Unfair Contract Terms in Consumer Contracts
The Commerce Commission reviewed 19 standard form consumer contracts from seven telecommunications businesses. Even though the majority of these businesses had already reviewed their contracts and made efforts to ensure they complied with the UCT provisions before they were introduced, the Commerce Commission identified 66 terms that could potentially be unfair. The Commerce Commission worked with the companies involved to amend the relevant contracts.
Key points from the telecommunications report
The most common terms identified as potentially unfair were terms that:
1. limit or exclude the liability of the supplier;
An unfair term can be justified if it is reasonably necessary to protect the legitimate interests of the business. However the Commerce Commission’s report indicates that the threshold for this justification is reasonably high as the Commerce Commission rarely agreed with the telecommunications businesses when this justification was used.
Which sectors will the Commerce Commission target next?
The Commerce Commission intends to target the electricity retail, credit and gym sectors next. Other industries should not be complacent though as they need to ensure they are compliant now. A business in another industry could easily be put under scrutiny if the Commerce Commission receives a complaint from a customer.
We encourage all businesses that sell to consumers to review their standard form consumer contracts to take into account the Commerce Commission’s views. Businesses cannot contract out of their liability to consumers under the UCT provisions so it is essential you ensure your terms comply. If you have any questions or need assistance reviewing your standard form contracts please contact your usual Jackson Russell lawyer or one of the lawyers below.