New Zealand: Be aware of imminent changes to our trading laws

Introduction

Major changes to the Fair Trading Act, Consumer Guarantees Act and four other important pieces of consumer legislation will have an effect on every business or individual who is buying or selling goods and services in New Zealand –including individuals who trade via Trademe.

It is important that you understand what these changes mean for you.

Purpose

The law reform was designed to update consumer law in New Zealand and to harmonise it with Australian law. The changes are intended to provide stronger consumer protection so that consumers can trade with greater confidence and to promote competition, innovation and growth.

What laws are changing?

There are significant changes to the Fair Trading Act 1986 and Consumer Guarantees Act 1993. There are also changes to the Carriage of Goods Act, Weights and Measures Act, Secondhand Dealers and Pawnbrokers Act as well as a new Auctioneers Act.

When do these changes take effect?

Some of the changes took effect last December. These include changes to new product safety requirements and the increased powers of the Commerce Commission. Changes to collateral credit contracts are also now in effect.

However, most of the key changes come into effect very soon on 17 June 2014. Changes that will come into force then include those relating to:

  • unsubstantiated representations by vendors;
  • the provision of extended warranties;
  • rules around the provision of unsolicited goods;
  • cooling off periods for telephone and door sales;
  • internet sales (including from overseas into New Zealand); and
  • unachievable delivery guarantees.

Further changes relating to unfair contract terms will come into force in March 2015.

We will take a look at the changes to the two most significant pieces of legislation in turn.

Consumer Guarantees Act 1993

The Consumer Guarantees Act protects consumers by providing certain guarantees from suppliers and manufacturers when goods are acquired.

The changes extend the Act to cover goods ordered over the internet or by telephone (including by individuals if sold by a "person in trade") and goods sold at auction or tender.

The amendments also introduce new guarantees for the delivery of goods. Traders will be liable under the Act if goods do not arrive within the stated timeframe or arrive damaged.

There are also new provisions relating to a five day cooling off period for telephone and door to door sales. During this period such consumers can cancel their purchase - as of right.

Fair Trading Act 1986

The Fair Trading Act protects consumers by prohibiting unfair conduct and trade practices. It provides for the disclosure of information relating to goods and services and promotes product safety. There are numerous changes that affect traders.

The new law prevents traders from making "unsubstantiated representations." Traders who claim that their goods are cheaper, better, superior or provide particular benefits must now have reasonable grounds for making those claims. Traders who claim that the good is for sale at "half price" need to be able to show that it is usually sold for twice that sale price!

Extended warranties have become a common occurrence in New Zealand in recent years. The law now specifies new disclosure requirements required by traders (who must provide comparisons of what consumers would get with and without purchasing the extended warranty) and also provides for a cooling off period so that consumers can properly think about whether they want to pay extra for the additional benefits of the extended warranty.

Unsolicited goods are goods delivered to a consumer who did not ask for them, after which the trader usually asks the recipient to pay if they wish to keep them. A consumer who is the recipient of unsolicited goods now has no general obligation to pay for them. What is more, if they tell the trader that they do not want the goods and then make the goods available for collection for 10 working days after receipt, the goods become theirs as a "gift" if not collected by the trader within the 10 working days period.

The changes also prohibit businesses from including "unfair contract terms" in standard form consumer contracts. An unfair term is one that causes a consumer to be disadvantaged when it is not a truly necessary term of the contract. For example a term that states that a business can change or alter other terms in a contract without consulting the consumer first.

The Commerce Commission has been granted extended powers. There are now increased penalties for breaching the Fair Trading Act - companies found breaching the Act can be fined up to $600,000 and individuals up to $200,000 per offence.

Finally, traders (including individuals) who are "in trade" and who make sales over the internet are now fully covered by the Fair Trading Act – even if the trader is based outside of New Zealand.

Contracting out of these Acts

You cannot contract out of these Acts if you are in the business of providing goods or services to consumers.

The only exception to this rule is where one business is contracting with another. To successfully exclude the provisions of the Acts both parties must be in trade, they must contract out in writing, and the exclusion must be fair and reasonable. What is fair and reasonable in the circumstances will depend on a number of different factors such as the type of agreement/whether one party has more bargaining power than the other and so on.

Conclusion

If you are a consumer you are about to enjoy more protection and benefits when you purchase goods and services in New Zealand.

If you are a business or an individual who trades then you should quickly come to grips with the new legislation or you will face a risk of prosecution. In particular we are aware of many of our clients who make strong statements about their products and might be at risk of making "unsubstantiated representations" in their advertising.

You should arrange for a review of your terms of trade and for your lawyer to also advise you on any aspects of your practice that might need to change (such as if you are involved in selling extended warranties or making telephone sales).

Remember most of these laws come into effect in only a few weeks time on 17 June 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions