The Secretary, Home and Territories Department, has forwarded the following Memorandum for advice:

• The Administrator of the Territory of New Guinea requested that the Natives’ Contracts Protection Ordinance be amended to provide power for the Administrator to annul any contract at any time for any reason he thinks fit. It was considered that the authority asked for is very arbitrary and the proposed amendment was not approved by the Minister.

2. The Administrator has now submitted a memorandum, copy attached, giving his reason why he considers an amendment of the Ordinance necessary and suggesting that provision on the following lines be added to section 7 of the Ordinance:

The Administrator may cancel at any time any contract which in his opinion is contrary to the interest of the natives.

I shall be glad if you will kindly favour me with advice–

1. as to whether there is any legal objection to the amendment proposed by the Administrator in paragraph 5 of his memorandum, and whether if such amendment were effected, it would apply to existing contracts; and
2. whether as the Ordinance now stands, it is competent for the Administrator to adopt the course he proposed in paragraph 4 of his memorandum.

The Administrator’s Memorandum reads as follows:

• As suggested by you during our conversation yesterday, I am re-submitting the matter of an amendment to the Natives’ Contracts Protection Ordinance having for its object the granting of power to the Administrator to cancel a contract to which natives are parties at any time. I am doing this because, from our conversation, it would appear that the position has not been clearly understood.

2. Under the Ordinance certain contracts made by a European with a native are not valid until they receive the approval of the District Officer. There is, therefore, no provision for any check on the contract other than that of the District Officer. Generally, it can be said the District Officers are most careful in regard to native interests. A case has arisen in which approval was given to a contract which involved some people of a native village which in my opinion was unconscionable. The justification for the District Officer’s approval was that the natives themselves were quite anxious to undertake the work entailed. This contract having been approved by the District Officer, there is no way in which it can be amended or cancelled.
3. The classes of contracts at present in existence are–
1. a contract by natives to collect, cut, dry and bag the copra from a plantation and deliver it to the plantation, the price paid to the natives being £5 per ton. In two instances of this kind of contract the natives having their own groves sell their copra to the planter for £3 per ton, in each case the planter ‘finding’ bags and twine. In addition the natives undertake to keep the plantation clean.
2. a contract to clear and plant virgin country, the price varying according to the class of country to be dealt with.

In the case of (i), above, the two contracts referred to are for five years and so far as I know there is no provision for any earlier determination as, for instance, by notice on either side. While of course it is recognised that in the case of a contract between Europeans where both parties may be presumed to be able to look after themselves, it would be wrong for an Administrator to interfere with contract. But we are dealing with a contract, one of the parties to which is a native or a group or community of natives whose interest it is our paramount duty to conserve and who are quite unable to look after themselves. These contracts as a rule allow a very liberal margin in favour of the white contractor. It is quite possible that during the term of a contract, conditions may so alter and circumstances arise reacting very much to the detriment of the native and causing distinct hardship, especially in the case of those contracts where the natives have agreed to sell their crop at a price fixed on a low market value of the product and, although even there I agree that contracts should not be lightly interfered with, I do think it is desirable that there should be some means by which the natives may be relieved from the operation of a contract which is becoming extremely harsh and unfair. It should be remembered that these contracts are not between individuals but as a rule affect a whole village or community of natives. Were they mere individual contracts, the position would be quite different but only in degree.

With regard to number (ii) above, it may be said that there is sufficient safeguard in the fact that a contract has to be approved by the District Officer, but so far there is no check on the District Officer or no remedy in the case of an error of judgement on his part.

4. As I pointed out I can possibly meet the whole situation by Administrative Instructions to District Officers, namely, that no contract could be approved by them without reference to the Administrative Instructions to District Officers, namely, that no contract could be approved by them without reference to the Administrator and the difficulties outlined in connection with (i) above would perhaps be set by the insertion in future contracts of a clause providing for the termination by six months notice from either side. This, however, would not enable us to deal with the existing contracts and is of doubtful validity in view of the statutory powers given to District Officers. However, should the Minister not approve of the amendment, these are the methods which I propose to adopt.
5. I would suggest that the amendment be worded somewhat as follows:

The Administrator may cancel at any time any contract which in his opinion is contrary to the interests of the natives.

In my opinion, the Governor-General has power to enact the legislation recommended by the Administrator, and therefore there is no legal objection to the proposed legislation on the ground of its validity.

It is true, however, as the Administrator apparently recognises, that the proposed legislation would constitute a departure from the general principles of the law of contract in British communities. On the other hand, however, it must be recognised that the ordinary law of contract applicable to persons in a civilised community is hardly suitable for application to dealings between civilised persons and natives.

The proposal recommended by the Administrator is somewhat analogous to the law relating to infants’ contracts, which provides that contracts for necessaries and certain contracts (including contracts of service) for the infants’ benefit are valid, but other contracts entered into by infants are void or voidable.

There is one important difference between the law relating to infants’ contracts and the Administrator’s proposal, namely, that under the law of contracts the question whether a contract is for the benefit of an infant is decided by a court–not by an executive authority.

If the proposal is adopted, therefore, the Administrator will be required to exercise powers of a judicial nature. It is possible that this may be the most satisfactory and efficient way of dealing with the matter. That is a question of policy which can only be determined, perhaps, after consideration of the opinions of authorities on native administration and after careful investigation of the circumstances existing in New Guinea. If it is desired to pass an Ordinance conferring such powers on the Administrator, I think there is power to do so.

In regard to the second question submitted for advice, section 7 of the Natives’ Contracts Protection Ordinance reads as follows:

7. It shall be entirely in the discretion of a District Officer or other duly authorized Officer to approve or disapprove a contract, unless he has been directed by the Administrator to approve or disapprove the contract.

This section authorises the Administrator to give directions to District Officers in regard to the approval or disapproval of contracts.

I am of opinion, therefore, that it is competent for the Administrator to adopt the course proposed in paragraph 4 of his Memorandum.

[Vol. 24, p. 252]