Helpful Resources

Useful Legislation

The Commerce Act 1986

The Commerce Act 1986 forms nearly the whole of competition law in New Zealand. The purpose of that act is to promote competition in markets for the long-term benefit of consumers in New Zealand. In essence the act prevents parties from engaging in what is known as “anti-competitive” conduct. The Commerce Commission has been established to administer and enforce the act. The Commerce Commission has broad powers under the act to enforce and investigate anti-competitive conduct.

Some of the primary prohibitions under the act are:

• Contracts, arrangements, or understandings that contain a provision that has the purpose, or has or is likely to have the effect of substantially lessening competition in a market - As is apparent, this is quite a wide reaching prohibition;
• Contracts, arrangements, or understandings that contain a cartel provision. A cartel provision is a provision that has the purpose, effect, or likely effect of price fixing, restricting output, and market allocating in relation to the supply of goods and services – Again, a broad prohibition on certain conduct; and
• The use of substantial market power to restrict, prevent, or make it difficult for competitors from entering or competing in the market, and eliminating competitors from the market – Note this prohibition is against parties who have a substantial degree of power in a market only.

Consequences for breaching the act can be quite severe, individuals may be liable for a criminal conviction and fined up to $500,000, and companies may be fined up to (the greater of) $10,000,000, 3x the value of any commercial gain as a result of the breach, or 10% of the turnover for every financial year the breach occurred in.

However, the act also provides for various exemptions for certain conduct that may not breach the above prohibitions.

If you have any questions in relation to this act, or are dealing with contracts that may brush on some of the points above, we suggest consulting your legal advisors. If you do not have one, our suggested legal provider is Josh Muir, Director at Lockhart Legal. You can contact him at Josh@lockhartlegal.co.nz.

The Companies Act 1993

The Companies Act 1993 is arguably one of the most important pieces of legislation in New Zealand history and is definitely the most important piece of legislation in a company context (it’s in the name). Broadly, the Companies Act 1993 governs the formation, dealings, and dissolution of companies.

However, more specifically within those board categories the Companies Act 1993 sets out the law for (amongst other things):

• How companies are formed;
• What requirements a company must comply with on an ongoing basis;
• What happens if a company breaches those requirements;
• How companies can deal with other third parties;
• How companies are run;
• Rights and obligations of directors;
• Rights and obligations of shareholders;
• How companies can be dissolved; and
• How third parties can claim against a company.

We expect all our members to fall within the scope of the Companies Act 1993 in some way. It is therefore important that your consult your legal advisors on issues concerning your company. If you do not have one, our suggested legal provider is Josh Muir, Director at Lockhart Legal. You can contact him at Josh@lockhartlegal.co.nz.

Consumer Guarantees Act 1993

The Consumer Guarantees Act 1993 is one of many pieces of general consumer protection legislation. Its purpose is to protect the interests of consumers, ensure businesses compete effectively, and ensure consumers and businesses participate in the trading environment confidently.

The basic thrust of the Consumer Guarantees Act 1993 is to provide basic statutory guarantees as to goods as services sole and provided to consumers (personal, domestic, or household use or consumption).

Given that most of you (if not all) are in the business of providing advertising services, the guarantees as to services will apply. They are:

• A guarantee that the services will be supplied with reasonable skill and care;
• A guarantee that the services will be reasonable fit for a particular purpose and of such a nature and quality that it can reasonable be expected to achieve a particular result; and
• A guarantee that the services will be completed within a reasonable time (if not previously agreed).

A failure to meet these guarantees may result in:

• A requirement for you to fix the issue;
• A requirement for you to pay someone else to fix the issue;
• The consumer cancelling the contract and you refunding them for the value of the services; and
• Your liability as to other costs, losses, expenses, damages, etc.

We understand that many (if not all of you) provide services to other businesses only. In that sense they are not “consumers” and as such, these guarantees do not apply. The Consumer Guarantees Act 1993 allows businesses to contract out of the that act in the course of their business dealings.

As such, we recommend that you have a term in your contracts expressly confirming that the deal is a business deal and therefore the Consumer Guarantees Act 1993 does not apply. If you have any questions or are unsure about any of this, we suggest you contact your legal advisors. If you do not have one, our suggested legal provider is Josh Muir, Director at Lockhart Legal. You can contact him at Josh@lockhartlegal.co.nz.

The Fair Trading Act 1986

Similarly, to the Consumer Guarantees Act 1993, the Fair Trading Act 1986 is another piece of consumer protection legislation in New Zealand. This act prevents businesses from:

• Engaging in conduct this is misleading or deceptive or is likely to mislead or deceive;
• Making unsubstantiated representations;
• Making false or misleading representations;
• Engaging in unfair trading practices; and
• (importantly and recently added) include unfair contract terms in standard consumer contracts and small trade contracts (contracts that have the value of less than $250,000).

Again, the above applies to “consumers” only except the prohibition on unfair contract terms which can also apply to “small trade contracts”. Again, the Fair Trading Act 1986 allows businesses to contract out of the that act in the course of their business dealings.

As such, and again, we recommend that you have a term in your contracts expressly confirming that the deal is a business deal and therefore the Fair Trading Act 1986 does not apply. If you have any questions or are unsure about any of this, we suggest you contact your legal advisors. If you do not have one, our suggested legal provider is Josh Muir, Director at Lockhart Legal. You can contact him at Josh@lockhartlegal.co.nz.

The Contract and Commercial Law Act 2017

This (relatively) recent act is the new behemoth governing the law of contract in New Zealand. The reason we call it a behemoth is because it supersedes and consolidates 12 older statutes that previously governed the law of contract in New Zealand:

1. The Carriage of Goods Act 1979;
2. The Contracts (Privity) Act 1982;
3. The Contractual Mistakes Act 1977;
4. The Contractual Remedies Act 1979;
5. The Electronic Transactions Act 2002;
6. The Frustrated Contracts Act 1944;
7. The Illegal Contracts Act 1970;
8. The Minors’ Contracts Act 1969;
9. The Sale of Goods Act 1970;
10. The Sale of Foods (United Nations Convention) Act 1994;
11. The Wages Protection and Contractors’ Liens Act Repeal Act 1987; and
12. The Mercantile Law Act 1908 (except Part 5); and
13. The Mercantile Law Amendment Act 1922.

Though your contracts will still be governed by their terms and contracting parties are still free to enter into contracts, where issues or disputes arise, the Contract and Commercial Law Act 2017 is often the second port of call to determine a dispute (the first being the contract itself).

We recommend that you consult your legal advisors in relation to your contracts – especially if there are any disputes that arise in relation to them. If you do not have one, our suggested legal provider is Josh Muir, Director at Lockhart Legal. You can contact him at Josh@lockhartlegal.co.nz.