Fair Trading Act 1986

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Fair Trading Act 1986

• Monday 18 June

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Purpose

• A piece of Consumer legislation
• Administered by the Ministry of Consumer Affairs
• Provisions enforced by Commerce Commission

• Part I - To prohibit
• misleading deceptive conduct
• False representations
• Unfair practices in trade
• Part II - To provide for disclosure of consumer
  information
• Part III IV - To promote
• Product safety
• Safety of services

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Provisions Part I Prohibited Conduct

• Misleading deceptive conduct ss9-12
• False representations
• Re supply of goods or services s13
• Re supply of land s14
• Unfair practices ss17-26
• Bait advertising s19

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Misleading Deceptive Conduct

• You have been misled or deceived if the
  information you receive about goods or services
  gives you a false impression
• Egs
• You see an advert in the paper for brass
  bedheads. When you inspect them in the shop, you
  find they are brass-plated
• The advert misled you about what the bedhead was
  made out of

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Misleading Deceptive Conduct

• You apply for a job vacancy advertised in the
  paper, but you find it was placed there by an
  employment agency to expand its pool of clients
• You have been misled by or given the impression
  that there was a specific job available

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Misleading Deceptive Conduct

• No person
• in trade
• Shall engage in conduct
• That is misleading
• Or deceptive
• Or is likely to mislead or deceive

• S2 - A person includes.
• Trade
• The word trade has its accepted English meaning
  (OBrien v Smolonogov)
• Engage in conduct
• That is misleading or likely to mislead (AMP v
  Heaven)

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False or Misleading Representations

• You have had a false representation made to you
  when the information you receive about goods (or
  services) is not true
• Egs
• You see bananas advertised at 1.99 per kilogram
  so you buy them. When you get to the checkout,
  the machine gives the price as 2.25 per kilo
• The supermarket claimed the goods were cheaper
  than they really were

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False or Misleading Representations

• You buy clothes labelled Made in France but
  find they were made in China
• The goods were not made where the label claimed
  they were made
• You buy a ring which the trader says is an
  antique diamond ring. The ring is new the
  stones are not real diamonds
• The ring is not as old as claimed, nor does it
  contain a diamond

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False or Misleading Representations

• No person
• In trade
• In connection with the supply or possible supply
  of goods or services
• Make a false or misleading representation that
  goods are of a particular kind(10 categories)

• S2 - A person includes.
• Trade
• The word trade has its accepted English meaning
  (OBrien v Smolonogov)
• Make a false or misleading representation that

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Unfair Practices

• An unfair practice is a selling method which is
  misleading or unfair
• Bait advertising
• Advertising at a specified price goods or
  services without intending to supply them at that
  price, in reasonable quantities for a reasonable
  time

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• Eg
• You hear on the radio about a special offer on
  beds. You go to the shop to buy one and find
  there was only one on special and its been
  sold. The trader wont get another one in at the
  advertised price for you, and tries to sell you a
  more expensive bed
• You have been lured into the shop on the pretext
  of getting a special when the trader had no
  reasonable grounds for believing he could supply
  the special it is unfair

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Unfair Practices

• No person shall
• In trade
• Advertise for supply of goods or services
• Which that person does not intend to offer for
  supply
• Or does not have reasonable grounds for believing
  can be supplied
• At a specified price
• For a reasonable period
• In reasonable quantities having regard to the
  nature of the market advertisement

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Unfair Practices

• S2 A person includes
• Trade
• The word trade has its accepted English meaning
  (OBrien v Smolonogov)
• Does not intend to offer for supply
• Does not have reasonable grounds
• At specified price
• For reasonable period
• In reasonable quantities

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Unfair Practices

• No precise definition of reasonable quantities
  or reasonable time
• Will depend on
• the particular market
• Nature of the advertisement
• Eg while stocks last? possible defence

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S19(3) Defence

• It is a defence if
• a) he offered to supply or to procure another
  person to supply goods of the kind advertised,
  within reas time, in reas quantity, at same price
  
• The customer accepts
• The person supplies the goods eg Raincheck OR
• b) he offered to supply or to procure another
  person to supply within reas time equivalent
  goods in reas quantity, at same price
• the customer accepts
• The person supplies the goods

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Part V Enforcement Remedies

• Enforcement
• Criminal prosecution
• Civil proceedings
• A breach of any section except ss9, 14(2) 23 is
  a crime
• Civil action available for above ss9, 14(2) 23

• Commerce Commission (CC) can initiate both civil
  criminal proceedings
• A consumer (in practice this is mainly rival
  traders) can complain to the CC about breaches or
  initiate civil proceedings
• Action must be brought within 3 years of breach

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Part V - Enforcement Remedies

• Remedies
• A breach of the Act gives rise to the following
• Criminal s40
• Fines of up to 200,000 for companies 60,000
  for individuals upon conviction

• Civil ss41-43
• S41 injunctions (to stop the activity causing the
  breach)
• S42 orders (to disclose info, for corrective
  advertising
• S43 other orders eg s43(2) damages, refunds of
  money, repair of goods, variation of contract

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Defences

• A s44 defence to a prosecution is available where
  the defendant can show that the breach was due to
  a
• reasonable mistake
• Reasonable reliance on info supplied by another
  person

• Act or default of another person, or an accident
  or some other cause beyond the defendants
  control and the defendant took reasonable
  precautions exercised due diligence to avoid
  the breach