Time to Update Your Ts and Cs

New legislation in force from 1 September 2017

In February the Contract and Commercial Law Act 2017 (CCLA) was enacted which will repeal a number of commercial statutes and consolidate them in the CCLA. It comes into force on 1 September 2017.

If you operate a business that uses standard form contracts, terms of trade or other such documents which refer to the old laws, you should update those to take account of the new legislation.

The CCLA is part of the government’s move to modernise legislation, including omitting redundant provisions and making changes in the language and format of legislation to make it more readable and accessible. Your contracts may refer to old legislation, and should be updated as a result of these changes.

What’s changed?

Rather than having many statutes all with a small amount of relevant information, these will instead all be collected together in one place. It’s a bit like a supermarket putting all the bread in one aisle instead of having it in various places around the shop. The following statutes will be repealed from 1 September 2017:

  • Carriage of Goods Act 1979
  • Contracts (Privity) Act 1982
  • Contractual Mistakes Act 1977
  • Contractual Remedies Act 1979
  • Electronic Transactions Act 2002
  • Frustrated Contracts Act 1944
  • Illegal Contracts Act 1970
  • Mercantile Law Act 1908 (except for part five of that Act, which has been retained)
  • Minors’ Contracts Act 1969
  • Sale of Goods Act 1908, and
  • Sale Of Goods (United Nations Convention) Act 1994

These statutes are now ‘consolidated’ in the new CCLA. This consolidation process has not resulted in any changes to the law, however it does make some changes in wording to clarify the existing law and modernise the language. In addition, as is increasingly common in modern statutes, the Act includes examples to aid readability.

A few examples

Some obscure laws stand out. For example, the new legislation confirms that bacteria within fish fillets is an ‘inherent vice.’

Comparable to the facts of a well-known New Zealand case which went to the Privy Council 20+ years ago,[1] confirms that legal title in unallocated gold coins does not pass to the purchaser until the particular gold coins have been allocated to a particular purchaser.

Other examples illustrate aspects of the law which are important but which can be easily forgotten. Do you know, for example, what your options are if you enter into a contract to buy a certain number of goods but the seller delivers too many or too few?

Let’s say you ordered 1,000 widgets, but the seller delivered 800 or 1,200 by mistake. Many people would assume that you would be obliged to accept the delivery at least to the extent of your order. However, under section 164 of the CCLA, in some cases you can reject the entire order. You have other options too, but we digress …

Timing

The new Act comes into force from 1 September 2017. There are a number of transitional provisions, however, which set out what parts of the Act apply to contracts entered into on or after various dates. In general, the Act will apply to all contracts entered into after 1 September 2017 but it will also apply to some entered into earlier.

How do the changes affect me?

Many businesses use standard form documents such as terms of trade, contracts for either buying or selling goods or services (including employment agreements), guarantees and so on. It’s likely that if drafted comprehensively, most, if not all, such documents will refer to at least one of the Acts which will soon be repealed.

If your contracts aren’t updated, any clauses referring to repealed legislation are likely to still be valid and interpreted as if the contract was referring to the CCLA.[2] However, each case will depend on the particular wording used and the section referred to, so it is better to avoid any doubt and make the changes now.

Now is the time to check all your contracts, terms of trade, and other similar documents and have them updated if required. Please see us if you need assistance, we have experts who can help.

 

[1]  Re Goldcorp Exchange Ltd (In Receivership): Kensington v Liggett [1994] 3 NZLR 385 (PC).
[2]  CCLA, section 19(1).

 

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