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Fair Trading Act 1986

Enforcement and remedies - Declaration of unfair contract terms

46I: Declaration of unfair contract terms

You could also call this:

“Courts can decide if some contract terms are not fair for customers or small businesses”

The High Court or the District Court can say that a term in a standard form contract for consumers or small businesses is unfair. This can happen if the Commission asks them to.

The court can only do this if they are sure about a few things. First, the contract must be for a consumer or a small business. Second, it must be a standard form contract, which is explained in another part of the law. Third, the law must allow them to say it’s unfair. Fourth, the term must actually be unfair, as described in another part of the law.

When the court says a term is unfair, they have to do two things. They need to say which contract they’re talking about by naming at least one of the people or businesses involved. They can also explain when or how using this term in a standard contract makes it unfair.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6410738.

Topics:
Business > Fair trading
Money and consumer rights > Consumer protection
Crime and justice > Courts and legal help
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46H: Application by Commission for declaration of unfair contract term, or

“The Commerce Commission can ask a court to decide if a contract term is unfair”

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46J: Standard form contracts, or

“Rules about contracts that are mostly written by one side”

Part 5 Enforcement and remedies
Declaration of unfair contract terms

46IDeclaration of unfair contract terms

  1. The High Court or the District Court may, on application by the Commission, declare that a term in a standard form consumer contract or standard form small trade contract is an unfair contract term.

  2. The court may make the declaration only if it is satisfied that—

  3. the term is in a contract that is a consumer contract or small trade contract; and
    1. the consumer contract or small trade contract is a standard form contract (as determined in accordance with section 46J); and
      1. the declaration is not prohibited by section 46K(1); and
        1. the term is unfair in the sense described in section 46L.

          1. A declaration under this section—

          2. must identify the contract to which it applies by reference to at least 1 of the parties to the contract; and
            1. may describe the context or conditions in which the term's inclusion in a standard form contract means that the term is an unfair contract term.

              Notes
              • Section 46I: inserted, on , by section 36 of the Fair Trading Amendment Act 2013 (2013 No 143).
              • Section 46I(1): amended, on , by section 16(1) of the Fair Trading Amendment Act 2021 (2021 No 32).
              • Section 46I(1): amended, on , by section 261 of the District Court Act 2016 (2016 No 49).
              • Section 46I(2)(a): amended, on , by section 16(2) of the Fair Trading Amendment Act 2021 (2021 No 32).
              • Section 46I(2)(b): amended, on , by section 16(3) of the Fair Trading Amendment Act 2021 (2021 No 32).