Commercial, Property & Trust Lawyers

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Commercial Articles

THE PRIVACY ACT - AN OVERVIEW

There are few areas of human endeavour that are not affected by the Privacy Act 1993. Our experience is that the ambit of the Act is not well understood. There are many misconceptions as to the rights and obligations imposed.

The focus of the Act is on information about individuals. Controls are imposed on the collection and disclosure of such information.

The Act identifies twelve distinct principles in relation to privacy protection. Those principles can be briefly
summarised as follows:

  • The purpose of collection of personal information. Information must be collected for a lawful purpose and must be necessary for that purpose;
  • The source of personal information. Information about an individual is required to be obtained from that individual with a number of limited exceptions including where the information is publicly available and where the individual has authorised its collection.
  • Collecting information from an individual. Where information is collected from an individual the individual must be made aware of several specific matters including that the information is being collected and the purpose for which it is being collected.
  • Manner of collection of personal information. Information may not be collected unlawfully or in circumstances that are unfair or that intrude to an unreasonable extent upon the personal affairs of the
    individual.
  • Storage and security of personal information. Information is to be stored with sufficient safeguards to protect against loss or unauthorised access.
  • Access to personal information. Where information is held about an individual in a form that can be readily retrieved the individual concerned is entitled to obtain confirmation that information is held and have access to that information.
  • Correction of personal information. Where information is held about an individual the individual is entitled to request the correction of that information. There is an obligation to ensure that information retained is accurate, up to date, complete and not misleading.
  • Accuracy of information. Information must be checked before it is used. A person holding information is not entitled to use the information until it has been checked as accurate, up to date, complete, relevant and not misleading.
  • Information not to be kept longer than necessary. Personal information must not be retained longer than is necessary for the purpose for which the information is lawfully able to be used.
  • Limits on use of personal information. A person holding information that is obtained for one purpose is not able to use it for other purposes except in certain limited situations.
  • Limits on disclosure of personal information. A person holding information is not entitled to disclose that information to anyone except in certain restricted circumstances.
  • Unique identifiers. Persons holding information are only able to assign “unique identifiers” (for example code numbers) to individuals if it is necessary to carry out their functions efficiently. The same unique identifier used by other persons e.g. government agencies cannot be used.

The foregoing summary covers the various principles that are likely to be relevant in most cases. The summary is by no means exhaustive. Matters likely to be relevant in any particular situation could well have been omitted.

With the exception of the right of an individual to receive information about himself or herself the various principles do not create rights that are legally enforceable through a Court of Law. Redress for breach of the Act’s principles is, however, available through a complaints body known as the Complaints Review Tribunal. The Complaints Review Tribunal has power to issue restraining orders, can order defendants to rectify situations and award damages. Ignorance or negligence on the part of the defendants will not be a defence.

Codes of Practice.

The Act contemplates that codes of practice for various industry and sector groups will be developed. Code of practice certificates are obtainable through the office of the Privacy Commissioner. Codes of practice are settled in conjunction with the Privacy Commissioner’s office and can provide for standardised compliance requirements within a particular industry or sector group.

To comply with the Act most businesses need to ensure that the manner that they deal with information about their employees and customers are dealt with in accordance with the Act’s requirements. Failure to do so could prove costly.

If you have any doubts as to whether your practices and procedures comply with the Act please contact Char-Lien Lim on 04 570 4186 or cllim@gywlaw.co.nz

 

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THE CONSUMER GUARANTEES ACT 1993
- AN OVERVIEW FOR SUPPLIERS

The Consumer Guarantees Act 1993 (“the Act”) covers amongst other things:

  • guarantees for goods and services and compensation for consumers;
  • contracting out;
  • romalpa clauses.

The Act supplements a range of existing consumer protection Acts in place and general remedies available under contract law. Other Acts conferring benefits on consumers include:

  • The Sale of Goods Act 1908;
  • The Fair Trading Act 1986;
  • The Contractual Remedies Act 1979;
  • The Hire Purchase Act 1971;
  • The Contractual Mistakes Act 1997.

The general structure of the Act imposes a wide range of obligations on the supplier of goods to consumers. "Consumer” has a special and limited meaning. For a person to be a Consumer the acquisition must be “ for
personal, domestic or household use or consumption”. If the person you are supplying is not a “Consumer” then the purchaser does not get the benefit of the guarantees imposed by the Act. Where your purchaser is a “Consumer” your purchaser receives the following guarantees from you:

  • you have a right to sell the goods;
  • the goods are of acceptable quality and fit for the purpose they are sold for;
  • the goods meet any requirement made known to you before being purchased by the Consumer (and user);
  • the goods correspond with any description of sample supplied;
  • where price is not determined by contract that it is a reasonable price (in some cases);
  • spare parts and repair services are available for goods for a reasonable length of time after sale. A supplier may contract out of his guarantee by clearly stating in the contract that spare parts and repairs will not be available;
  • consumers have the right to rely on any express guarantees given by manufacturers even if these guarantees are not given directly to the Consumer.

The Act confers on end-users a number of additional guarantees from manufacturers.

Although you may not consider yourself to be a manufacturer the word has a special definition under the Act. Where goods are manufactured outside New Zealand and the foreign manufacturer of the goods does not have an ordinary place of business in New Zealand the person who imports or distributes those goods is deemed to be a manufacturer for the purposes of the Act. By that mechanism the ultimate consumer of goods receive the following guarantees from you in respect of goods where you are deemed to be the manufacturer:

  • That the goods are of an acceptable quality. You are deemed to guarantee that they are fit for all purposes for which goods of the type in question are commonly supplied, are acceptable in appearance and finish, are free from minor defects, are safe and durable having regard to the nature of the goods, their price, any statements made about the goods in any packaging or label on the goods and any representation made about the goods by the supplier or the manufacturer. The guarantee given is comprehensive. It is imperative that all goods in respect of which you are the manufacturer have packaging and labelling fully appraising the end user of their nature and quality. Failure to do so will effectively extend the scope of the guarantee being given.
  • That the goods comply with the description applied to the goods by or on behalf of the manufacturer or with the consent of the manufacturer. This guarantee includes descriptions added by yourself, descriptions on goods as received by you or descriptions added to goods by on-sellers with your consent. There are a number of steps you should take to limit your exposure. In particular your procedures, contract documentation and packaging should be reviewed by a solicitor.
  • That the goods fail to comply with guarantees as to repairs and parts. There is a guarantee imposed by the Act that manufacturers will take reasonable action to ensure that facilities for repair of goods and the supply of parts for goods are reasonably available for a reasonable period after the goods are supplied. This guarantee can only be excluded by ensuring that consumers are notified at or before the time goods are supplied to them that the manufacturer does not undertake that repair facilities and parts will be available for those goods.
  • The final additional guarantee imposed on manufacturers is that goods comply with guarantees included with the goods. If any goods are received by you with written guarantees from manufacturers you will be deemed to have given those guarantees as well. Again you should have your documentation including any such guarantees considered by a solicitor so that you do not end up guaranteeing more than you intend.

There are opportunities under the Act for contracting out. Supply Contracts need to be carefully drafted to ensure that any contracting out is permitted by the Act.

Where you use Conditions of Sale they should be drafted having regard to the provisions of the Act.

Most suppliers will be familiar with reservation of ownership provisions known as Romalpa Clauses. You should be aware that Section 5 of the Act guarantees consumers a right to undisturbed possession of goods. The section only applies when the goods are supplied to a Consumer. A buyer who acquires the goods for the purpose of resupplying them in trade or using them in the course of the process of production or manufacture or repairing or treating in trade other goods or fixtures on land is not a Consumer. This effectively excludes all wholesale transactions. It also excludes retail transactions where the goods are going to be used in production, manufacture or treatment of something else.

As with most Acts of Parliament which have application to your business it is unwise to make assumptions as to how the Consumer Guarantees Act 1993 affects your business. The best time to receive good advice is before the problem arises. The Act has the potential to impose obligations on you as a seller that you do not expect. It may well be that when you are fully appraised of your potential liabilities that you will wish to change the way you do things and the documents you use.

For assistance with the Consumer Guarantees Act contact Samuel Walker on 04 570 4173 or srwalker@gywlaw.co.nz

 

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THE CREDIT CONTRACTS AND CONSUMER FINANCE ACT 2003
– A COMMERCIAL LENDER’S OVERVIEW

An unstated policy underlying the Credit Contracts and Consumer Finance Act 2003 (“the Act”) is that business and investment finance does not require to be regulated in the same manner as consumer credit. Consequently, most of the provisions of the Act apply only to consumer credit contracts.

The Act regulates consumer credit quite strongly while leaving business and investment credit contracts highly deregulated. The exception is the oppressive contract provisions which will continue to apply to all credit contracts.

The regulation of business/commercial finance transactions is effectively being left to common law principles and other statutes.

For the majority of the provisions of the Act to apply, you must be dealing with a consumer credit contract and not just a credit contract. A consumer credit contract is basically one under which the debtor is a natural person, the purpose to which the credit will be applied must be primarily for personal, domestic or household purposes and the creditor must usually be in the business of giving credit (wide definition).

As a result, credit contracts where the debtor is a company, an incorporated society or similar incorporated body will not be a consumer credit contract and accordingly will not be subject to most of the provisions of the Act.

The Act requires a determination of the purpose for which the debtor enters into a credit contract to be made. It is important for the lender to determine the debtor’s motivation in entering into any transaction. This is particularly the case where credit is being granted in terms of something which may be acquired for either personal or business use.

Section 14 of the Act permits lenders to obtain a declaration from the debtor before the debtor enters the credit contract that the debtor’s purpose is either or both primarily for the purpose of business or investment. Having such a declaration is held to be relatively conclusive evidence that it is not a consumer credit contract. The result is that the credit contract will not fall within the ambit of the Act.

The proviso to section 14 is that where the creditor or the person who obtains the declaration knows, or had reason to believe at the time the declaration was made, that the credit was in fact to be used primarily for personal, domestic or household purposes, this negates the effect of the declaration and potentially brings the credit contract entered into within the ambit of the Act as a consumer credit contract.

It is not sufficient for the declaration to form part of the loan or security document and it must be a separate written document.

Where individual directors or shareholders of a company debtor give to a creditor a guarantee in respect of a commercial credit contract, those parties will not be entitled to benefit of section 26 of the Act - provisions which relate to disclosure.

Guarantees of credit contracts (not just consumer credit contracts) remain subject to Part 5 of the Act – the oppressive contract provisions.

If you require assistance on Credit Contracts and Consumer Finance Act matters contact Samuel Walker on 04 570 4173 or srwalker@gywlaw.co.nz

 

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