Fair Trading Act 1986

Unfair conduct - Unconscionable conduct

8: Court may have regard to certain matters

You could also call this:

“How courts decide if actions are unfair”

When deciding if someone’s actions are unfair, a court can look at many things. They can consider how much power each person had in the situation. For example, if one person is a business and the other is a customer, the business might have more power.

The court can also think about whether both people acted honestly and if the person affected by the unfair actions could protect themselves. They might look at whether the affected person could understand any papers given to them.

The court can check if anyone was pressured or tricked. They can also see if important information was kept secret that could have hurt the affected person.

If there’s a contract involved, the court can look at how it was made. They might ask if the affected person had a chance to change the contract terms or if they got advice about it. The court can also check if the contract is fair and if its rules are clear.

The court can look at how both people followed the contract and if any actions to enforce it were legal. They can also consider anything else that happened between the two people after they made the contract.

If no specific person was affected, the court can still look at how the actions might affect people in general who could be in that situation.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS736892.

Topics:
Business > Fair trading
Money and consumer rights > Consumer protection

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7: Unconscionable conduct, or

“Businesses must always act fairly and reasonably when dealing with customers”


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9: Misleading and deceptive conduct generally, or

“Businesses must be honest and not trick people”

Part 1 Unfair conduct
Unconscionable conduct

8Court may have regard to certain matters

  1. When assessing under section 7 whether a person’s conduct is unconscionable, a court may have regard to 1 or more of the following:

  2. the relative bargaining power of the person engaging in the conduct (the trader) and any person (whether or not an identified individual) who is disadvantaged, or likely to be disadvantaged, by the conduct (an affected person):
    1. the extent to which the trader and an affected person acted in good faith:
      1. whether, taking account of the particular characteristics and circumstances of an affected person, the affected person or the affected person’s representative was reasonably able to protect the affected person’s interests:
        1. whether an affected person was able to understand any documents provided by the trader:
          1. whether the trader subjected an affected person to unfair pressure or tactics or otherwise unduly influenced an affected person:
            1. whether the trader unreasonably failed to disclose to an affected person—
              1. any intended conduct of the trader that might adversely affect the affected person’s interests:
                1. any risk to the affected person’s interests arising from the trader’s intended conduct, if the trader should have foreseen that the risk would not be apparent to the affected person:
                2. if there is a contract to which the conduct relates, anything listed in subsection (2):
                  1. any other circumstance that the court considers relevant.
                    1. If the conduct involves a contract between the trader and an affected person, the court may also have regard to—

                    2. the circumstances in which the contract was entered into, including—
                      1. any inducement to enter into it:
                        1. the extent to which the affected person had an effective opportunity to negotiate the terms:
                        2. whether the affected person obtained independent legal advice, or other independent professional advice, about the contract before entering into it:
                          1. the terms of the contract:
                            1. the form of the contract, including, in the case of a written contract, whether its terms are transparent:
                              1. whether the terms of the contract allow the affected person to be reasonably able to meet their obligations under it:
                                1. whether the affected person’s obligations under the contract are reasonably necessary for the protection of the trader’s legitimate interests:
                                  1. the conduct of the trader and affected person in complying with the terms of the contract:
                                    1. the length of time the affected person has to remedy any breach:
                                      1. whether any action by the trader in relation to enforcement of the contract was lawful:
                                        1. any other conduct of the trader or affected person, after the contract was entered into, in connection with their relationship.
                                          1. To the extent (if any) that no particular individual is identified as disadvantaged or likely to be disadvantaged by the conduct, this section applies with all necessary modifications as if—

                                          2. references to an affected person were references to the type of person likely to be disadvantaged by the conduct; and
                                            1. references to the existence of a particular circumstance were references to the likely existence of that circumstance in relation to that type of person.
                                              Notes
                                              • Section 8: inserted, on , by section 6 of the Fair Trading Amendment Act 2021 (2021 No 32).