Unfair Contract Terms Guidelines published

From 17 March 2015, it will be unlawful to include an unfair term or clause in a standard form consumer contract. The Commerce Commission’s new Unfair Contract Terms Guidelines will help businesses comply with this new law.

The guidelines help parties to standard form consumer contracts to think about how the UCT provisions apply to them and:

  • explain the unfair contract terms provisions in the Fair Trading Act and describe the Commission’s approach to enforcement of these provisions
  • explain how the Commerce Commission will assess whether a term may be unfair, and the principles it thinks are likely to be applied by the courts
  • identify some kinds of terms that may be unfair and those that may not be unfair.

Commission will actively enforce the new law

The Commission will actively enforce the new law and will initially focus on known potential problems like:

  • industries and practices that have proven problematic overseas or where the Commission has received complaints, such as the telecommunications, rental car, fitness, airlines, and online trading industries
  • contracts that are causing harm to vulnerable consumers in the consumer credit area, like loan contracts and credit related contracts for the sale of goods or services
  • terms that limit competition, like automatic ‘rollover’ or renewal terms and terms that lock consumers into contracts that they wish to exit, preventing them switching to a competitor
  • any term that allows a business to increase the price it charges for goods or services without the customer being allowed to terminate the contract with no penalty.

The new unfair contract term provisions only apply to contracts signed after 16 March 2015. The new laws also apply to any existing contract (except insurance contracts) that is varied or renewed after 16 March 2015. Any earlier contract is not captured by the law.

Read more and download the Unfair Contract Terms Guidelines.

Summarised from information provided by the Commerce Commission.

Published in consumer and occupational safety.

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