Business Law FAQ - New Zealand

How much does a business lawyer cost in New Zealand?

Business lawyers in NZ typically charge $300-$600 per hour. Many offer fixed fees for standard services.

Should I set up a company or stay as a sole trader?

Both structures have advantages:

Consider a company when: taking on significant debt, employing staff, seeking investment, or when personal asset protection is important.

Do I need a shareholder agreement?

A shareholder agreement is highly recommended if you have multiple shareholders. It prevents disputes by addressing:

• Decision-making processes and voting rights
• Dividend policies
• What happens if a shareholder wants to exit
• Transfer restrictions (can shares be sold to anyone?)
• Dispute resolution mechanisms
• Non-compete obligations
• What happens on death or incapacity

What should be in a commercial contract?

Essential elements of a solid commercial contract:

• Parties: Full legal names and details
• Scope: Clear description of work/goods
• Price: Amount, payment terms, GST
• Timeline: Delivery/completion dates
• Warranties: Quality guarantees
• Liability: Limitations and exclusions
• IP: Who owns what's created
• Confidentiality: Protection of sensitive info
• Termination: How to end the contract
• Disputes: How disagreements are resolved

Can I get out of a contract I've signed?

Possibly, depending on circumstances. Contracts may be voidable for:

• Misrepresentation: You were misled about important facts
• Duress: You were pressured or threatened
• Undue influence: Unfair pressure from a trusted relationship
• Mistake: Fundamental misunderstanding by both parties
• Breach: The other party has materially breached

How do I protect my business idea or intellectual property?

Protection depends on the type of IP:

Consider multiple forms of protection. A business lawyer or IP specialist can advise on the best strategy.

What are director's duties in New Zealand?

Directors have serious legal obligations under the Companies Act:

• Good faith: Act honestly in the company's best interests
• Proper purpose: Exercise powers for legitimate reasons
• No reckless trading: Don't continue trading when insolvent
• Meet obligations: Don't agree to debts the company can't pay
• Care and diligence: Act as a reasonable director would
• No misuse of information: Don't use company info for personal gain

What happens in a commercial dispute?

Commercial disputes typically progress through stages:

1. Negotiation: Direct discussion to resolve issues
2. Formal demand: Written letter outlining claim and deadline
3. Mediation: Neutral third party helps reach agreement (often required before court)
4. Arbitration: Private decision-maker (if agreed in contract)
5. Litigation: Court proceedings if other options fail

Courts encourage settlement. Litigation is expensive ($20,000-$200,000+) and time-consuming. Alternative dispute resolution is usually preferable.

Do I need a lawyer to set up a company in NZ?

You can register a company yourself through the Companies Office website for $115. However, consider a lawyer if:

• You have multiple shareholders
• You need a customised constitution
• Complex share structures are needed
• You're unsure about the right structure
• You need shareholder or director agreements

DIY is fine for simple single-shareholder companies. Get legal help for multiple shareholders or complex structures to avoid costly problems later.

What is due diligence when buying a business?

Due diligence is investigating a business before purchase. It typically covers:

A lawyer coordinates legal due diligence while accountants handle financial review. This investment protects you from hidden problems.