The government has announced that it is now accepting submissions on the Fair Trading Amendment Bill, which was introduced to Parliament at the end of last year. This legislation has the potential to impact how many businesses operate, particularly those that engage in SME business-to-business contracts.
As we have previously discussed here and here, this Bill proposes a number of changes to the Fair Trading Act, including introducing a prohibition against unconscionable conduct in trade, and an extension of the unfair contract terms regime to include business to business contracts where the applicable contract and trading relationship has a value of less than NZ$250,000 per year.
A huge number of contracts are likely to fall under the proposed business to business unfair contract terms regime. Most of these contracts will involve small and medium businesses which, according to the Ministry of Business, Innovation & Employment, make up 97% of the total number of businesses in New Zealand, generating 28% of GDP.
The proposed amendments to the Fair Trading Act are likely to have wide-ranging effects on how business is done in New Zealand, and it is important that affected businesses review the Bill and consider whether to file a submission.
In particular, businesses should consider making submissions as to:
whether the prohibition on unconscionable conduct in trade is appropriately worded, so as to strike a proper balance between protecting consumers and allowing businesses to operate competitively, and
whether the proposed extension of the Fair Trading Act's existing protection against unfair contract terms in standard form consumer contracts to small trade “business to business" contracts is appropriate.
Businesses that engage in door-to-door sales should take special care to review the proposed legislation, as the new restrictions as to when a salesperson can enter a property (for example, where a general “no solicitation" notice is posted), will impact on how these direct selling businesses operate.
Submissions close on Friday 27 March 2020. If you would like more information, or assistance with preparing your submission, please contact the authors or your usual Bell Gully adviser.
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.