Abstract:
In March 2015, New Zealand’s unfair contract terms law (UCTL) came into force. The authors were concerned the law change would result in little change in practice, particularly as consumers are unable to challenge terms as being unfair – only the Commerce Commission has standing to challenge such terms. To assess the effect of the UCTL, a study was carried out. In phase one, which occurred before the UCTL came into effect, contracts from companies that supplied goods and services to consumers were assessed to determine the prevalence of unfair contract terms. In phase 2, nine months after the law change, contracts from the same companies were reassessed to determine whether they had been changed to comply with the UCTL and whether the changes had been effective. Disappointingly, only one third of companies had attempted to remove unfair terms and, of these, none were successful in removing all of the unfair contract terms. Common unfair contract terms that remained included attempting to limit liability for consequential loss. The study’s findings accord with a recent review by the Commerce Commission of some telecommunication companies contracts. While all but one of the companies in the review had made changes, at least one unfair contract term remained in each contract. The discrepancy between the high rates of amended contracts compared with the study can be explained as telecommunication contracts had long been identified as having large number of unfair terms: the sector was aware it was within the Commerce Commission’s sights. The paper argues that given the high level of noncompliance with the UCTL, the UCTL needs to be amended and brought in line with Australia’s UCTL law so that consumers can challenge terms. In addition, the Disputes Tribunals and other industry dispute resolution schemes need to be able to adjudicate upon unfair contract terms.