We checklist:

  • What is this new law in force from 17 March 2015; a layperson’s guide.
  • Why it matters to B2C suppliers.
  • What to do about it.

Here’s what to do about it:

  1. Ideally before 17 March, but as soon as possible, get a legal review of processes and B2C standard form contracts (address B2B aspects too).
  2. Amend contract forms and related processes.
  3. Put particular attention on renewed and varied contracts as they are commonplace in B2C contracts, and may happen without change to the general Ts and Cs.

​The Detail

What is this new law in force from 17 March 2015

The new unfair contract terms regime in the Fair Trading Act makes it a breach for B2C consumer supply standard form contracts to contain “unfair contract terms”. Quite a sizeable proportion of such contracts in NZ will not be compliant.

The new law has extended provisions defining what unfair contract terms are: they revolve around matters such as transparency; removing significant imbalances between suppliers and customers with “take it or leave it” standard form contracts, while protecting the legitimate interests of the suppliers.

Transparency and the overall terms in the contract are significant factors. A term written in legalese and buried in a long contract is less likely to be compliant than an upfront and clear statement of the same term.

Transparency is important on another key issue: upfront pricing and the main subject matter of the contract fall outside the unfair contract term regime so long as they are disclosed transparently.

The new legislation gives examples of the sorts of terms that may fall foul of the unfair contract term regime.

For more detail, see our many articles on our website such as Many B2C contract terms unenforceable from March 2015.

Why it matters to B2C suppliers

Standard form B2C contracts are only in breach if the Commerce Commission gets an order. The reality is that this won’t happen that often, at least in the early days.

But there’s a sting in the tail. If the Commission does obtain court orders, the supplier may well not be able to enforce unfair terms, rendering the terms toothless. Many B2C providers won’t want to risk losing their nicely crafted terms, so they’ll want to redraft now to reduce that risk, especially where there are large volumes of customers on points that raise customer-wide systemic concerns.

The regime applies to post 17 March contracts. But beware renewed and varied contracts as they fall victim even if the customer first signed up before 17 March. See our article, A trap: unfair contract terms regime applies to varied and renewed contracts.

What to do about it

  1. Ideally before 17 March, but as soon as possible, get a legal review of processes and B2C standard form contracts (address B2B aspects too).
  2. Amend contract forms and related processes.
  3. Put particular attention on renewed and varied contracts as they are commonplace in B2C contracts, and may happen without change to the general Ts and Cs.