The Commerce Commission is making its way through different industries which use standard form contracts with their customers.
Standard form contracts are basically the kinds of contract you get presented with where all the terms are already set, and your choice is to either accept the contract as it is or walk away.
The Commission’s mission is to identify terms in a standard form contract that are unfair on customers, and make sure the business using the contracts:
- Stops relying on the unfair terms in the contracts it already has and
- Does not use those terms in any new contracts.
Telecommunications companies were the first industry to have the Commission come through. The Commission identified a lot of terms used by the different companies that were unfair. Eventually, all of the companies changed all of the unfair terms to achieve what the Commission agreed was fair. You can only imagine how much work was involved, and how annoying it would have been for anyone who had gone through the cost of creating or updating their contracts not long before the Commission came knocking.
Next on the Commission’s hit list are other big industries including the retail energy companies, and gyms.
All of this action comes from changes to the Fair Trading Act giving the Commission stronger powers to deal with unfair terms. With the telecommunication companies everything was done by agreement, but don’t go thinking the Commission will take it easy if you break the rules. The changes to the Act give the Commission power to sue in court to force a business to stop relying on unfair terms and to remove them from the business’ standard form contracts for good.
So you’re a business – what does all of this mean for you?
Well if you don’t use standard form contracts, it doesn’t mean anything – but, you might want to think about whether standard form contracts would make your business more efficient.
If you are looking to create standard form contracts, or you are looking to update existing ones, or you are using them with no plans to review them any time soon, you need to give careful attention to whether any terms might be unfair on your customers. You don’t want to find out that terms you have been relying on can’t be enforced, or go to the effort of creating standard form contracts only to have the Commission make you re-do your homework.
If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:
Wallace Revell
wrevell@farry.co.nz
09 379 0055 or 03 477 8870
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.