Consumer Law Reform Bill passes into law (at last)

Wednesday 11 December 2013

Authors: Laura Littlewood and Katie Green

Overhaul of New Zealand's consumer law

You would be forgiven for assuming the Consumer Law Reform Bill had been parked until 2014, after its much drawn-out progress through Parliament. However, yesterday the Bill (in the form of five separate amendment Acts and one replacement Act) passed its third reading. The Acts should receive Royal assent before the sun sets on 2013, but many of the provisions of the Acts will not come into force for six months and, in some cases, 15 months (see details below).

The Acts had bipartisan support. Together they are intended to update New Zealand's consumer law to include modern transactions and to align our law more closely with Australia.

A table summarising the key changes under each of the Acts is set out at the end of this article.

How long do you have to comply?

The Acts include a number of transitional provisions which give you time to update your contracts and practices. The key provisions that will come into force over the next 15 months are as follows:

​Implementation timing
6 Months (Jun​e 201​4)*​
15 months (March 2015)*

In six months* new provisions come into effect relating to:

  • contracting out of the Fair Trading Act 1986 (FTA)
  • unsubstantiated representations
  • extended warranties
  • unsolicited goods and services
  • uninvited direct sales
  • lay-by sales
  • internet traders and shill bidding
  • delivery relating to guarantee
  • guarantee relating to electricity and gas​
  • indemnification of gas and electricity retailers
In 15 months* a new prohibition relating to "unfair contract terms" in "standard form consumer contracts" comes into effect.

Were there any last minute changes?

A number of Supplementary Order Papers (SOPs) have been introduced since the Bill was considered at the Select Committee stage, primarily in relation to insurance contracts. These have been reviewed in previous updates here.

Two further and final SOPs (SOP 404 and SOP 405) were also introduced in the week preceding the final reading of the Bill. These SOPs introduced technical amendments or amendments which provided clarification on previous amendments and did not introduce any substantive changes.

What do you need to do?

Some of the key issues which you will need to consider before the transitional periods come to an end are:

  • Do your "standard form consumer contracts" include any "unfair contract terms"?

    This may also cover your business contracts if they relate to goods or services which are also consumer goods or services, as the definition of "consumer contracts" under the FTA is very broad.

  • Should you now be adopting a practice of contracting out of the FTA in your business to business contracts?

  • Have you updated your extended warranty agreements and materials to comply with the new mandatory requirements for these agreements? (These requirements also apply to applicable insurance contracts.)

  • Have you updated your lay-by sales agreements and direct sales agreements (and related practices) to comply with the new mandatory requirements for these agreements?

  • Are you dealing in second-hand goods on a routine or promotional/trade-in basis? If so, do you have the applicable licences in place?

  • Do you have processes and guidelines to ensure you retain supporting evidence that all representations that you make in trade are substantiated?

​​​​Consumer Law Reform 2013

Consumer Law Legislation

Summary of Key Amendments

Fair Trading Act 1986

The FTA:
  • prohibits certain unfair conduct and practices in relation to trade
  • provides for the disclosure of consumer information relating to the supply of goods and services
  • promotes product safety.
Amended by the Fair Trading Amendment Act 2013

The FTA now has new obligations and restrictions relating to:
  • unfair contract terms
  • unsubstantiated representations
  • extended warranties
  • shill bidding
  • unsolicited goods and services, uninvited direct sales and lay-by sales
  • consumer information standards, product safety and product recalls
  • internet sales
  • auctions and auctioneers.
The FTA also has a new right to contract out of certain provisions of the FTA in business contracts.

The maximum penalties for breaches of the FTA have been significantly increased - from $60,000 to $200,000 for individuals and from $200,000 to $600,000 for bodies corporate.
Consumer Guarantees Act 1993 (CGA)

The CGA aims to protect consumers by providing that consumers have certain:
  • guarantees when acquiring goods or services from a supplier
  • rights of redress against suppliers and manufacturers if goods or services fail to comply with a guarantee.
Amended by the Consumer Guarantees Amendment Act 2013

The CGA now includes new guarantees relating to:
  • delivery
  • the supply of electricity and gas.
The CGA also has new obligations and restrictions relating to:
  • contracting out of the CGA
  • collateral credit agreements
  • indemnification of gas and electricity retailers.
Secondhand Dealers and Pawnbrokers Act 2004

The Secondhand Dealers and Pawnbrokers Act sets out a licensing and certification regime for traders who are engaging in business as a secondhand goods dealer (whether as their primary or ancillary business).
Amended by the Secondhand Dealers and Pawnbrokers Amendment Act 2013

The scope of the Act has been expanded by widening the definition of "secondhand dealer" and including a presumption that certain activity falls under the Act.
Weights and Measures Act 1987

The Weights and Measures Act establishes a system of weights and measures to be used in trade in New Zealand and regulates their use for trade.
Amended by the Weights and Measures Amendment Act 2013

The amendments to the Weights and Measures Act primarily relate to:
  • offering goods for sale by number and weight which are not pre-packaged or which are pre-packaged at the premises where they are offered for sale
  • infringement fee levels and penalties.
Auctioneers Act 2013

The Auctioneers Act 2013 sets out a registration regime for auctioneers. It repeals and replaces the Auctioneers Act 1928.
The new Auctioneers Act moves auctioneer regulation away from a system of licensing to a system of registration of auctioneers.

It also sets out two tiers of offences with corresponding penalties.
Carriage of Goods Act 1979

The Carriage of Goods Act applies to all goods carried by road, rail, sea or air within New Zealand (subject to certain exceptions) and governs the rights and liabilities of carriers.
Amended by the Carriage of Goods Amendment Act 2013

The only amendment to the Carriage of Goods Act is to increase carriers' maximum liability to the other contracting party from $1,500 to $2,000, if the carrier's maximum liability has not been specified in the contract of carriage.​


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Laura Littlewood

    Senior Associate Auckland
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