Supplementary Order Paper No 39

No 39

House of Representatives

Supplementary Order Paper

Tuesday, 8 June 2021

Fair Trading Amendment Bill

Proposed amendments

Hon Dr David Clark, in Committee, to move the following amendments:

Clause 7: new section 26C

In clause 7, new section 26C(1)(c), replace “when it” (page 5, line 32) with “when the relationship”.

Clause 7: new section 26D

In clause 7, replace new section 26D(2) (page 6, lines 4 to 7) with:

(2)

Trading relationship, in relation to a contract, means a relationship consisting of—

(a)

that contract; and

(b)

any other contract (whether current or prospective) between the same parties on the same or substantially similar terms.

In clause 7, new section 26D(3)(b), replace when it (page 6, line 11) with when the relationship.

In clause 7, new section 26D(3)(b)(i), after “consideration” (page 6, line 14), insert “(including GST, if applicable)”.

In clause 7, new section 26D(3)(b)(ii), after “consideration” (page 6, line 17), insert “(including GST, if applicable)”.

In clause 7, delete new section 26D(4)(a) and (b) (page 6, lines 21 to 24).

In clause 7, new section 26D(4)(d)(ii), replace “later.” (page 6, line 33) with “later; and”.

In clause 7, after new section 26D(4)(d) (page 6, after line 33), insert:

(e)

GST means goods and services tax payable under the Goods and Services Tax Act 1985.

In clause 7, new section 26D, example 1, replace “$400,000” (page 6, line 36) with “$253,000 ($220,000 plus GST)”.

In clause 7, new section 26D, example 1, replace “A’s holding company and B’s subsidiary” (page 6, line 37) with “A and B”.

In clause 7, new section 26D, example 1, replace “A’s holding company to pay B’s subsidiary $50,000” (page 7, line 1) with “A to pay B $57,500 ($50,000 plus GST)”.

Clause 7: new section 26E

In clause 7, after new section 26E(3) (page 8, after line 10), insert:

(4)

Regulations made under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

Schedule

In the Schedule, new Schedule 1AA, Part 1, clause 1(3), definition of relevant insurance agreement, paragraph (a), replace “the commencement date” (page 12, line 26) with “the specified date”.

In the Schedule, new Schedule 1AA, Part 1, clause 1(3), definition of relevant insurance agreement, paragraph (b), replace “time.” (page 12, line 30) with “time”.

In the Schedule, new Schedule 1AA, Part 1, clause 1(3), after the definition of relevant insurance agreement (page 12, after line 30), insert:

specified date means—

(a)

1 April 2025; or

(b)

if an earlier date is specified under subclause (4), that date.

In the Schedule, new Schedule 1AA, Part 1, after clause 1(3) (page 12, after line 30), insert:

(4)

The Governor-General may, by Order in Council, specify a date for the purposes of paragraph (b) of the definition of specified date in subclause (3).

(5)

An Order in Council made under subclause (4) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

Explanatory note

This Supplementary Order Paper amends clause 7 and the Schedule of the Fair Trading Amendment Bill. Those provisions amend the Fair Trading Act 1986 by inserting new sections 26B to 26E and new Schedule 1AA, which introduce protections against the use of unfair terms in standard form small trade contracts.

New section 26C is amended to improve the drafting of the definition of small trade contract. No substantive change is intended.

New section 26D is amended to remove the concept of related parties from the definition of trading relationship. This change means that only contracts that are between the same parties will count for the purposes of assessing whether the trading relationship between the parties will be worth $250,000 or more in any given year (in which case the protections against the use of unfair contract terms will not apply). Contracts between parties related to those parties will not count towards the $250,000 threshold.

New section 26D is also amended in relation to goods and services tax (GST). The GST amendments clarify that any applicable GST must be included in the assessment of the trading relationship’s value.

New section 26E is amended by the addition of new subsection (4), which states that any regulations made under that section are secondary legislation. This is a technical adjustment to bring the section into line with the terminology used in the Legislation Act 2019.

New Schedule 1AA is amended to provide that the new protections against unfair contract terms in small trade contracts do not apply to relevant insurance contracts entered into before 1 April 2025 or, if an earlier date is appointed by the Governor-General by Order in Council, before that earlier date. This is intended to enable the new protections’ roll-out in the insurance industry to be co-ordinated with the insurance contract law review currently being carried out by the Government, so that insurers do not need to review their contracts twice.

Departmental disclosure statement

The Ministry of Business, Industry, and Employment considers that a departmental disclosure statement is not required to be prepared for this Supplementary Order Paper.