although not necessarily in the construction sector. This is the new law against unfair contract terms, which was inserted into the Fair Trading Act on 17 March 2015. You can ask the Commerce Commission to apply for a court ruling that a contract is “standard form” (ie. there is no realistic ability to renegotiate or modify it) and that some of its terms are unfair to you. If you can persuade the Commission to take up your case, and the Commission is successful, then those unfair terms become illegal. The Act gives 13 examples of unfair terms, and they are almost all to be found in the building materials suppliers’ terms and conditions of trade. So does the Fair Trading Act open up the possibility of builders getting some relief from the more unfair aspects of those terms and conditions? Unfortunately not. Predictably, only consumers are covered by these provisions. Why should that be the case? Why is a modest joiner who is struggling to make enough money to feed his family, any less deserving of special protection than a homeowner such as Graeme Hart (New Zealand’s richest citizen), Sir Michael Fay, or Sir John Key? The problem is that the Government lumps small businesses in with big businesses, and assumes they all have equal bargaining power, whereas in reality that is a complete fallacy. Small businesses should be lumped in with consumers, where they belong. Australia has already woken up to this and extended the benefit of their unfair contract terms law to small businesses. Small businesses are defined as those that employ less than 20 people. The standard from contracts that are covered are those where the
contract price is $300,000 or less (or $1m if the contract is for more than 12 months). The Australian law has already been very effectively enforced by the Australian Competition and Consumer Commission (“ACCC”). The ACCC first examined 46 standard form contracts across seven industries and published a report of their findings in November 2016. They then contacted the major players in those industries, many of whom voluntarily agreed to remove the offending provisions from their terms of trade. When one major waste management company refused to do so, the ACCC applied to the Federal Court in September 2017 for an order that eight of their contract terms were unfair and therefore void. It remains to be seen whether New Zealand follows Australia’s lead and addresses a major cause of injustice in the construction industry, but it won’t happen unless the industry lobbies for it, or it is sensationalised by the media. So go ahead. State your case, agitate for change, and make some noise. If the Australians can do it, then so can we.
Geoff Hardy has 44 years’ experience as a commercial lawyer and is a partner in the Auckland firm “Martelli McKegg”. He guarantees personal attention to new clients at competitive rates. His phone number is (09) 379 0700, fax (09) 309 4112, and email geoff@martellimckegg.co.nz. This article is not intended to be relied upon as legal advice.
JOINERS Magazine June 2019 page 81