As part of our consumer law update in June we made reference to changes to the Fair Trading Act 1986 ("FTA") which are to come into effect in March 2015.

The further change to the FTA will regulate what can be described as "standard form consumer contracts" (which may in fact also include business-business contracts relating to consumer goods) to address concerns about consumer contracts, or specific terms in consumer contracts, being unfair.

Standard form consumer contracts commonly relate to gym memberships, day care centres, telecommunications, finance, utilities, hire purchase, online apps and software, to name a few. Special exclusions will apply for insurance contracts.

The draft guidelines

On 31 July 2014, the Commerce Commission (the "Commission") published draft guidelines setting out its approach to enforcing the new provisions of the FTA once they come into effect.
The draft guidelines contain useful examples of contracts and contractual terms which may be considered unfair and set out what the Commission is likely to take into account as part of its determination of fairness, in the context of the specific statutory provisions.

The Commission has called for submissions on its approach by the end of September. We would expect their final guidelines to be issued before the end of the year.

The draft guidelines can be found in full by clicking here

Our advice

As mentioned in our previous update, we would suggest that businesses begin to consider updating their standard form consumer contracts, especially in the context of these draft guidelines and as necessary take professional advice.

Written by Mark O'Donnell at 00:00




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