Unfair commercial practices law to be strengthened
New measures to better protect businesses and consumers from unfair commercial practices have been announced by Commerce and Consumer Affairs Minister Kris Faafoi and Minister for Small Business Stuart Nash.
“We know that unfair commercial practices are harming New Zealand businesses and consumers,” Kris says.
“We’re taking action to prohibit the most serious types of commercial misconduct, and to ensure there are better protections against unfair contract terms.”
The Government is proposing two key changes.
The first is to prohibit conduct that is unconscionable – this is serious misconduct that goes far beyond being commercially necessary or appropriate.
The second is to extend current protections against unfair contract terms in standard form consumer contracts to apply to business contracts with a value below $250,000.
“There are existing laws that already prohibit unfair commercial practices, but the changes we’re making go further,” says Stuart.
He says some of the examples of misconduct that people provided during a recent consultation on the issue were particularly concerning.
“We heard about a range of potentially unfair contract terms, including extended payment terms, one-sided contract terms, and businesses being locked-in to contracts for long periods of time.”
“We also heard that some businesses aren’t complying with the terms of existing contracts, making excessive demands, and blacklisting and bullying their suppliers.”
“Clearly, both small businesses and consumers are suffering because of poor commercial conduct, with negative effects on the economy.”
“The measures the Government is taking will put a stop to this,” he says.
Kris says the Government expected to introduce changes through a Fair Trading Amendment Bill by early next year.
“This is part of other work underway to promote competition and protect people against unfair business practices.”
“The new market study powers which the Commerce Commission is using to review the retail fuel sector is an example of the sort of work the Government’s doing in this space.”
“We’re also strengthening laws to protect vulnerable consumers from loan sharks, looking at other ways to improve business to business payment practices, and reviewing the current law around misuse of market power such as predatory pricing,” Kris says.