GRC Professional - February 2015 Edition | Page 30

Do you feel valued? Taylor Root is the leading specialist legal, risk and compliance recruitment consultancy in Australia. Each year our teams produce dedicated market updates and salary survey reports to help our clients stay on top of market trends. If you would like to request your copy of the 2014 Salary Guide and Market Report for the Australian compliance and operational risk market, please contact us on the details below. Request a copy by visiting taylorroot.com/Australia or by contacting Amanda Atherton on [phone] or [email protected] taylorroot.com @TaylorRootLegal taylor-root • Assign the contract to someone else, to the detriment of the other party; • Vary the upfront price payable, without giving the other party a right to exit the contract. amount, cost-basis, and procedures for payment, if challenged. What are the risks? The NZCC can apply to the District or High Court on its own initiative, or at the request of any party to the contract. If the court declares a term to be unfair, it can have wide precedent effect: The NZCC will pay particular attention to standard form consumer contracts that contain such terms, however the ‘grey list’ approach is heavily dependent on all the facts and context in each case. Pricing not affected, unless it is a penalty? The “upfront price” of a contract (as well as its core subject-matter) cannot be declared an unfair term. The upfront price is the price payable under a contract, but only to the extent that it is transparent. The NZCC will still pay close attention to price, and will try to limit the scope of this exemption by scrutinising all terms relating to price that may have not been transparently disclosed. In particular, the regulator will focus on penalties and ancillary costs, which are not part of the upfront price and which it says have a particular tendency to be unfair. Where it is not clear whether an amount payable is a penalty or part of the upfront price, the NZCC will demand evidence from the party seeking payment. It will not matter whether it is described as a “penalty” or something else. So it is important to ensure all price terms are clearly expressed in plain language, and be prepared to justify the 28 GRC Professional • February 2015 PART OF THE SR GROUP Brewer Morris | Carter Murray | Frazer Jones | SR Search | Taylor Root UK | EUROPE | MIDDLE EAST | Asia | AUSTRALIA | OFFSHORE Where it is not clear whether an amount payable is a penalty or part of the upfront price, the NZCC will demand evidence from the party seeking payment. • all businesses are prohibited from using the term in a standard form contract, unless it can be used in a way that complies with the court’s decision; and • businesses which already have that term in a standard contract (entered into after 17 March 2015) may no longer apply or enforce it. There are significant consequences for trying to use or enforce a term that has been declared unfair: • Criminal fines up to NZ$200,000 (individuals) or NZ$600,000 (corporates); • An injunction preventing relying on or including such term; or • Orders to refund money or pay damages. And apart from formal consequences, substantial reputational damage in the face of an adverse ruling or publicity is alone usually enough to sharply get the attention of the CEO and Board of Directors. •••