Commercial Leases: Key differences between an Assignment of Lease and a Sublease

The Consumer Guarantees Act 1993 (CGA) provides a consumer with remedies if a business has failed to provide them with goods or services to a reasonable standard, regardless of whether the consumer has a written warranty or guarantee from the supplier or manufacturer. The CGA is intended to foster a trading environment in which consumer’s interests are protected, businesses compete effectively, and consumers and businesses can participate confidently. Does the CGA affect me? If you supply products or services as a normal part of your business, you are likely to be considered \'in trade\' and the CGA will apply to your business transactions. The CGA will affect you if you are a manufacturer of products that are subsequently supplied to consumers, even if those products are indirectly supplied through distributors and/or retailers. Parties to business-to-business transactions can (and regularly do) agree to exclude or modify some or all of the default guarantees and remedies under the CGA, but such an agreement must be in writing and the parties will only be bound if it is fair and reasonable.  A manufacturer of a product could exclude the CGA in a contract with a distributor, but that will not affect the rights of an end consumer of that product under the CGA against the manufacturer. What are my obligations under the CGA? As a business or person in trade, any goods or services you manufacture or supply must meet the minimum requirements outlined in the CGA. Goods must: Be sold with clear title free from security interests Be of acceptable quality Be fit for purpose Match their description Comply with samples Be reasonably priced, if there is no predetermined price If delivered by the supplier, be delivered on time Have spare parts or repairs available Services must be: Performed with reasonable skill and care Fit for purpose Provided within a reasonable time Priced reasonably, if there is no predetermined price For more detail on these obligations, see the guidance available on the Consumer Protection website. When might I be liable to claims under the CGA? If a supplier has breached a guarantee under the CGA, the consumer may have remedies including requiring the supplier to repair, replace or refund the purchase price. The consumers remedy will depend upon the severity of the breach and the type of product or service concerned. For smaller claims, if a consumer is unable to resolve the matter directly with a supplier, a cost effective approach may be to make a Disputes Tribunal claim. If you are would like to understand more about your rights or responsibilities under the Consumer Guarantees Act, Holland Beckett can provide you with advice and guidance. 

The collapse of high-profile construction businesses such as Mainzeal and Ebert Construction and subsequent judgments dealing with the distribution/management of retentions have prompted some important legislative changes affecting the construction industry. The most recent change being amendments to the Construction Contracts Act 2002 (CCA) contained in the Construction Contracts (Retention Money) Amendment Act 2023 (“the Amendment Act”). Scope The Amendment Act affects retention money (commonly referred to as retentions) withheld under a commercial construction contract entered into or renewed after 5 October 2023. Purpose The main purpose of the Amendment Act is to provide contractors with more transparency and control over retentions held against them, and to ensure that those retentions are not intermingled with other funds of their customers, which had previously made recovery difficult if the customer became insolvent. Retention Money Scheme Retention money is money owed to a contractor that is held back by the customer to secure the performance of the contractor’s obligations under a construction contract. It is common for a customer to be entitled to hold back a percentage of each of the Contractor’s progress payment claims which accumulates as retentions. In 2017, an earlier amendment to the CCA introduced mandatory rules contained in a then-new Part 2A of the CCA that determined how retentions are required to be held, accounted for and used by the party retaining them. However, deficiencies in these rules were highlighted in the context of liquidation proceedings and related cases following from the collapse of Ebert Construction in 2018. In particular, although the intention that retention money would be held “on trust” and that accounting records must be kept by the party holding those retentions was clear, it was less clear that retention money had to be held in a segregated account or what the consequences were if retention money was not held and accounted for with in the correct manner. New Requirements The Amendment Act clarifies and supplements the previous provisions in the CCA regarding retention money. In particular: the party who is entitled to withhold retentions is deemed to hold that money on trust from the point in time that it becomes entitled to withhold them (ie. the portion of a payment claim that is able to be held as a retention must be held on trust whether or not the balance of a payment claim is actually paid to the contractor); retention money must be segregated from other funds, for example in a trust account or escrow arrangement with a third party. This is to avoid retentions being intermingled with other funds of the customer; and accounting records, including a ledger for each retentions account, must be kept by the party holding retention money; contractors are entitled to certain information about their retention account including in what type of account, and with whom, the retentions are kept and ledger records; continuity of the trust applying to retention money in the event of a liquidation or receivership of the customer is expressly provided for; MBIE is given powers to enquire into and enforce compliance with the retentions rules directly; and new penalties for non-compliance are introduced including fines of up to $50,000 for a director and up to $200,000 for a company. Next Steps Our construction law experts at Holland Beckett Law can assist people who intend to withhold retention money under a construction contract to ensure they comply with the above requirements and to advise contractors on their rights and remedies in relation to retentions held against them.

The purpose of the Fair Trading Act 1986 (FTA) is to promote confidence and fair competition amongst business and provides a number of rights to consumers. The Commerce Commission works hard to enforce fair and proper trade practices of businesses providing goods and services to the New Zealand market. A recent example being the $840,000 fine recently received by TheMarket.com for misleading conduct (charged under s10 of the FTA). The Fair Trading Amendment Act 2021 (Amendment Act) came into force on 16 August 2022. The Amendment Act has introduced a further restriction to consumer contracts, extended the scope of business that must now comply and prohibited door-to-door salespeople from entering or remaining on residential property when told to leave. Unconscionable conductThe Amendment Act now prohibits any conduct in trade that is ‘unconscionable’. The Amendment Act has not provided a definition of what unconscionable conduct consists of, but does provide some guidance for the Courts at s8 of the FTA. We can expect a similar approach to be taken in the New Zealand Courts as has been in the Australian Courts, where it has been defined as being “against conscience or to offend conscience” (Stubbings v Jams 2 Pty Ltd [2022]). Small Trade ContractsPrior to August 2022, the prohibition of unfair contract terms at s26A of the FTA only applied to standard form consumer contracts – this is the contract between a company and the consumer (typically the person at the end of the chain). The Amendment Act has extended the scope of s26A of the FTA to apply to small trade contracts. The criteria for this is: Each party to the contract is engaged in trade; The contract is not a consumer contract; and The contract does not form part of a trading relationship that exceeds an annual threshold of $250,000 at the time the contract is entered into. Door-to-door salespeopleSection 36RA of the Amendment Act states any uninvited direct salespeople must immediately leave the residential property (or not enter) if told to do so by the person residing at the property. A breach of this provision can result in a fine of up to $10,000 for an individual and $30,000 for a business. How can we help?Businesses should be taking a proactive approach when drafting and negotiating consumer contracts or contracts that fit the small trade contract criteria. Holland Beckett Law can review your standard form contracts or provide drafting advice to ensure your contracts are acceptable to commercial standards. If you would like to know more or need help with your contracts please get in touch.