The Fair Trading Amendment Act 2021 comes into force in August 2022 and this will place new obligations on businesses while providing new protections for consumers and small businesses.

The key change is that “standard form small trade contracts” will now be subject to the unfair contract principle.

To understand the significance of this change we first need to identify what constitutes a “small trade contract”? A small trade contract will need to be:

■ Between two parties engaged in trade;

■ Not a consumer contract; and

■ Not part of a trading relationship with an initial annual value exceeding $250,000.00 including GST.

Examples of a small trade contract will include terms of trade presented to a customer with little time for the terms to be reviewed or negotiated.

Prohibition of “unfair contract terms” A term will be considered “unfair” where:

■ It creates a significant imbalance of rights and obligations between the contracting parties;

■ the imbalance is not required to protect a party’s interests; and

■ if used, the term could disadvantage the other party. A provision giving only one party the ability to take certain actions (for example, varying the terms or terminating the contract) is likely to be considered “unfair”. Other terms that may be considered unfair include automatic rollover and renewal clauses, early termination charges and some forms of indemnity terms.

It is really important to remember that the Fair Trading Act is not designed to – and won’t – disadvantage a business that has a legitimate business interest and a term is required to protect this interest.

Unconscionable conduct

Unlike “unfairness”, the principle of “unconscionable conduct” is more nuanced, and less defined. Unconscionability will be considered on a case-by-case basis.

Factors that can be considered include:

■ Relative bargaining power of the parties;

■ Extent to which the parties acted in good faith;

■ Whether there was any undue influence;

■ If the affected party was able to understand the documents;

■ Commerce Commission.

The Commerce Commission has authority to commence proceedings against a business, if it believes that the terms of a contract are unfair, even if they are not party to the agreement or contract. As a result, it is important for a business to understand its obligations and to ensure that its standard form contracts will comply with the Fair Trading Act.

Existing Contracts

These changes will not apply to any contracts entered into before 16 August 2022.

However, take care when making any changes to existing contracts as the provisions will apply to contracts amended or varied after 16 August 2022 irrespective of when the contract was first entered into.

If there is a silver lining when talking about the global COVID-19 pandemic, it has to be the return to our shores of thousands of highly skilled Kiwis.

For years, New Zealand has been a casualty of what has been termed ‘brain drain’, as highly qualified New Zealanders left in search of opportunities aboard.

Recent figures show that over 50,000 expats have already returned home, with predictions that as many as 500,000 are likely to make their way over the next few years.

What will returning Kiwis encounter on their return to the homeland?

One of the first issues of reverse migration, is likely to be a period in managed isolation and quarantine facilities and the associated cost. Legislation has been passed to enable the Government to recover some of the costs of managed isolation and quarantine facilities for those returning to New Zealand. The COVID-19 Public Health Response and Amendment Bill provides a legal framework to allow the Government to set payment terms, exempt groups of people and waive charges in cases of financial hardship. New Zealand citizens, permanent residents and temporary entry class visa holders are all sharing the costs in varying degrees.

When returning Kiwis finally find freedom on the other side of MIQ, what will the landscape look like?

This population of people are bringing with them advanced skills and networks obtained through their international experiences and New Zealand needs to ensure that these benefits and experiences are shared and captured to enhance the local economy.

While some will have the flexibility to work remotely for international employers, many will be seeking work within the domestic job market. They will benefit from the recently signalled employment law changes which aim to improve employees’ entitlements, increase the minimum wage and sick leave entitlements.

While a considerable number may settle in Auckland, the provinces will benefit too. The purpose of a recent survey carried out by Kiwi Expat Association (KEA) was to better understand offshore Kiwis and their intentions, such as their timeframes to return home, skills, industry experience and wealth, as well as their needs upon return.

The survey indicated that while 32% of returnees intend to reside in Auckland, the remainder are looking to return to the regions, with 22% leaning towards somewhere they may not have lived before.

The big question – what does this mean for our housing market, which is already under the spotlight given recent changes to the Residential Tenancies Act, increasing housing prices and new tax rules in the past year?

While there is continued pressure on the housing market, the effect of the legislative changes announced in March 2021 by the Labour Government are likely to flow through. These changes are intended to make the property market fairer for first home buyers and to take out some of the ‘heat’ from the market. The changes include an extension of the Bright Line Test which sees tax paid on any capital gains made if an investment property is sold within a set period. The extension of the bright-line test from five to ten years will effectively see a longer lock-in period for property investors and is intended to slow down property sales.

Another change was the removal of interest rate deductibility from investor housing. Proposed to begin in October this year, deductibility on mortgage interest will be reduced by 25% increments for existing property investments and will be fully phased out by April 2025. This policy will generate a significant amount of additional tax to be paid by property investors and will weigh on cashflows and potentially impact decision making.

While the true effect of these recent changes to is yet to be seen, returning Kiwis can be sure that the Government is focused on improving the supply of housing to the market. This is also the intention with the recent review of the Resource Management Act.

While it may not be a smooth home coming for all, many Kiwis will simply be grateful to return to a country which has been largely unaffected by a global pandemic. And for us who are already here, we should see the influx of those returning home as an opportunity for growth and connection.

AUTHOR: Christine Symes is a director at Bramwell Bate and provides advice on a range of matters including property, company and commercial, trusts and estates, and Wills and Power of Attorneys.

christine@bramwellbate.co.nz

By Anna Bernie

The COVID-19 pandemic has created a great deal of economic uncertainty both globally and in New Zealand.  During the lockdown in April and May 2020 we were all questioning how the housing market would be impacted.

Contrary to the expectations of some commentators, the NZ housing market has been booming since the end of lockdown.  Whether this is from an increase in Kiwis returning home, new home buyers taking advantage of lower interest rates or people just needing a change, the fact is competition for houses has increased and prices are still rising. According to data REINZ released in September 2020, median house prices across NZ increased by 16.4% in August 2020.  In Hawke’s Bay the increase in annual sales volumes during August was 32.5%, the highest number of house sales for the month of August in 14 years.

Bramwell Bate is finding that clients are often involved in a multi-buyer situation where now, more than ever, they are needing to put their best foot forward in order to have a chance at their offer being accepted.

It is still important, however, that you do your homework first.  A house purchase is one of the biggest investments you will likely make in your lifetime.

When you put forward an offer to purchase a property, you can make the offer subject to several conditions that need to be satisfied before your purchase proceeds.

One of the most common conditions is finance.  Even if you have pre-approval from a bank, most banks will need to see the signed Agreement for Sale and Purchase and approve the property you are looking to purchase before they will give you final approval. This makes the finance condition crucial.

If it is your first home, then you may be eligible for a Homestart Grant or to withdraw funds from your Kiwisaver.  In these situations you should speak with your lawyer about what timeframe your finance condition should have to ensure you have sufficient time to get approval and withdrawal of funds, especially if you need those funds to pay a deposit to the vendor.

A solicitor’s approval condition is also often included in an Agreement for Sale and Purchase.  This can provide your solicitor with a chance to look at the Agreement and the title to the property.  For example, there may be an easement on the property which gives someone a right of way, or a right to run power or pipelines through your property. You may also have plans to develop your property and before you proceed with the purchase it is important to consider whether any easements might restrict your ability to do so.

Another common condition is a builder’s report. This report generally allows you to obtain a report on the condition of the home and other improvements on the property.

We recommend you speak with your lawyer prior to making an offer so that you can consider the number of conditions to include and ensure that you are sufficiently protected.  There may also be instances where you can make enquiries before putting forward your offer, such as obtaining the builder’s report or asking your lawyer to take a look at the title to the property before you proceed.

Whatever you decide, it is important to get the proper advice and support.  A signed Agreement for Sale and Purchase is a legally binding document. Your lawyer will talk you through it, answer any questions, and ensure it is correct before you sign.