 1974.)		

Refusal to register agreement.

10. (1) A magistrate may refuse to register any agreement if it appears to him that the terms of such agreement are-

(a) in contravention of any existing law; or

(b) beyond the power of either party to perform.

(2) In every case where a magistrate refuses to register an agreement he shall return such agreement with the reason for his refusal indorsed thereon.

(3) Upon the refusal of a magistrate to register an agreement, either of the parties thereto may make application to the Chief Justice for an order directing the magistrate to register such agreement and the Chief Justice may in his discretion grant or refuse such application.

Remedies for breach of agreement.

11. In addition to any money payable or due under a registered agreement, damages for the breach thereof may also be sued for and if such breach consists of failure or refusal to complete any work specified in the agreement the Court may either order the defendant to pay to the plaintiff such sum as in its judgment will be sufficient to defray the cost of completing such work by another person, together with such further sum by way of damages as to the Court may seem fit; or the Court may award damages only.

Interest limited to 10 per cent.

12. No interest at a rate higher than 10 per cent per annum shall be charged in or recoverable under a registered agreement:

Provided that this section shall not apply to-

(a) the National Reserve Bank of Tonga;

(b) an institution doing banking business, as defined in section 2 of the National Reserve Bank of Tonga Act; or
Cap. 102

(c) any person (a principal object of whose business is the extension of credit) to whom section 40 of the National Reserve Bank of Tonga Act applies pursuant to a Notice made with the approval of His Majesty in Council.
(See Act 48 of 1988, s. 62(2).)*

*Section 62 of Act 48 of 1988 (and therefore this proviso) was brought into operation on 1 July 1989.

No claim for refusal to register agreement.

13. No claim shall be valid or allowed against the Government or any magistrate by reason of any magistrate in exercise of the powers contained in section 10 hereof refusing to register an agreement.

Power of Cabinet to exempt Tongans.

14. It shall be lawful for the Prime Minister with the consent of exempt to Cabinet, upon application made on that behalf, to exempt any Tongan from the provisions of this Act. Exemption shall be granted by certificate under the hand of the Prime Minister and shall be subject to the conditions (if any) imposed in each case, and the Prime Minister may at any time with the consent of Cabinet cancel any such exemption and require the holder to return the same to his office under a penalty not exceeding $10. Notice of every such exemption and of every such cancellation shall be published forthwith in the Gazette. The production of any such certificate as aforesaid or a copy of the Gazette containing such publication as aforesaid shall be sufficient proof of exemption or of cancellation in any Court in the Kingdom. (Added by Act 20 of 1930.)

Application.

15. Nothing in this Act contained shall affect the validity of or be in any manner applicable to-

(a) an agreement between the master and seaman of a registered vessel duly made and registered in accordance with The Shipping Act;
Cap. 136

(b) a contract for the carriage of goods by sea; or

(c) an agreement for the sale or mortgage of any vessel.

(Acts 13 of 1927; 14 of 1927; 20 of 1930; and Amended by Act 14 of 1978.)

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THE SCHEDULE
(Section 6)

FORM OF AGREEMENT

THIS AGREEMENT made the ..................... day of ...................19.........

BETWEEN..............................of............................................ of the one part and
........................................... of ………………….................... of the other part.

The said* ....................................... agrees to †.......................................
The said †† .................................... agrees to ‡ ...................................... and pledges to the said ................................................ the following articles as security for the performance of this agreement: ** ....................................... and the said ......................................... undertakes and agrees to preserve carefully the said articles hereby pledged as security. And the said ........................................... further agrees that he will not give away sell or otherwise dispose of the said articles until he has received from ...................................................................... a signed memorandum stating that the terms of this agreement have been performed.

IN WITNESS whereof the said................................................................ and ……………...................................... have hereunto set their hands the day and year first above written.

Signatures of parties.

STAMP

Witness to the signatures of ........................... and .............................

* Insert here the name of the party of the one part.
† Set out here in full the nature of the services to be performed e.g.:-
(1) Cash to be advanced; (2) Goods to be supplied; (3) Services to be rendered and state also the date or dates when they are to be rendered.
†† Insert here the name of the party of the other part.
‡ Set out here in full the nature and extent of the services to be performed and when they are to be completed.
** Here enumerate any articles agreed on as security: if none, this clause may be struck out.

INDORSEMENT

Agreement between ....................................and...................................
Received for registration ............... day of ....................... 19 .
Registered No................................................
Magistrate, District of......................
(Amended by Act 6 of 1929.)

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