Fair Trading Amendment Bill receives Royal Assent – some changes in effect immediately

The Fair Trading Amendment Bill (Bill) received the Royal Assent on 16 August 2021. The Bill is now the Fair Trading Amendment Act 2021 (Amendment Act) and introduces significant changes to the Fair Trading Act 1986 (Fair Trading Act). 
 
Key changes include the application of the unfair contract term (UCT) regime to business-to-business or "small trade" contracts, a prohibition on unconscionable conduct and a prohibition on uninvited direct sales. More information about these changes is available in our previous Alerts, including here.  

Minor changes now in force

Some of the Amendment Act's minor changes are now in force. Of note:

• Enforceable undertakings: The Commerce Commission (Commission) can accept enforceable undertakings that a business provides compensation for, or take other steps to avoid or mitigate the effects of, possible or actual Fair Trading Act breaches and/or pays the Commission's costs for investigating or bringing proceedings against it.

• Test cases: The Commission now has an express power to state a case for the opinion of the High Court on Fair Trading Act issues. This will allow the Commission to clarify certain issues without naming a defendant.

• Information disclosure: The Commission can prohibit the disclosure of information, documents and evidence by businesses (for example, to others under investigation) that are subject to Fair Trading Act investigations or inquiries by it. Ignoring the Commission's orders is an offence punishable by a fine of up to $4,000 for an individual and $12,000 for a body corporate. 

• Extended warranties: Businesses who agree extended warranty agreements with customers over the telephone must provide a copy of the agreement to the customer within five working days of the date it is agreed. Customers can cancel an extended warranty agreement within five working days of receiving the agreement.

• Management banning orders: The Amendment Act extends the set of circumstances where directors or managers may be subject to a management banning order.  

Significant changes come into force next year

The extension of the UCT regime to business-to-business contracts, and prohibitions on unconscionable conduct and uninvited direct sales comes into force next year, on 16 August 2022. Businesses should use this time to understand their new obligations and align their current practices if they are not already doing so.
 
You can read our most recent update regarding the extension of the UCT regime to small trade contracts here. We will be preparing further updates on the Amendment Act's major changes, including unconscionability, in the coming months.

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.