New legal provisions prevent unfair business practices

Image Courtesy: KTS Chartered Accountants

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Wellington, August 17, 2022

Changes to the Fair Trading Act that took effect on August 16, 2022, strengthen protections for businesses and consumers, apart from addressing unfair business practices in New Zealand.

Commerce Commission Chair Anna Rawlings said that the changes include the addition of a new prohibition against ‘unconscionable conduct’ which is a business activity that substantially departs from New Zealand’s generally accepted or expected standards of business conduct.

Commercial conduct that is against good conscience is an example.

“Good business conscience is measured against the values and norms of modern society and expectations of what is right and proper according to those values and norms. Those values and norms can include acting honestly, fairly and without deception or unfair pressure. This is conduct that is more than just hard commercial bargaining, but is clearly unfair and unreasonable,” Ms Rawlings said.

Small Trade Contacts

Under the new regulations, businesses are also protected from unfair terms in standard form small trade contracts. These are ‘take it or leave it’ contracts such as many power or phone service agreements. Many standard commercial supply agreements may also be standard form, small trade contacts.

“Terms in standard form small trade contracts can be assessed as unfair under the new law if, at the time the contract is entered into, it forms part of a trading relationship with an actual or expected annual value of less than $250,000,” Ms Rawlings said.

Commerce Commission Chairperson Anna Rawlings (From CC website)

Door Salespersons

Amendments to the Fair Trading Act also offer additional protections for residents approached by door-to-door sellers.

“Residents can now stop salespeople from coming to their homes to sell goods or services without invitation. They can either tell them not to enter the property or ask them to leave. Residents can use a sticker or sign, such as a ‘Do Not Knock’ sticker on their gate or front door which tells salespeople that they cannot enter their property. If residents have a face-to-face conversation with a particular salesperson, and they tell them to not enter the property or to leave, then the salesperson cannot return for two years,” Ms Rawlings said.

These new protections for residents strengthen existing protections under the Trespass Act 1980. The Commission has released guidance on its website for businesses and consumers wanting to know more about the new laws.

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