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Report No. 199

New Zealand (procedural unfairness):

New Zealand Law Commission in 1990 proposed guidelines and among them the 'procedural' ones are as follows:

"A contract or a term in a contract, maybe unfair, if a party to the contract is seriously disadvantaged in relation to another party to the contract because he or she

(a) is unable to appreciate adequately the provisions or the implications of the contract by reason of age, sickness, mental, educational or linguistic disability, emotional distress, or ignorance of business affairs; or

(b) is in need of the benefits for which he or she contracted, to such a degree as to have no real choice whether or not to enter into the contract; or

(c) is legally or in fact dependant upon or subject to the influence of, the other party or persons connected with the other party in deciding whether to enter into the contract; or

(d) reasonably relies on the skill, care or advice of the other party or a person connected with the other party in entering into the contract; or

(e) has been induced to enter into the contract by oppressive means, including threats, harassment or improper pressure; or

(f) is for any other reason, in the opinion of the Court, or a serious disadvantage; and that the other party knows or ought to know of the facts constituting that advantage or the facts from which that disadvantage can reasonably be informed."

The Court, under another provision, is required to see whether the disadvantaged party received appropriate legal advice or other professional advice.

We have thus focussed separately on the 'procedural' aspects of unfairness in contracts in different countries. In the next chapter (Chapter IX), we shall likewise separately focus on the 'substantive' aspects of unfairness of contracts in several countries.

Unfair (Procedural and Substantive) Terms in Contract Back

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