If your business uses standard terms and conditions, they may be open to challenge under the Fair Trading Act 1986. Since the Fair Trading Amendment Act 2021 changes took effect, the unfair contract terms rules, which first protected consumers, also apply to many standard-form small trade contracts between businesses (broadly, those with a total annual value below NZ$250,000).
What is an unfair term?
A term may be unfair if it would cause a significant imbalance in the parties' rights, is not reasonably necessary to protect the legitimate interests of the party relying on it, and would cause detriment to the other party if relied on.
Terms that often attract scrutiny
- One party can change the price, scope or terms without the other's agreement.
- Only one party can end the contract or avoid performing it.
- Automatic renewal with hard-to-find opt-out dates.
- Large penalties for the other party's breach, with none for yours.
- Broad exclusions of liability that leave the customer without recourse.
- Limits on the other party's right to dispute or claim.
Why it matters
A court can declare a term unfair, meaning it cannot be relied on. The Commerce Commission can also take enforcement action. The Fair Trading Act also prohibits unconscionable conduct in trade, so how you apply your terms matters as well as what they say.
How to review your terms
- Identify every standard-form contract you use: customer terms, supplier terms, subscriptions, franchise or agency documents.
- Check whether each is a “standard form” (offered on a take-it-or-leave-it basis) and whether it falls inside the regime.
- Look for one-sided terms and ask whether each is genuinely needed to protect your business.
- Make important terms transparent: plain language and prominent placement.
- Review regularly as your business changes.
We can audit your standard terms and rewrite them to be fair, clear and enforceable.
General information only, not legal advice. Legislation and thresholds can change.
