Report No. 199

New Zealand: (substantive unfairness)

New Zealand Law Commission, 1990 in the Report on 'unfair' contracts (Nu11) proposed a definition as follows:

"(1) A term of a contract is also unfair if, in the context of the contract as a whole, it is oppressive;

(2) A term of a contract is oppressive if it:

(a) imposes a burdensome obligation or liability which is not reasonably necessary to protect the interests of the other party; and

(b) is contrary to commonly accepted standards of fair dealing.

(3) A transaction that consists of two or more contracts is to be treated as a single contract if it is in substance and effect a single transaction."

The Commission gave a number of examples of 'substantive' unfairness.

It also stated that a contract is not unfair unless, in the context of the contract as a whole,

(a) it results in a substantially unequal exchange of values; or

(b) the benefits received by a disadvantaged party are manifestly inappropriate to his or her circumstances; or

(c) the disadvantaged party was in a fiduciary relationship with the other party.

The above are the 'substantive' unfair terms in contract or guidelines relating thereto, which are found in other countries.