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Truck shop sentenced for “incomprehensible” contracts

15 August 2017


An Auckland truck shop has been fined $108,000 for providing contracts which included “incomprehensible” clauses, the Commerce Commission says.

Zee Shop pleaded guilty to seven charges under the Credit Contracts and Consumer Finance Act 2003, for failing to disclose key information and failing to express key information clearly and concisely.

The Commission says in sentencing, Judge David Wilson QC said the contracts contained grammar and syntax which made some clauses “incomprehensible”. Referring to the cancellation requirements, he said “how people managed to navigate their way through those remains mysterious”.

“The law specifies what information must be in consumer credit contracts, and it also requires lenders to express key information clearly and concisely,” says Commissioner Anna Rawlings.

“Zee Shop not only routinely failed to include the right information, but some information in the contract was also incomprehensible to customers.”

Zee Shop is based in Auckland and operates in suburbs such as Mangere, Manurewa, Otara, and Takanini. It used five vans, some of which operated in Hamilton and Whangarei. It sells consumer goods such as food, clothing and electronics on credit at prices higher than those charged in mainstream stores.

Key information missing from the firm’s standard contract included the total number of payments required and an accurate statement of the consumer’s right to cancel the contract. A number of contracts also failed to disclose the amount of each payment or how frequently the consumer would be required to make payments. 

“The contracts were also poorly presented and did not state the necessary information clearly and concisely. The terms and conditions were in two condensed columns with no headings, and they were difficult to understand.” says Ms Rawlings.

Zee Shop was not among the initial 32 traders identified in the Commission’s 2014/15 Mobile Trader project, but came to the Commission’s attention later.

Last updated on the 16th August 2017