Defences

The Fair Trading Act provides some general defences to criminal actions taken under the Act. Note that these defences do not apply to civil actions.

These defences are that:

  • The contravention was due to a 'reasonable mistake'. To prove a reasonable mistake, it is necessary to show there was an intention to act correctly. This means some reasonable system of checking, such as a compliance programme, should have been in place to detect errors.
  • The contravention occurred because the defendant 'reasonably relied' on information from another person outside the control of the defendant (not a director, employee or agent).
  • The contravention was caused by an 'accident' outside the defendant's control, or was caused by the actions of a third party (not a director, employee or agent), and reasonable precautions and diligence were exercised to avoid the contravention. The contravention must be one which could not have been avoided if reasonable precautions were taken and due diligence exercised. In one instance, the court found that because a shopper had moved a can of soup to a different place on a shelf, the resulting incorrect shelf pricing of the can was due to an accident beyond the defendant's control.

A business using the latter two defences must give written notice, including the name of the third person, to the person bringing the case against them no later than seven days before trial.

The Act also provides a number of specific defences:

Publishers and the media

When a broadcaster or newspaper publishes an advertisement which contravenes the Act, the publisher and the advertiser may both be liable. A defence is available to the publisher and the person who arranged the publication (for example, the advertising agent) if they can prove that they had no reason to suspect the false or misleading nature of the advertisement.

In addition, the Act provides a special defence for broadcasters and newspaper publishers, excluding them from the consequences of misleading and deceptive conduct and false representations if they appear in editorial comment, articles, forecasts and the like.

Consumer information standards regulations

A special defence is available to businesses charged with failing to meet consumer information standards regulations. This defence applies only to businesses who have acquired the goods from a supplier in New Zealand for the purposes of resupply. In other words, the defence is for the intermediary who has no control over the labelling of the goods.

Businesses must show either that they could not have reasonably known that the labelling of the goods did not conform to the regulations, or that the supplier told them that no regulations applied to the goods.

A business using this defence must give written notice, including the name of the supplier, to the person bringing the case against them no later than seven days before the trial.

Bait advertising

In the prosecution of a business for inadvertently not supplying goods (section 19(2)), a defence is available if it can be established that the business:

  • offered, or arranged, to supply goods or services of the kind advertised in a reasonable time and in reasonable quantities (in other words, offered a 'raincheck'); or

offered to supply immediately, or arranged to supply within a reasonable time, equivalent goods or services in reasonable quantities and at the original price.

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