By Melissa Higham - 17 Mar 2015
Does your business use standard form consumer contracts? If so,
you need to be aware that unfair contract terms will be prohibited
in standard form consumer contracts from today (17 March 2015).
A term will be considered unfair if it:
- causes a significant imbalance in the parties'
rights under the contract; and
- is not reasonably necessary to protect the legitimate
business interests of the person who would be advantaged
by it; and
- would cause detriment if relied on.
Terms that define the main subject matter or set the upfront
price of the contract are exempt from being unfair. Terms that
the law expressly allows you to include are also exempt.
The Fair Trading Amendment Act 2013 provides a "grey list" of
terms that are likely to be unfair. This list includes terms
we come across frequently in standard form consumer contracts, such
as the right for one party to vary or renew a contract without the
other party's consent. While these terms may not always be
unfair, they need to be carefully considered.
The Commerce Commission is responsible for enforcing unfair
contract terms legislation and has indicated that it will begin by
targeting industries that have proven problematic or where it has
previously received complaints. These industries include
telecommunications, rental cars, fitness, airline and online
trading. The Commission will also be looking closely at loan
contracts provided by lower-tier finance lenders.
If your business uses standard form consumer contracts, and you
have not already had your terms reviewed, we can help.
Contact
Melissa
Higham