NEW ZEALAND Law and Practice Contributed by: Liz Blythe, Troy Pilkington, Emma Peterson and Craig Shrive, Russell McVeagh
deceiving another person and making unsubstanti - ated representations in trade. Fair and Reasonable Contract Terms It is common for the parties to expressly exclude the terms of the FTA and other implied consumer protec - tions – for example, those pursuant to the Consumer Guarantees Act 1993 – in outsourcing and technol - ogy contracts and to instead document the specific warranties and service commitments applicable to the arrangement in the contract terms. However, certain provisions cannot be contracted out of in B2B trans - actions, where to do so would not be “fair and reason - able” (noting that the test of fairness explicitly consid - ers the relative bargaining power of the two parties). The unfair contract terms regime in the FTA, which traditionally only applied to consumer contracts, has been extended to also apply to standard form, non- negotiated B2B contracts with an annual value of less than NZD250,000 under the Fair Trading Amendment Act 2021 (the “Amendment Act”). The Amendment Act has also been expanded to introduce a statutory prohibition on unconscionable conduct in trade. While “unconscionable conduct” is not defined, the govern - ment has provided that the intention is for the prohibi - tion to address similar conduct as in Australia, where the courts have found that conduct is unconscionable if it is “against conscience by reference to norms of society”. The Australian courts have stated that such norms can include acting honestly, fairly, and without deception or unfair pressure; the New Zealand courts are likely to take a similar approach when assessing such conduct. Implying Terms Into a Contract Given the typically high-value and heavily negotiated nature of outsourcing and technology contracts for core business-critical technology, the New Zealand courts will be reluctant to imply terms into the contract – on the basis that, if the parties wanted the term to be part of the bargain, they would have set that out in the contract expressly. Specifically, in contrast to the UK and Australian positions, New Zealand courts have tended to be reluctant to imply a universal doctrine of good faith into commercial contracts.
The agreement of warranties, standards and pre - scribed obligations is therefore an important stage in the negotiation of outsourcing and technology contracts. However, the courts may still imply terms into outsourcing and technology contracts in some cases – for example, where it is necessary to make the contract work. The courts adopt the following test to determine whether a term should be implied in the contract. • The term must relate to a business custom that is so well known that the parties must have known of it and intended it to form part of the contract. • The term must be certain and reasonable. • There must be clear and convincing evidence of the custom (unless the doctrine of judicial notice applies). • The term must not be contrary to an express term of the contract or inconsistent with the tenor of the contract as a whole. 4.5 Data Protection and Cybersecurity Contractual Protections on Data and Security There has been an increased focus on privacy, data protection and security in outsourcing and technology contracts. Where an outsourcing arrangement or par - ticular piece of technology relates to or involves the processing of data (and, in particular, personal data), the underlying contract will likely include: • provisions ensuring that consent has been given to the sharing of that data with the service provider; • provisions requiring the service provider to moni - tor and report security, data and privacy breaches when data is shared and provide the customer with all information and assistance reasonably required in respect of the same; • restrictions on the transfer of information outside New Zealand; • restrictions or limitations on onward transfers of information from the service provider to sub-pro - cessors or other third parties; • provisions ensuring that individuals are provided with the requisite rights in relation to their personal data; and • provisions demonstrating that the service provider complies with the Privacy Act and, where applica - ble, the EU or UK GDPR by:
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