You can apply to the Commerce Commission to have a term reviewed in a standard form consumer contract. This is a contract that you accept on a take it or leave it basis and there is no negotiating the terms. The Commerce Commission then decide if they will seek a declaration from the District Court that a term is unfair.
There are certain factors that the Court must be satisfied with when dealing with an application. This includes whether the term is in a consumer contract and, if so, is it also a standard form contract.
The Court must also then be satisfied that the term in the contract:
- would cause a significant imbalance
- is not reasonably necessary to protect legitimate interests
- would cause detriment if applied.
Some terms are exempt and can’t be declared unfair if they:
- define the main subject matter of the contract such as the services or products to be supplied
- set the up-front price payable under the contract
- are expressly allowed by law.
The contract as a whole is looked at so there may be other benefits that outweigh the unfairness, such as a lower price. The supplier would have to show their legitimate interest can’t reasonably be protected by any other means.
The Commerce Commission has set out a grey list that they presume to be unfair where only the supplier can:
- terminate, vary or renew the contract
- penalise you for breach or termination
- avoid or limit liability or enforcement rights.
This may be proven to be fair if you have an ability to terminate, are given adequate notice, or have a reciprocal right.