The Fair Trading Amendment Bill:
- introduces a prohibition against unconscionable conduct in trade,
- extends the current protections against unfair contract terms in standard form consumer contracts to also apply to business-to-business contracts that form part of trading relationships with an actual or expected value below $250,000 per year,
- strengthens the ability of consumers to require uninvited sellers to leave or not enter their premises, including through the use of 'Do Not Knock' stickers, and
- makes a number of minor, technical changes to the Fair Trading Act.
In preparing this Bill, the Government considered the negative consequences unfair commercial practices have on businesses, consumers, and the country and economy generally. While there are a number of legislative protections against unfair practices, the consultation undertaken by the Ministry of Business Innovation and Employment in 2018 identified gaps in these protections, which this Bill seeks to address.
The Bill does not define unconscionable conduct, however it does include a range of factors to which a Court may have regard when determining if unconscionable conduct has occurred, including:
- the relative bargaining power of the trader and affected person,
- the extent to which the trader and affected person acted in good faith,
- whether the affected person was reasonably able to protect their own interests,
- whether the affected person was able to understand documents provided by the trader, and
- whether the trader subjected an affected person to unfair pressure or tactics, or otherwise unduly influenced an affected person.
The Bill also sets out a range of factors that a court may have regard to if the relevant conduct includes a contract, which broadly cover the circumstances under which the contract was entered into, the terms of the contract and how the contract will operate in practice.
As to the extension of the unfair contract terms regime to cover businesses, the Bill includes several examples to assist with the interpretation of which trading relationships will be covered by the new provisions. Broadly speaking, a contract will be considered to be a small trade contract if it is not a consumer contract and:
- it is between two or more parties that are engaged in trade, and
- it does not comprise or form part of a trading relationship that is worth $250,000 or more per year when the relationship first arises.
Contracts are treated as forming part of the same trading relationship if they are on the same or substantially similar terms (not including the main subject matter or upfront price, which may be disregarded) and have the same parties or related parties.
The Government has signalled that the Bill will likely be considered by Select Committee in early 2020. There will be an opportunity to make submissions on the Bill at this point.
We encourage anyone who would like assistance in making a submission to get in touch with the contacts listed or your usual Bell Gully advisor.
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.