Its objective is to facilitate business arrangements on commercially agreed terms and generally, without the courts having to intervene unless it is absolutely necessary.
The application of contract law in New Zealand is the same regardless of whether the contracting parties are foreign-owned or New Zealand-owned. It is possible, however, to select the jurisdiction that will govern the contract and where any disputes must be heard – this can be done on either an exclusive or non-exclusive basis.
The Contract and Commercial Law Act 2017 (CCLA) provides a ‘one stop shop’ for various rules that relate to issues that commonly arise in contractual arrangements. For example:
New Zealand’s trade practices and consumer protection regimes are governed by the following legislation:
The Commerce Act 1986 (Commerce Act) protects consumers by regulating commercial conduct to promote competitive markets within Aotearoa New Zealand.
The Commerce Commission was established by the Commerce Act to enforce competition, fair trading and consumer credit laws. To do so, the Commerce Commission has the ability to clear and authorise business mergers and acquisitions, regulate certain goods and services, receive and investigate complaints under the Commerce Act, as well as prosecute alleged contraventions of the same (see Mergers and Acquisitions).
The Fair Trading Act 1986 (FTA) regulates conduct and practices in trade to protect consumers. Notably, the FTA:
Businesses cannot contract out of the FTA with consumers, but are able to do so with other businesses under certain conditions.
Failure to comply with the FTA constitutes an offence which may result in various civil remedies including fines and court orders, as well as criminal sanctions in some instances. The FTA also empowers the courts to impose management banning orders on individuals who are repeat offenders under the FTA.
Many of the prohibitions set out in the FTA are also repeated in the Financial Markets Conduct Act 2013, though relating specifically to financial products.
The Consumer Guarantees Act 1993 (CGA) provides various implied guarantees to protect consumers of goods and services from suppliers in trade. These guarantees only apply to goods and services of a kind ordinarily acquired for personal, domestic or household use, where the goods are not acquired for the purposes of resupplying them in trade, using them in a manufacturing process or repairing the goods in trade.
The implied guarantees under the CGA include:
The consumer may seek redress from the supplier or manufacturer if any of the above guarantees are not met.
The Credit Contracts and Consumer Finance Act 2003 (CCCFA) regulates credit contracts entered into with consumers where money is loaned for personal use, including hire purchase and personal lending arrangements. However, the CCCFA does not apply where the credit is for commercial or investment purposes.
The CCCFA sets out limits on how much interest may be calculated and charged, and sets out disclosure requirements on lenders, including around interest and fees to help consumers compare the cost of borrowing and contract terms. Lenders cannot enforce credit contracts with consumers until all of the required disclosures have been made.
The CCCFA requires lenders to assess the suitability and affordability of the credit contract for the consumer before lending money or increasing the available credit on an existing loan. Borrowers may challenge “oppressive” contracts and the CCCFA allows courts to vary credit contract terms which the courts determine to be unfair or unreasonable.
The CCCFA did not historically cover “Buy Now, Pay Later” (BNPL) credit contracts because they do not typically charge interest or credit fees, or take security. However, from 2 September 2024, BNPL lenders are required to comply with all obligations of a lender under the CCCFA (with some modifications).
Parties may only contract out of the FTA and CGA in limited circumstances. Businesses proposing to offer goods or services in New Zealand should seek legal advice before doing so to ensure that they can meet their minimum obligations under the FTA and CGA.