A deal gone wrong: misleading claims and unfair terms

When you were misled

If you suffered loss after entering a contract because of a misrepresentation the other side made to you, they are liable to pay damages as if it had been made fraudulently, unless they prove that they had reasonable grounds to believe, and did believe, up to the time the contract was made, that what they said was true.

Misrepresentation Act s 2(1)

Terms that take away your rights

No contract term or notice can exclude or restrict liability for death or personal injury caused by negligence.

Unfair Contract Terms Act s 2(1)

For other loss or damage caused by negligence, such a term or notice works only if it satisfies the requirement of reasonableness.

Unfair Contract Terms Act s 2(2)

If you deal as a consumer, or on the other side's written standard terms of business, they cannot rely on a term to exclude or restrict their liability for their own breach of contract, unless the term is reasonable.

Unfair Contract Terms Act s 3

A term that excludes or restricts liability for a misrepresentation made before the contract was made has no effect unless it satisfies the requirement of reasonableness.

Misrepresentation Act s 3

A term is reasonable if it was fair and reasonable to include, given the circumstances that were, or ought reasonably to have been, known to or in the contemplation of both sides when the contract was made. It is for the side relying on the term to show that it is reasonable.

Unfair Contract Terms Act s 11

When a business misleads a consumer

When a business deals with a consumer, it is an unfair practice to do or say anything that might reasonably deceive or mislead the consumer, to make a false claim, or to take advantage of a consumer whom the business knows, or ought reasonably to know, is not in a position to protect their own interests.

Consumer Protection (Fair Trading) Act s 4

A consumer who entered a transaction involving an unfair practice can take the business to court, as long as the claim is not more than the prescribed limit. The Act sets that limit at $30,000, or another amount the Minister prescribes. A consumer with a larger claim can give up the excess, but then cannot recover more than the limit in that action.

Consumer Protection (Fair Trading) Act s 6

This guide covers only the rules these Acts set out.