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Fair Trading Act 1986

5D: No contracting out: exception for parties in trade

You could also call this:

"Some trade agreements can exclude certain laws if both parties agree in writing."

Illustration for Fair Trading Act 1986

You can make an agreement that lets you do something that would normally be against the law. This is allowed if you and the other party are both in trade and you agree to it in writing. You must both be in trade and agree to exclude certain parts of the law, such as section 9, 12A, 13, or 14(1). You can include a provision in your agreement that says you do not rely on what the other party said. This is like an entire agreement clause. The court will look at all the circumstances to decide if it is fair and reasonable. The court will consider things like the subject matter of the agreement and the value of the goods or services. They will also look at how much power each party had to negotiate the terms. If one party had to accept the agreement without being able to change it, the court will consider this. If you make an agreement like this, you cannot take the other party to court for certain things. But the Commission can still take you to court if you break the law. This section does not limit the application of subpart 3 of Part 2 of the Contract and Commercial Law Act 2017.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6156603.

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5DNo contracting out: exception for parties in trade

  1. Despite section 5C(1) and (2), if the requirements of subsection (3) are satisfied, parties to an agreement may include a provision in their agreement that will, or may (whether directly or indirectly), allow those parties to engage in conduct, or to make representations, that would otherwise contravene section 9, 12A, 13, or 14(1); and in that case,—

  2. the provision is enforceable; and
    1. no proceedings may be brought by any party to the agreement for an order under section 43 in relation to such a contravention of section 9, 12A, 13, or 14(1).

      1. A provision of the kind referred to in subsection (1) includes, for example,—

      2. a clause commonly known as an entire agreement clause:
        1. a clause that acknowledges that a party to the agreement does not rely on the representations or other conduct of another party to the agreement, whether during negotiations prior to the agreement being entered into, or at any subsequent time.

          1. The requirements referred to in subsection (1) are that—

          2. the agreement is in writing; and
            1. the goods, services, or interest in land are both supplied and acquired in trade; and
              1. all parties to the agreement—
                1. are in trade; and
                  1. agree to contract out of section 9, 12A, 13, or 14(1); and
                  2. it is fair and reasonable that the parties are bound by the provision in the agreement.

                    1. If, in any case, a court is required to decide what is fair and reasonable for the purposes of subsection (3)(d), the court must take account of all the circumstances of the agreement, including—

                    2. the subject matter of the agreement; and
                      1. the value of the goods, services, or interest in land; and
                        1. the respective bargaining power of the parties, including—
                          1. the extent to which a party was able to negotiate the terms of the agreement; and
                            1. whether a party was required to either accept or reject the agreement on the terms and conditions presented by the other party; and
                            2. whether the party seeking to rely on the effectiveness of a provision of the kind referred to in subsection (1) knew that a representation made in connection with the agreement would, but for that provision, have breached section 12A, 13, or 14(1); and
                              1. whether all or any of the parties received advice from, or were represented by, a lawyer, either at the time of the negotiations leading to the agreement or at any other relevant time.

                                1. To avoid doubt, nothing in this section—

                                2. prevents the Commission from bringing proceedings for an offence under this Act (including an offence under section 12A, 13, or 14(1)) against a party to the agreement referred to in subsection (1):
                                  1. limits the application of subpart 3 of Part 2 of the Contract and Commercial Law Act 2017.

                                    Notes
                                    • Section 5D: inserted, on , by section 8 of the Fair Trading Amendment Act 2013 (2013 No 143).
                                    • Section 5D(5)(b): amended, on , by section 347 of the Contract and Commercial Law Act 2017 (2017 No 5).