The Commerce Commission has released draft guidelines on how it will enforce a ban on unfair contract terms due to come into effect next year.

Consumer NZ has been campaigning for several years to have the Fair Trading Act amended so consumers are protected from unfair terms and conditions.

Examples of unfair terms we’ve found include clauses that allow suppliers to unilaterally vary the contract, impose steep cancellation fees and hike the price without notice.

Unfair contract terms will be prohibited after 17 March 2015

Commerce Commission chairman Dr Mark Berry said businesses were being given plenty of time to run a ruler over their current contracts.

“We welcome feedback from businesses on our draft guidelines. But as the new laws will also have an impact on consumers we encourage feedback from them too,” Dr Berry said.

Submissions on the draft guidelines will close on 30 September 2014.

The new provisions will allow the Commission to act on a complaint about a contract term by going to court and seeking a declaration the term is unfair.

The court would declare a term unfair if it is satisfied the term:

  • would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
  • is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and
  • would cause some detriment (whether financial or otherwise) to the other party if applied, enforced or relied on.

The draft Unfair Contract Terms Guidelines can be viewed on the Commission’s website at http://www.comcom.govt.nz/fair-trading/guidelines/.

See Consumer’s Play Fair campaign.