9Introduction

It can be relatively common to find that a fixed-term contract, such as with a gym, has renewed without you noticing – and you have to pay if you want to get out of it.

‘‘The Fair Trading Act bans unfair contract terms. Roll-over contracts that impose unreasonable fees and notice periods to cancel would risk breaching this ban and are open to challenge,’’ Wilson said.

You can approach the business in the first instance – it is up to them to prove that they had a good reason for including contract terms. The Commerce Commission can ask a court to make a declaration on whether a term is unfair, at which point the business cannot enforce it.

The commission suggests these questions might help identify an unfair term: ❚ Are you penalised if the contract is terminated but the business is not penalised? ❚ Can the business change important terms of the contract without your permission, or without letting you cancel the contract? ❚ Can only the business decide whether the contract has been breached?

People also regularly complained about lenders not meeting their disclosure obligations under the Credit Contracts and Consumer Finance Act, and about the fees they charged.

Lenders must disclose credit fees, default fees, their annual rates of interest and default interest rates. If they are charging administration fees, they need to relate to the actual cost of administering the contract.

Lenders also have a requirement to lend responsibly, so that customers are able to repay their loan, to ensure their customers are informed, and act ethically.