Pre-Contract Disclosure Statements In New Zealand: What To Know

When you're negotiating a new deal, it's easy to focus on the exciting part: getting to "yes".

But a lot of business disputes don't start because someone broke the contract - they start because someone felt misled before the contract was signed.

That's where using a pre contract disclosure statement can be a smart, practical tool. It helps you set expectations early, reduce misunderstandings, and show you're acting transparently from day one.

In this guide, we'll break down what a pre-contract disclosure statement is, when you might use one, what to include, and how it can interact with key New Zealand laws like the Fair Trading Act 1986 and the Contract and Commercial Law Act 2017.

Note: This article is general information only and not legal advice. Pre-contract disclosures (and the consequences of getting them wrong) depend heavily on your specific deal and the statements made during negotiation.

What Is A Pre Contract Disclosure Statement?

A pre contract disclosure statement is a document (or structured set of written disclosures) provided before a contract is signed. Its purpose is to give the other party clear information that:

• helps them understand what they're agreeing to;
• reduces the risk of misunderstandings later; and
• helps you avoid claims that you misrepresented key facts during negotiations.

In plain terms, it's you saying: "Here are the important facts and assumptions you should know before you sign."

A pre-contract disclosure statement is commonly used when:

• there's information asymmetry (you know more than the other party);
• the deal is high-value or long-term;
• the other party is relying on your information to decide; or
• you're making claims about performance, revenue, costs, availability, exclusivity, or future outcomes.

It's not the same thing as the contract itself. The contract sets the binding terms. The disclosure statement is supporting material that helps ensure the contract is entered into on an informed basis.

In most everyday business transactions, a disclosure statement is optional (unless you're operating in a specific regulated context that requires certain disclosures). It's mainly a practical risk-management tool.

Also, a disclosure statement isn't a "magic shield". If you've said something misleading, you generally can't fix it by relying on fine print or a generic disclaimer - and you can't "contract out" of liability for misleading or deceptive conduct under the Fair Trading Act 1986. But used properly, a well-prepared disclosure statement can be persuasive evidence that you acted fairly and clearly throughout the negotiation.

When Should Your Business Use A Pre Contract Disclosure Statement?

Not every small business needs a pre contract disclosure statement for every transaction.

But if you regularly enter into deals where the other party depends on information you provide, it's worth considering a standard disclosure process (and getting it tailored to your business).

Common Situations Where A Disclosure Statement Helps

1) Selling A Business (Or Buying One)

If you're selling your business, you'll often provide information about revenue, expenses, key contracts, staff, suppliers, assets, and liabilities. A structured disclosure statement (usually paired with due diligence) can help reduce the risk of disputes after settlement.

In many cases, you'll also want the actual sale terms properly documented in a Business Sale Agreement, with warranties and disclosures carefully aligned.

2) Entering A Commercial Lease

Commercial leases can be full of "surprises" if they're not clearly discussed upfront - things like outgoings, rent review clauses, permitted use restrictions, and make-good obligations.

If you're the landlord (or a head tenant subleasing), a disclosure statement can help ensure the tenant understands key commercial realities before signing a Commercial Lease Agreement.

3) Supplying Ongoing Services Or Managed Work

Any time you're selling a service where scope, assumptions, limitations, and client responsibilities matter, disclosures help prevent scope disputes.

For example, you might provide a project disclosure alongside your Service Agreement that clarifies what's included, what's excluded, dependencies, and any third-party costs.

4) Offering Products With Performance Claims

If your marketing or sales process includes performance claims (for example, "this will reduce power bills by 30%" or "this system handles 10,000 users"), you need to be careful. Those claims can trigger liability under the Fair Trading Act 1986 if they're misleading or can't be substantiated.

A disclosure statement can help you qualify claims, state assumptions, and confirm what the customer should (and shouldn't) rely on.

5) Licensing, Distribution, And Exclusivity Arrangements

If you're promising a territory, exclusivity, minimum performance, or pipeline expectations, these are prime areas for disputes if the commercial reality doesn't match what was implied during negotiations.

Clear pre-contract disclosure reduces the chance that your negotiation discussions later get interpreted as "promises".

Situations Where You Should Be Extra Careful

You should slow down and consider a disclosure statement (and legal advice) if:

• the other party is relying heavily on forecasts or "expected" outcomes;
• there's a significant power imbalance (e.g. you're the only supplier, or they're unsophisticated);
• you've used strong sales language (even casually, in emails or calls);
• the deal involves personal guarantees, security interests, or large upfront payments; or
• you're preparing a "take it or leave it" offer and want to reduce the risk of later arguments about what was understood.

What Should A Pre Contract Disclosure Statement Include?

There's no universal template that works for every industry. The "right" disclosure depends on what you're selling, how you sell it, and what the other party is likely to assume.

That said, most effective disclosure statements cover a few key themes: accuracy, completeness (within reason), and clarity.

A Practical Checklist

Here are common inclusions in a pre contract disclosure statement for New Zealand businesses:

• Parties and transaction overview: who is involved, what deal is being proposed, and what documents form part of the negotiation pack.
• Key commercial assumptions: assumptions behind pricing, timelines, deliverables, volumes, supply constraints, or service levels.
• Scope boundaries: what is included and what is excluded (and what costs may be additional).
• Known risks or limitations: for example, reliance on third-party suppliers, regulatory approvals, lead times, or market variables.
• Financial disclosures (where relevant): historic financials, whether figures are audited/unaudited, and what the other party should do to verify them.
• Statements about forecasts: clarifying that projections are estimates, the basis for them, and the variables that could change results.
• Reliance statements: clearly identifying what information the other party can rely on (and what they should independently verify).
• Confidentiality reminders: particularly if sensitive information is shared pre-contract; it may sit alongside an NDA.
• Data handling (if personal information is involved): how you collect and manage information, consistent with a Privacy Policy and the Privacy Act 2020.

Make Sure Your Disclosures Match Your Contract

This is the part many businesses miss: your disclosure statement should line up with the terms of the final contract.

For example:

• If your disclosure says delivery is ?typically 2?3 weeks?, but your contract says "time is of the essence" and includes penalties - that mismatch can create conflict.
• If your sales emails promise a feature, but the contract excludes it - you're inviting an argument about what was really agreed.

If you're aiming for a deal to be "final" once signed (with limited ability to back out), it's also important to understand when agreements become binding and what conditions apply - concepts like what makes a contract legally binding and whether you're working towards an unconditional contract matter more than many business owners expect.

What Are The Legal Risks If You Don't Disclose Properly?

The main reason businesses use a pre contract disclosure statement is risk management.

If things go wrong later, disputes often focus on what was said (or not said) during negotiations - especially if the contract is silent on an issue or if one party claims they signed based on certain representations.

Misrepresentation And Contract Claims

If you make incorrect statements that induce someone to enter into a contract, you may face allegations of misrepresentation.

This can lead to remedies such as damages, contract cancellation, or settlement pressure - even if you didn't intend to mislead them.

It's also common for negotiations to involve "headline terms" early on (price, timelines, key deliverables), and the details to come later. If those early statements aren't handled carefully, they can create legal and commercial risk.

Fair Trading Act 1986 (Misleading Or Deceptive Conduct)

The Fair Trading Act 1986 applies broadly to trade. That means many business-to-business dealings are still captured (not just consumer sales).

If your marketing, pitch decks, proposals, or negotiations include misleading statements (or create a misleading overall impression), you can face claims even where:

• the other party is another business;
• the misleading conduct wasn't deliberate; or
• you thought it was "just sales talk".

A clear pre contract disclosure statement can help reduce this risk by putting key qualifications and assumptions in writing. However, it won't necessarily protect you if the overall impression created is still misleading, or if the disclosures aren't prominent, accurate, and consistent with what you've said elsewhere.

Consumer Guarantees Act 1993 (When You Sell To Consumers)

If you sell to consumers, the Consumer Guarantees Act 1993 may apply (unless a proper business-to-business contracting out clause is used where allowed).

While the CGA isn't specifically about disclosure statements, the same practical point applies: consumers often rely on what they're told pre-purchase, so clear written information helps prevent complaints and disputes later.

Privacy Act 2020 (When You're Sharing Personal Information Pre-Contract)

Sometimes your pre-contract process involves sharing personal information - for example:

• client contact details in a pipeline list when selling a business;
• employee details (even in summary form) in due diligence;
• customer records or subscription lists;
• identification documents for finance or onboarding.

If personal information is involved, you need to handle it carefully (including secure transmission and limiting what's disclosed). Your disclosure approach should align with the Privacy Act 2020 and your privacy documentation.

How Do You Prepare A Pre Contract Disclosure Statement (Without Overcomplicating It)?

The goal isn't to bury the other party in paperwork. The goal is to make sure the right information is communicated clearly, and that you've got a record of it.

Step 1: Identify The "Reliance Points" In Your Sales Process

Start by asking:

• What questions do prospects always ask before they sign?
• What assumptions do they commonly make?
• What do you tend to "explain later" after they've committed?
• What facts would you want disclosed if you were the buyer?

These reliance points are where disputes usually start, so they're where disclosures matter most.

Step 2: Separate Facts From Estimates

A strong disclosure statement draws a clear line between:

• facts (e.g. "our current lease ends on X date", "our standard turnaround time is Y"); and
• estimates or forecasts (e.g. "we expect growth of 20%", ?implementation will likely take 6?8 weeks?).

If something is an estimate, say so - and include the assumptions it depends on.

Step 3: Get The Timing Right

Disclosures work best when they're provided:

• before the other party is locked in;
• with enough time for them to review; and
• in a format that's easy to understand (not scattered across ten emails).

If you're using preliminary documents like a term sheet or Heads of Agreement, consider providing your key disclosures at the same time so the "big picture" is clear early.

Step 4: Confirm In Writing That The Other Party Received It

You don't need to be overly formal, but you should keep evidence that:

• the disclosure statement was provided;
• it was provided before signing; and
• the other party had a chance to ask questions.

This can be as simple as an email attaching the disclosure statement and asking them to confirm receipt.

Step 5: Don't Rely On Generic Templates

It's tempting to grab a template and call it done - but that's risky.

A good pre contract disclosure statement needs to reflect:

• your industry and regulatory environment;
• how your business actually operates;
• your contract terms (including limitations of liability, scope, and payment terms); and
• the specific transaction type (sale, lease, service arrangement, supply deal, etc.).

Using the wrong template can be worse than using none, because it may create inconsistencies or disclose the wrong things (or miss the crucial ones).

Key Takeaways

• A pre contract disclosure statement is a practical way to set expectations and reduce disputes by putting key information in writing before a contract is signed.
• Disclosure statements are especially helpful for higher-risk deals like business sales, commercial leases, ongoing service arrangements, licensing, and any deal involving forecasts or performance claims.
• In New Zealand, poor pre-contract disclosures can create legal risk under the Fair Trading Act 1986 (misleading or deceptive conduct) and through claims like misrepresentation.
• In many cases, disclosure statements are optional (unless a specific regulated regime requires them) - but using clear, accurate disclosures can still be a valuable risk-management step.
• Your disclosures should be clear, relevant, and consistent with the final contract - mismatches between "what was said" and "what was signed" are a common cause of disputes.
• If personal information is shared during negotiations (e.g. customer or employee data), your process should align with the Privacy Act 2020.
• It's usually worth getting legal support to tailor your disclosure statement and contract terms, rather than relying on a generic template.

If you'd like help preparing or reviewing a pre contract disclosure statement (or tightening up the contract it supports), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.