From 17 June 2014, it will be an offence under the Fair Trading Act to make an unsubstantiated representation in trade.

This means that those who make representations that are true, and that are not misleading, will still be liable for breaching the Fair Trading Act if they are unable to “substantiate” their representation at the time they make it.

Those in trade who do not have something to back up their representations could be found criminally liable, and could be fined up to $600,000 for a company or up to $200,000 for an individual.

That “something” doesn’t need to be too complicated. The Commerce Commission has published guidance which suggests it is enough to have information provided from reputable suppliers or manufacturers, information the business making the claim holds, or some other reliable source of information.

There are also a number of defences available to traders, including the defence that the statement was a reasonable mistake.

Marketers will be relieved to know “puffery” is also still ok. These are the “mere puffs” of advertising rhetoric not meant to be taken seriously. The law presumes reasonable people would not expect to be able to rely on these statements.

However, given the changes, if you engage in trade now is a good time to review your compliance practices to ensure you do not accidentally make a representation you cannot substantiate.

You should ensure you keep a record of the information you rely on when making statements to potential purchasers. It would be best practice to also keep a record of the statements you have made.

Retailers and resellers might also want to consider including or bolstering warranty and indemnity clauses for manufacturer representations.