NEW ZEALAND Law and Practice Contributed by: Liz Blythe, Troy Pilkington, Emma Peterson and Craig Shrive, Russell McVeagh
tions apply for health, intelligence, and security agen - cies. Penalties for Breach of Such Laws The maximum fine under the Privacy Act is NZD10,000 for failure to comply with an access order, compli - ance notice or transfer prohibition notice. The same maximum applies for failure to notify a privacy breach where required under the Privacy Act. In addition, there is a process by which privacy com - plaints can be escalated to the Human Rights Review Tribunal, which may grant a number of remedies – for example, a declaration that the business has inter - fered with the privacy of the individual and the award of damages. The Human Rights Review Tribunal can award damages up to a maximum of NZD350,000 (with the maximum award for a privacy matter to date being just over NZD168,000). Outsourcing contract models in New Zealand vary, depending on the specific circumstances of the par - ticular outsourcing arrangement – for example, the types of services being procured and the size of the customer’s business. Direct Contracting Although there is no one standard approach to out - sourcing contracts in New Zealand, direct contracting tends to be the prevailing model. It is also increasingly common for customers to aggregate service provid - ers by contracting with a core outsourcing provider directly for a number of different services, often involv - ing third-party managed services or subcontracting arrangements. This allows these customers to take advantage of relative administrative simplicity, cost- efficiency, and a single point of end-to-end service provider responsibility – all while still making use of specialist third-party capability. These outsourcing arrangements are typically governed by a master services agreement, with each service falling under a separate service schedule or statement of work. 3. Model Outsourcing Contracts 3.1 Standard Contract Model
The master services agreement contains the general legal terms relating to the arrangement as a whole and will typically include: • provisions relating to the initial term of the engage - ment; • a process for agreeing to additional services; • liability caps and exclusions; • warranties; • indemnities; • a dispute resolution process and termination rights; and the overarching principles and standards to which the services will be provided to the customer. The specific details of the arrangement are detailed in the service schedules, which will set out the service levels and service credit regime, pricing, customer dependencies, assumptions, customer requirements and other specific service terms. Existing Templates and Drafting Outsourcing Contracts It is common for service providers to push to use their existing contractual template as the basis for the outsourcing contract. Depending on the type of IT services being procured, the size (and relative bar - gaining power) of the customer and the value of the transaction, it can be more challenging to negotiate amendments to such template agreements – or to use the customer’s terms as a basis for negotiation – in the New Zealand market than it is in other larger markets where this practice is more widespread. The drafting of outsourcing contracts in New Zea - land has shifted in line with global developments in outsourcing. Parties are increasingly contracting on terms that focus on agility and partnership, rather than more traditional adversarial-style obligations. Further - more, there is a trend towards customers becoming much more sophisticated purchasers of these types of services, with several larger organisations now at the second- or third-generation outsourcing stage. Con - tracts are increasingly focused on service outcomes, rather than prescribing the method of service provi - sion in detail.
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