NZ First leader Winston Peters has defended a clause in the party's constitution which hold MPs liable for a $300,000 penalty if they resign.

The clause states that every member who is elected as a New Zealand First list MP or constituency MP, must sign a "resignation obligation contract" which imposes a "liability for liquidated damages in the sum of $300,000" if they resign or are expelled from caucus or the party.

Peters said a lot of time and money was put on the line and "no one is entitled to jeopardise it and just walk off without any regard to the proportionality of the vote at election time, that's why it's important".

NZ First MP Ron Mark couldn't recall signing such a contract and said he would have to have a serious conversation with his family before he did.


"It's ringing a bell but I can't remember signing a contract of that sort."

But he agreed with the sentiment behind the clause.

"If you're a list MP, you're a list MP and you're there at the behest of the party. Quite frankly if they can't live up to the party's expectations they should leave."

Fellow NZ First MP Tracey Martin was adamant she didn't sign such a contract but was unsure whether the clause remained in the constitution.

But she had no problem with it.

"I've come in here as a NZ First MP, I have no intention of leaving NZ First. I was elected as a list MP."

National MP Nick Smith asked Justice Minister Andrew Little in Parliament whether the Government supported MPs being subjected to legally binding contracts requiring them to pay $300,000 if they fell out with their party.

Little said he had no knowledge of such an arrangement and it sounded hypothetical.


Peters then stood with a point of order saying Little had no ministerial responsibility for a party's constitution.

Peters has pushed for the Electoral (Integrity) Amendment Bill, also known as the waka-jumping bill.

The bill, which ensures Parliament's proportionality in the event that an MP leaves or is ejected from a party, is part of the Labour-NZ First coalition agreement and needs the support of the Green Party to pass into law.

In a statement, Smith said such contracts were illegal in other workplaces and would be unconstitutional in most democratic countries.

"So why are they at the core of our current Government. They turn elected representatives into puppets of a party leader who is now attempting to impose the same restrictions on free speech on Parliament's other MPs, in spite of universal opposition to the waka-jumping bill."

Speaking to reporters later, Peters said the waka-jumping bill, if passed into law, would render the clause obsolete.


"It was a stop-gap measure to ensure that members did not breach the MMP ratios that the voters of this country voted on."

All NZ First MPs had signed it, he said.