Damages And Remedies Under New Zealand’s Fair Trading Act

If you run a business in New Zealand, the Fair Trading Act 1986 (FTA) isn’t just something you “tick off” and forget about.

It directly affects how you advertise, negotiate, sell, and represent what you do - and it can come back to bite (or protect) you when a deal goes wrong.

One of the most common questions we hear is: what can someone actually claim against my business under the FTA, and what can I claim if I’ve been misled? In other words, what kinds of damages and remedies under the Fair Trading Act apply in real life?

Below, we’ll break down the key remedies available under the FTA, how damages are typically assessed, and what practical steps you can take to reduce your risk (and protect your cash flow) before issues escalate.

What Does The Fair Trading Act Cover For Businesses?

The Fair Trading Act 1986 is New Zealand’s core “truth in trade” law. It applies to most business conduct “in trade”, including marketing, online listings, sales calls, negotiations, invoices, and contract discussions.

From a small business perspective, the FTA matters because it can apply even when you didn’t intend to mislead anyone. A genuine mistake in advertising copy, a sloppy product description, or an assumption you repeated from a supplier can still create legal exposure.

The Key FTA Rules That Commonly Lead To Claims

While the Act covers a lot, FTA disputes usually come down to a few main areas:

• Misleading or deceptive conduct (broadly, behaviour that misleads or is likely to mislead).
• False or misleading representations (for example, claims about price, quality, performance, sponsorship/approval, or business characteristics).
• Unsubstantiated representations (making claims you can’t reasonably back up at the time you make them).
• Unfair practices such as bait advertising or misleading “limited time” deals.

Even if you have a written contract, an FTA issue can still arise if your pre-contract statements or marketing created a misleading impression.

And while the FTA is often associated with “consumer” problems, it can also apply between businesses. B2B conduct is very much in scope - especially when one party relied on the other’s statements in deciding to enter a deal.

What Are “Damages And Remedies” Under The FTA, In Plain English?

When people search for Fair Trading Act damages and remedies, what they usually mean is:

• What outcomes can a court order if the FTA has been breached?
• Can someone get compensation, refunds, or cancellation rights?
• What can happen to the contract itself?
• What does this mean for the business’s money and operations?

Under the FTA, the “remedies” can be financial (like compensation), operational (like injunctions stopping certain conduct), and corrective (like advertising corrections). In some situations, the outcome is effectively to put the affected party back in the position they would have been in if the misleading conduct hadn’t occurred.

Importantly, FTA consequences can come from different directions:

• Civil claims (a customer, supplier, or another business sues for loss).
• Regulatory enforcement (a regulator may investigate and take action, depending on the conduct).
• Contractual fallout (disputes, cancelled projects, withheld payments, loss of repeat work).

Because the FTA risk isn’t “just legal” - it becomes commercial very quickly - it’s worth thinking about remedies early and building them into your contract and compliance approach.

Common Remedies Under The Fair Trading Act (And When They Apply)

The FTA provides a range of remedies, and which one applies depends on the facts of the case (and what the affected party can prove).

Here are the remedies businesses most commonly see in FTA disputes.

1) Damages (Compensation For Loss)

This is usually what people mean by “damages”. If a party can show they suffered loss because of misleading or deceptive conduct (or another relevant FTA breach), the court may order compensation.

In a business context, this might include:

• paying for additional work required to deliver what was represented
• the cost of fixing defective or non-compliant goods/services where the buyer relied on misleading claims
• wasted expenditure (e.g. money spent preparing for a project based on incorrect information)
• loss caused by delays or disruption after relying on inaccurate representations

Loss calculations can get technical fast, especially where part of the loss is “downstream” (for example, you miss out on a tender because a supplier misrepresented capacity or lead times).

2) Injunctions (Stopping Conduct Quickly)

An injunction is a court order that tells someone to stop doing something (or sometimes to do something specific).

In an FTA scenario, injunctions may be used to:

• stop misleading advertising (especially where a campaign is ongoing)
• stop a business from making certain claims they can’t substantiate
• prevent the sale of goods marketed in a misleading way

This is particularly relevant if you’re running marketing at scale (online ads, email campaigns, product listings), because an injunction can disrupt revenue immediately.

3) Corrective Advertising Or Public Notices

Sometimes, the “fix” isn’t just compensation. If a business has created a misleading impression in the market, a court may require corrective statements or disclosures.

For small businesses, this can be painful because the reputational impact often costs more than the legal claim itself. It’s one reason it’s worth having a clear internal approval process for marketing claims - especially “performance” or “results” claims.

4) Contract-Related Orders (Variation, Refund-Like Outcomes, Or Setting Things Aside)

Depending on the nature of the dispute, the FTA can empower a court to make practical orders connected to a contract - for example, orders that unwind all or part of a transaction, vary a contract, or require money/property to be refunded or returned. Whether these orders are available (and appropriate) depends on the type of FTA breach and what can be proved on the facts.

If you’re relying on written terms to manage risk (and you should be), make sure they’re drafted in a way that supports your commercial reality. Well-set terms can also help reduce the factual disputes about what was promised.

In practice, many FTA disputes about marketing and representations end up intertwined with the contract itself, including arguments about what the agreement actually required and what was said during negotiations.

This is where having properly drafted Service Agreement terms (or product sales terms) can make an enormous difference, because it gives you a clearer baseline for what was and wasn’t promised.

5) Declarations And Other Court Orders

Sometimes the remedy sought is a court declaration that the conduct breached the Act (or did not breach it). That can matter for leverage in settlement negotiations and can impact ongoing relationships with suppliers, franchise partners, or resellers.

The court may also make other orders available under the FTA depending on the scenario, especially where doing nothing would leave one party unfairly exposed.

How Are Fair Trading Act Damages Calculated (And What Can Be Claimed)?

Damages are not “automatic”. A person (or business) claiming damages usually needs to prove:

• there was conduct that breached the FTA (e.g. misleading or deceptive conduct)
• they relied on that conduct (or it materially influenced their decision-making)
• they suffered loss as a result

From a small business owner’s perspective, two points are worth keeping front of mind:

• Documentation matters: emails, quotes, proposals, website screenshots, and sales call notes often become key evidence.
• The “story” matters: what impression was created, and was it reasonable for the other party to rely on it?

Examples Of Loss A Business Might Claim

Here are a few common examples (these are general examples - the facts always matter):

• Extra costs to complete a project after relying on inaccurate claims about delivery timeframes, product compatibility, or certifications.
• Remedial work costs where goods/services weren’t as represented.
• Wasted spend like marketing costs, setup costs, or staff time that becomes pointless due to misleading statements.
• Lost profits in some situations, where the loss is sufficiently connected and can be evidenced (this is usually more complex and heavily fact-dependent).

Even if you’re the party being sued, understanding these categories helps you assess exposure early and make smart commercial decisions about whether to fight, settle, or renegotiate.

Can Your Contract Exclude FTA Liability?

Generally, you can’t contract out of the Fair Trading Act itself (including the core prohibition on misleading or deceptive conduct), even in B2B deals. That means a disclaimer or clause saying “the FTA doesn’t apply” usually won’t protect you if your conduct is misleading.

That said, some businesses can contract out of the Consumer Guarantees Act in certain B2B transactions if strict requirements are met (and it’s done properly). Separately, it’s also common to manage risk by making marketing and contract documents consistent, and using clear limitation of liability clauses, scope and specification clauses, and carefully drafted disclaimers where appropriate.

This is one reason it’s risky to rely on generic templates. Your wording needs to match:

• who you sell to (consumers, businesses, or both)
• how you sell (online, subscription, recurring services, custom builds)
• what you say in marketing (performance claims, comparisons, testimonials)

If you’re selling online, properly drafted Online Shop Terms And Conditions can help align customer expectations with what you can actually deliver (and reduce the “gap” where FTA disputes often start).

Practical Steps To Reduce Your FTA Risk (Before A Claim Happens)

Most FTA disputes aren’t caused by “bad actors”. They’re caused by busy businesses moving fast - reusing old website copy, relying on supplier claims, or letting sales scripts drift over time.

Here are practical ways to reduce your risk from day one.

Audit Your Marketing Claims (Especially “Results” And “Best” Claims)

If you’re making claims like “guaranteed results”, “fastest”, “cheapest”, “NZ’s best”, “clinically proven”, or “certified”, ask yourself:

• Do we have evidence right now to back this up?
• If a customer asked for proof, could we provide it quickly?
• Is the claim still true after a product change, supplier change, or price update?

If your claims rely on data about customers (testimonials, outcomes, case studies), you should also make sure your handling of personal information is compliant. For many small businesses, a properly tailored Privacy Policy can also support your overall compliance approach.

Get Your Quotes, Proposals, And Scope Documents Tight

A surprising number of FTA disputes start with a quote that’s “sort of” clear, but not quite. If your quote implies something (even unintentionally), it can create a mismatch between what the customer reasonably expected and what you intended to provide.

To reduce that gap, make sure your documents clearly set out:

• what is included (and what is not)
• assumptions (e.g. client to provide access, approvals, materials)
• timeframes and dependencies
• variations and change request processes

This is exactly the kind of detail that belongs in your customer-facing contracts, whether that’s a service contract, project agreement, or standard terms.

Train Your Sales Team (Even If That Team Is Just You)

FTA problems often happen in conversations - not on your website. Think sales calls, DMs, in-person meetings, and quick “yes we can do that” answers.

It helps to create simple internal rules, like:

• avoid absolute promises (“we guarantee” / “always” / “never”)
• use written follow-ups to confirm what was discussed
• don’t guess technical details - check and confirm in writing
• be careful with competitor comparisons

If you have staff who talk to customers, you’ll usually want those expectations reflected in employment documentation too, including confidentiality and conduct standards. Depending on your setup, an Employment Contract and policies can help you keep customer communications consistent and compliant.

Have A Clear Complaint And Resolution Process

If someone says you misled them, the first 48 hours matter. A clear internal process helps you:

• respond consistently (and avoid admissions you don’t mean)
• gather facts quickly (screenshots, emails, call notes)
• identify whether it’s a quality issue, misunderstanding, or true FTA risk
• resolve commercially before it escalates

For many businesses, having the right contractual wording around disputes and remedies helps here too - because it gives you a roadmap to follow when something goes wrong.

What Should You Do If You’re Facing An FTA Claim (Or You Think You’ve Been Misled)?

If you receive an allegation of misleading conduct, it’s normal to feel defensive - but the best early step is usually to slow down and get organised.

If Someone Is Claiming Against Your Business

Consider doing the following early:

• Preserve evidence: keep copies of ads, listings, emails, quotes, and versions of webpages.
• Identify the representation: what exactly do they say you represented, and where was it said?
• Check reliance: did they actually rely on that statement when deciding to buy?
• Assess loss: what are they claiming, and is it genuinely linked to the alleged conduct?
• Stop any ongoing issue: if your marketing is genuinely inaccurate, fix it quickly to limit further exposure.

It’s also wise to get legal advice before you respond in detail, especially if the claim involves a significant amount, reputational risk, or ongoing contracts with other customers.

If Your Business Has Been Misled By Another Business

FTA remedies can also protect you if you’ve relied on misleading statements from a supplier, contractor, or seller.

In that situation, the early steps are similar:

• write down what was said and when (memories fade quickly)
• collect supporting documents (proposals, product specs, marketing claims)
• calculate your loss clearly (extra costs, wasted spend, delay impacts)
• decide what outcome you want (refund, price reduction, compensation, revised performance)

If the dispute is tied to a signed agreement, you may also need to think about broader contract remedies and strategies. Where documents need to be updated or corrected quickly, a properly drafted Deed Of Settlement can be a practical way to resolve the dispute cleanly and reduce the risk of repeat issues.

And if you’re considering ending a commercial relationship, it’s important to check termination rights first - especially if there are ongoing deliverables or payment milestones. Sometimes the best path is to document the exit properly, rather than “just walking away”.

Key Takeaways

• The Fair Trading Act 1986 applies broadly to business conduct “in trade”, including your advertising, sales discussions, and pre-contract statements.
• FTA damages and remedies can include compensation for loss, injunctions stopping conduct, corrective advertising, and (in some cases) contract-related orders like variation or setting aside.
• Damages claims usually depend on proving a breach, reliance, and a clear link between the conduct and the loss suffered.
• Many FTA disputes can be reduced (or avoided entirely) by tightening your marketing claims, improving quotes and scope documents, and using properly drafted customer contracts.
• If an FTA issue arises, preserving evidence early and getting advice before you respond can prevent a manageable problem turning into a costly dispute.

If you’d like help reviewing your advertising claims, updating your customer terms, or responding to an FTA complaint, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.