Report No. 199
New Zealand does not have a single specific piece of legislation, which protects against unfair terms in consumer contracts. The two main pieces of consumer legislation in New Zealand are the Fair Trading Act, 1986 (NZ FTA) and the Consumer Guarantees Act, 1993 (CGA). (See Unfair Contract Terms, Discussion Paper, Victoria, 2004).
The (NZ) FTA covers misleading and deceptive conduct in trade, trade descriptions, unfair practices, consumer information and product safety. Liability is strict (as the breach may be innocent). The type and amount of any awarded civil remedy is discretionary. Unlike the TPA, 1974 (Australia) on which it is largely based, it does not have unconscionable conduct provisions.
The (NZ) CGA applies to the supply of goods or services which are intended for ordinary household use. The Act provides consumers with a number of implied guarantees. It imposes obligations on sellers and manufacturers and provides a number of remedies that enable the consumer to pursue the manufacturer or seller of the goods or services.
There are a number of New Zealand statutes that reform the Common Law approach to contractual relationships.
The Contractual Remedies Act, 1979 allows a party to a contract to recover damages (assessed as if the representation was a term of the contract) for an innocent or negligent misrepresentation, which induced the contract and also governs the circumstances in which a party is entitled to cancel a contract. Cancellation of a contract results in all parties being relieved from further performance but the Act also provides the courts with broad discretionary powers to grant remedial relief to any party to prevent injustice when a contract is cancelled.
The Contractual Mistakes Act, 1977 and the Illegal Contracts Act, 1970 largely codify the established Common Law rules relating to contracts which are entered into by mistake or contrary to law. Both statutes, however, confer on the court a broad statutory discretion to grant remedial relief in respect of contracts subject to those Acts.