Commercial Law Refresher

By Andrew Comer – Principal at law firm Stace Hammond

Kiwi businesses are subject to, and regulated by, an extensive matrix of commercial laws. 

A base understanding of the legal landscape is critical.

Here’s a high-level overview of some of the key commercial laws currently in place in New Zealand.

CONSUMER GUARANTEES ACT 1986 (“CGA”)

  • The CGA protects consumers by ensuring they receive what they’ve paid for and, if a faulty product or substandard service has been provided, consumers are provided with repairs, a refund or replacement.
  • The CGA does this by automatically implying a number of quality guarantees when any person or business provides good or services ‘in trade’ to consumers for personal or domestic use. 
  • The implied guarantees include that:  the goods are of acceptable quality; the goods and services are fit for purpose; the goods match the description and samples or demonstrations provided; the goods will be owned by the customer once purchased; the price will be reasonable if not agreed beforehand; spare parts and repair facilities will be available; delivery will be on time and in acceptable condition; and the services will be performed with reasonable care and skill and will be completed within a reasonable time.

FAIR TRADING ACT 1986 (“FTA”)

  • The FTA protects consumers against being misled or being treated unfairly, and requires all information provided to consumers to be accurate and that information is not withheld from consumers.
  • The FTA does this by making illegal the following types of trader behaviour:  misleading or deceptive conduct; making false representations; making unsubstantiated claims; engaging in unfair practices (e.g. bait advertising, harassment, pyramid selling etc); and incorporating unfair contract terms into agreements (e.g. terms that cause a significant imbalance between parties, that are not reasonably necessary to protect the business’s legitimate interests and which would cause detriment if enforced).

PRIVACY ACT 1993 (“Privacy Act”)

  • The Privacy Act applies to any person or business that collects, uses and stores ‘personal information’ (i.e. information about identifiable, living people).
  • It protects consumers by requiring parties who collect personal information to observe 12 privacy principles which relate, generally, to:  collection; storage; security; access and correction; accuracy; retention; use and disclosure; and the use of unique identifiers.

CREDIT CONTRACTS AND CONSUMER FINANCE ACT 2003 (“CCCFA”)

  • The CCCFA covers transactions where consumers borrow money or buy goods on credit.  Such transactions include ‘consumer credit contracts’ (i.e. where a borrower is given credit for personal use, such as a mortgage, credit card, overdraft, personal or cash loan), ‘consumer leases’ (i.e. leases of goods for personal use whereby the lessee has the right to buy or the lease is for more than one year) and ‘buy-back transactions’ (i.e. where a homeowner transfers an interest in their home with a right of re-purchase).
  • In such circumstances, a lender is bound by strict disclosure requirements.  Furthermore, the borrower has numerous rights, including the right to cancel in the first few days after receiving disclosure, the right to repay early and the right to request concessions if they are suffering unexpected hardship.

PERSONAL PROPERTY SECURITIES ACT 1999 (“PPSA”)

  • The PPSA regulates the creation, registration and priority of ‘security interests’ – that is, interests which in substance secure payment of a debt or other obligations – in ‘personal property’ (which is essentially any form of property other than land, buildings and ships larger than 24m). 
  • Registration of security interests is effected by registering a ‘financing statement’ on the Personal Property Securities Register (PPSR), which is a publicly available online noticeboard.  The financing statement records key information, most notably the collateral in respect of which security is being taken by the creditor.  If a debtor business is put into liquidation or receivership, a secured party who has not registered its security interest on the PPSR may lose priority to other creditors who have registered on the PPSR, on a distribution from asset realisations.

CONTRACT AND COMMERCIAL LAW ACT 2017 (“CCLA”)

  • The CCLA came into force in September 2017.
  • It is a significant piece of law which regulates numerous aspects of trade including, among other things, contractual mistakes and remedies, the sale of goods, frustrated and illegal contracts, contracts with minors, privity (i.e. the right of non-contractual parties to enforce rights under a contract), electronic transactions and the carriage of goods.

COMMERCE ACT 1986 (“Commerce Act”)

  • The purpose of the Commerce Act is to “promote competition in the markets for the long-term benefit of consumers in New Zealand”.
  • The Commerce Act does this by prohibiting various types of anti-competitive behaviour, including:  agreements that substantially lessen competition in the market; agreements that fix, control or maintain prices (i.e. cartel conduct); agreements that restrict output or capacity, or allocate markets or customers; a person or a business taking advantage of their dominant position in a market for an anti-competitive purpose; and a person or business specifying a minimum price at which its goods or services can be sold by another (i.e. resale price maintenance).

COPYRIGHT ACT 1994 (“Copyright Act”)

  • The Copyright Act gives owners protective rights in respect of ‘original works’.
  • Copyright exists automatically (without the need for registration) in the following types of original work when they are created:  literary works; dramatic works; musical works; artistic works; sound recordings; films; communication works; and typographical arrangements of published editions.  
  • The Copyright Act gives owners the exclusive right to prevent others from doing the following (i.e. restricted acts) with their work:  copying the work; issuing copies of the work to the public; performing, playing or showing the work in public; communicating the work to the public; making an adaptation of the work; or authorising anyone else to do these things.  Copyright infringement occurs if anyone does these without the owner’s permission.

TRADE MARKS ACT 2002 (“TMA”)

  • The TMA governs the registration of trade marks in New Zealand.
  • A trade mark is a unique sign (or badge of origin) – typically a word, logo, or slogan, but may include things such as a shape, colour, sound, picture or smell – that identifies and distinguishes one trader’s goods or services from another trader’s.
  • Registration of a trade mark on the New Zealand trade marks register provides the owner with exclusive use (and the exclusive right to license use) of the trade mark, for the goods or services covered, throughout New Zealand.  Use of a trade mark that is identical or similar to a registered trade mark, without the owner’s permission, is a ground for trade mark infringement.

ARBITRATION ACT 1996 (“Arbitration Act”)

  • The Arbitration Act governs the formal dispute resolution process known as ‘arbitration’.
  • Arbitration is a non-court based approach to resolving disputes where two or more parties agree to submit a dispute between them to an independent party (i.e. the arbitrator) to make a final, binding decision (i.e. the award).  The award is enforceable as a judgment of a court.
  • The Arbitration Act provides the procedural framework, and rules, for all arbitrations governed by that statute.

UNSOLICITED ELECTRONIC MESSAGES ACT 2007 (“UEMA”)

  • The UEMA prohibits the sending to a recipient, without the recipient’s prior consent, of ‘unsolicited commercial electronic messages’ with a New Zealand link (i.e. messages sent to, from or within New Zealand).  Electronic messages include messages sent by way of email, fax, instant messaging and mobile phone text.  It does not extend to Internet pop-ups or telemarketing.  For the message to be ‘commercial’, it must do the following 3 things:  market or promote goods, services, land, interests in land or business or investment opportunities; assist a person to obtain (dishonestly) a financial advantage or gain from another; and provide a link (or directs a recipient) to a message that does either of the above.
  • The UEMA also requires all commercial electronic messages to include accurate information about who authorised the message and to provide a functional unsubscribe facility
  • Finally, the UEMA prohibits use of address-harvesting software or a harvested-address list in connection with the sending of unsolicited commercial electronic messages. 

The above overview has kindly been provided by Andrew Comer, a Principal at law firm Stace Hammond.  It has been provided for general information purposes only.  It is not, nor is it intended to be treated as, legal advice and is subject to change without notice.  It is not intended to be an exhaustive list of all commercial laws in place in New Zealand. 

Andrew specialises in corporate and commercial law and regularly provides advice in relation to start-up companies, mergers and acquisitions, joint ventures, capital raising, commercial contracts, corporate governance and company secretarial matters. 

Stace Hammond is a New Zealand law firm with offices in Auckland, Hamilton and Tauranga with legal expertise in the areas of business, finance, corporate and dispute resolution.

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