Act · 1986 · Tier 1
Fair Trading Act 1986
Also known as: FTA, the Fair Trading Act
What it is
The Fair Trading Act 1986 is the New Zealand statute that prohibits misleading or deceptive conduct in trade. It is the primary statute the Commerce Commission uses to address deceptive commercial conduct, including in real estate and property services. The Act also gives private parties a right of action for damages arising from breaches.
The FTA sits alongside the Consumer Guarantees Act 1993. Where the CGA focuses on quality of goods and services, the FTA focuses on the truthfulness of representations made about them. In property contexts, the two are often pleaded together.
What it covers
- Misleading or deceptive conduct — in trade, regardless of intent (section 9).
- False or misleading representations — specific categories including quality, approval, nature, composition, price, and standard (section 13).
- Unsubstantiated representations — making representations without reasonable grounds (section 12A).
- Unfair contract terms — certain standard-form consumer contract terms can be declared unfair by the court (sections 26A and 46H–46M).
- Remedies — civil and criminal, including damages, corrective advertising, orders, and pecuniary penalties.
The Act applies to any conduct "in trade," which is broadly defined and clearly includes real estate agency work, building inspection services, conveyancing, and related property-transaction activities.
What it gives you
- A private right of action for damages where you have suffered loss as a result of a breach.
- A clear standard of conduct: representations must not be misleading or deceptive, must not be false in specified categories, and must have reasonable grounds.
- Access to Commerce Commission investigation for conduct affecting consumers more broadly.
- Protection against unfair contract terms in standard-form contracts.
Key sections and how they work
Section 9 — Misleading and deceptive conduct generally
"No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
Our reading: This is the most important FTA provision for real estate contexts. The standard is objective — conduct is assessed by its likely effect on a reasonable member of the relevant audience, not by the defendant's intent. A statement made in good faith but which is in fact misleading breaches section 9. Silence can be conduct under section 9 where there is a duty to disclose. A building inspector who states "no underfloor insulation" while also acknowledging they could not access the subfloor is making a statement likely to mislead a reasonable reader. An agent who characterises a sale price as "the best in the area" where that claim is not supported is engaging in likely-to-mislead conduct.
Section 12A — Unsubstantiated representations
A person must not, in trade, make an unsubstantiated representation. A representation is unsubstantiated if the person does not have reasonable grounds for the representation at the time it is made. This section was added in 2013 and has been used in enforcement against price comparisons and capability claims.
Section 13 — False or misleading representations
Section 13 prohibits false or misleading representations in trade about specified matters, including:
- Whether goods are of a particular kind, standard, quality, grade, quantity, composition, style, or model.
- Whether services are of a particular kind, standard, quality, or quantity.
- That goods are new.
- Sponsorship, approval, endorsement, or affiliation.
- The place of origin of goods.
- The need for goods or services.
- The existence, exclusion, or effect of any condition, warranty, guarantee, right, or remedy.
- The price.
Breach of section 13 is a criminal offence, in addition to civil liability.
Section 43 — Other orders (damages and related remedies)
Section 43 allows courts to make compensation orders, order refunds or variations of contracts, and award damages to parties who suffer loss from a contravention. Injunctions sit under section 41; corrective advertising orders under section 42A. Private parties can combine these to seek damages, injunctions, and corrective advertising. Claims typically proceed in the District Court or High Court; the Disputes Tribunal has jurisdiction up to $30,000.
Unfair contract terms — sections 26A and 46H–46M
The court may declare a term in a standard-form consumer contract (or a standard-form small trade contract) to be an unfair contract term (s.26A). The declaration renders the term unenforceable against consumers (s.46M). Declarations are sought by the Commerce Commission, not by private parties directly. Agency agreements that purport to preauthorise broad licensee action, shift all liability to the vendor regardless of fault, or use terms that a reasonable consumer could not be expected to understand may be vulnerable to this provision.
How the Act is applied in practice
The Commerce Commission has enforced the FTA against real estate agencies on multiple occasions, most notably in the prosecution of five agencies (2016–2020) for price-fixing conduct in response to TradeMe's listing-fee model. Commerce Commission enforcement typically targets conduct that affects many consumers; individual cases often proceed privately via damages actions.
Section 9 is frequently pleaded alongside Rule 9.2 of the Professional Conduct Rules — the two are closely related. Section 9 provides a civil damages pathway; Rule 9.2 provides a professional-discipline pathway. A vendor who suffers loss because of misleading agent conduct may pursue both.
Common misuses
"We didn't mean to mislead you"
Intent is not required under section 9. The test is whether the conduct was misleading or likely to mislead, assessed objectively. A statement made in good faith that turns out to be incorrect can still breach the Act. The only question is whether the conduct, objectively assessed, met the prohibited standard.
"It was just puffery / marketing language"
Some exaggerated language in marketing is recognised as non-actionable puffery — the "finest coffee in town" type. Specific factual claims in property marketing ("fully renovated," "no weathertightness issues," "no EQC history") are not puffery and are actionable if misleading.
"The disclaimer in the agreement protects us"
Contractual disclaimers cannot displace FTA liability for misleading conduct. A "we make no representations" clause in an agency agreement does not prevent the agent's specific representations from being actionable.
When you might cite this Act
- An agent made a specific statement about the property that turned out to be false. Section 9 / section 13.
- An inspection report contains material statements that a competent inspector would not have made. Section 9 — likely to mislead a reasonable reader.
- Marketing materials represent the property in ways that are not supportable. Section 13 — false representations about quality or characteristics.
- Price or cost representations were made without reasonable grounds. Section 12A.
- A standard-form agency agreement contains clauses that no reasonable consumer could be expected to understand or that unfairly transfer risk. Sections 26A and 46H–46M (unfair contract terms).
Related rules
- Consumer Guarantees Act 1993 — sits alongside the FTA; CGA covers quality, FTA covers truthfulness.
- Professional Conduct and Client Care Rules 2012 — Rule 9.2 on misleading conduct overlaps substantially with FTA section 9.
- Commerce Act 1986 — adjacent statute covering anti-competitive conduct.
Authoritative sources
- Full text: Fair Trading Act 1986 — legislation.govt.nz
- Commerce Commission: comcom.govt.nz
- Consumer Protection (MBIE): consumerprotection.govt.nz