The Road Transport Forum is welcoming legislative changes to tackle “unfair commercial practices” such as late payments.
The Government is proposing two key changes under the Fair Trading Amendment Bill, expected early next year.
The first is to prohibit “unconscionable conduct” which goes beyond being commercially necessary or appropriate.
The second is to extend current protections against unfair contract terms in standard form consumer contracts to also apply to business contracts with a value below $250,000.
“This will have a profound impact on small transport companies that in some parts of the country are subject to unfair contract terms in the form of unilateral deferred payments (UDP),” Road Transport Forum chief executive Nick Leggett says.
“This is an insidious practice used by some large corporates seeking to extend payment times to their suppliers beyond what is normally considered acceptable.
“RTF has lobbied hard for a legislative solution to UDP for the past few years. It first came to our attention when a number of transporters working for big players in the primary sector were forced to accept 60 to 90-day payment terms.
“Where we have some reservations is the Government’s intention to prohibit ‘unconscionable conduct’. RTF’s concerns are whether this will be effective and even usable for small to medium businesses, without the legal resources to pursue it,” Leggett says.
Commerce and consumer affairs minister Kris Faafoi says the changes are about protecting businesses and consumers harmed by unfair commercial practices.
“We’re taking action to prohibit the most serious types of commercial misconduct, and to ensure there are better protections against unfair contract terms.
“This is part of other work underway to promote competition and protect people against unfair business practices.
“The new market study powers which the Commerce Commission is using to review the retail fuel sector is an example of the sort of work the Government’s doing in this space.
“We’re also strengthening laws to protect vulnerable consumers from loan sharks, looking at other ways to improve business-to-business payment practices, and reviewing the current law around misuse of market power such as predatory pricing,” Faafoi says.
