Fixing a muddle for businesses

New Zealanders mostly work in businesses with less than 20 employees. Surprisingly, there are only 5100 or so companies with more than 50 employees. While there are many different forms of entities, including self-employed, companies, trusts and partnerships, the same business laws apply to all.

Many businesses would be aware of the Sale of Goods Act that has been with us since 1908, and many would be aware of other consumer-focused statutes that were enacted from the late 1960’s to meet the changing face of business. These were designed to codify the common law in relation to the many common issues business and consumers faced in their dealings with each other.

These are:
•    Mercantile Law Act 1908
•    Sale of Goods Act 1908
•    Frustrated Contracts Act 1944
•    Minors Contracts Act 1969
•    Illegal Contracts Act 1970
•    Contractual Mistakes Act 1977
•    Contractual Remedies Act 1979
•    Carriage of Goods Act 1979
•    Contracts (Privity) Act 1982
•    Sale of Goods (United Nations Convention) Act 1994
•    Electronic Transactions Act 2002

The result of all these Acts is that while there is plenty of law dealing with commerce and consumers, there are many inconsistencies, anomalies and redundancies.  Much of the language needed to be modernised so that it could be properly understood in the 21st Century.

The upshot is that a new statute, the “Contract and Commercial Law Act”, came into force in September. This modernises and consolidates all the above Acts into one. This will make the law more accessible to business owners. The minor changes that have been made are intended by Parliament to clarify the intention of the law and to reconcile inconsistencies between various existing laws.

We recommend that all businesses have their contracts and standard terms and conditions reviewed so that updated versions can be prepared in light of the new Act. It would also be a good opportunity to double check that in all standard contracts and agreements any cross references to applicable law are made current.

If you are unsure check with your lawyer.

It is comforting to see that this new Act has been designed to streamline and modernise the law for business owners and remove the anomalies in the myriad of old statutes the legal profession has been grappling with.

John Waugh, Devonport Law, Matakana
www.devonportlaw.nz