In the broad sense commercial law includes company law and the law of contracts. This article contains brief notes on some topics not covered elsewhere.
For the most part commercial law in New Zealand follows that of England. This is true not only of those matters which are governed by the common law, but also of many of the subjects regulated by statute – for example, arbitration, bills of exchange, marine insurance, partnership, and trademarks.
The law of bankruptcy in New Zealand, although generally similar to that of England, differs in details. Among the principal deviations are that the Official Assignee combines functions performed by the official receiver and the trustee in England, and that an immediate adjudication of a debtor as bankrupt is sought following a bankruptcy petition, the English receiving order procedure being unknown. The bankruptcy law has been little altered since 1893 and a badly needed revision is in progress.
Except in the case of incorporated bodies, there is no provision in New Zealand for registering business or trading names. This differs from the position in England, Australia, and some other places. Subject to the law which makes a person liable for passing his goods off as those of another, anyone may carry on business under any name he chooses.
The Chattels Transfer Act of 1924 requires certain instruments affecting the title to or possession of chattels to be registered in the Supreme Court. The object is to prevent frauds which may be committed where one person possesses goods the ownership of which has passed to or remains with another. The principal classes of instrument requiring registration are securities and non-customary hire-purchase agreements. An unregistered instrument is void as against a subsequent registered instrument, a bona fide purchaser of the goods for value, and the Official Assignee. The goods are also liable to seizure by creditors of the person in whose apparent order and possession they are found. Securities may be given over existing and, in some cases, future book debts, crops, stock, and wool. These are liable to registration in the ordinary way. Securities given by companies are registrable under the Companies Act but not the Chattels Transfer Act.
The Act exempts customary hire-purchase agreements from registration. These are agreements between traders and members of the public in respect of goods which are specified as being commonly bought on hire purchase.
Much of the law relating to hire purchase is the general law of contracts. Some degree of regulation was introduced by the Hire Purchase Agreements Act of 1939. This lays down rules to protect purchasers where goods are repossessed by the seller. The object is to ensure that, because of the purchaser's inability to complete the transaction, the seller does not receive more than the price of the goods. The buyer cannot contract out of the Act, but it does not apply if the goods are voluntarily returned, albeit at the seller's persuasion.
The New Zealand law relating to most types of insurance is identical with that of England. Insurance is compulsory under the Workers' Compensation Act in respect both of claims arising out of that Act and of employers' common law liability for negligence. The Transport Act of 1962 provides for compulsory third party liability insurance by owners of motor vehicles. New Zealand pioneered this legislation in 1928, but today the scope of compulsory motor accident insurance is narrower than that in many other countries.
A common law lien is a right to retain possession of a chattel as security for a debt owed in respect of that chattel. For example, an unpaid seller may retain the goods although they have become the buyer's property. A workman who has done work on an article may retain it until his debt is paid. If he is unpaid for two months the workman has a statutory right to sell the article by auction after giving notice.
Another type of lien is created by the Wages Protection and Contractors Liens Act of 1939. The principle of the Act is that a contractor, subcontractor, or worker doing work on land or goods who has a claim against his employer may require the amount of his claim to be withheld by a superior contractor or head employer out of the money due to the immediate employer under the contract. Where land is involved and an action is commenced to enforce the lien it may be registered as a charge against the land. This procedure gives a remedy where the head contractor claims against the owner. Whether or not notice of a lien has been given, portion of the contract price must be withheld for 31 days after a contract is completed.
The Sale of Goods Act of 1908 is virtually a replica of the English legislation. One small difference is that there is no market overt in New Zealand.
The unit trust in New Zealand corresponds to the investment company in the United States. It provides a means whereby the smaller investor may share the benefits of skilled investment in a wide range of securities. In the typical unit trust a substantial sum (say £500,000) is subscribed by the public; each investor is allocated “units” corresponding to the amount he has subscribed and is known as a unit-holder. The subscriptions are pooled to purchase stock or shares in enterprises selected by the managers of the trust with an eye to profitability and safety. Investments can be varied in the light of market conditions. The shares are vested in a trustee for the unit-holders; the profits are pooled and distributed among unit holders. Partly because of the small share market, unit trusts were not established in New Zealand until 1960. The comparatively depressed state of the economy since then has limited expansion, there being only four in 1963.
Unit trusts are closely regulated by the Unit Trusts Act of 1960. Based to some extent on Victorian legislation, the Act is most comprehensive. Its aim is to give unit holders a measure of protection similar to that enjoyed by shareholders. In addition, because of the likely business inexperience of many unit trust investors, the Act places certain supervisory responsibilities on the trustee.
by Bruce James Cameron, B.A., LL.M., Legal Adviser, Department of Justice, Wellington.