Consumer Credit Contracts 07 Dec 2011

The Credit Contracts and Consumer Finance Act 2003 (“Act”) was enacted to simplify and update the law relating to the provision of credit. The previous Credit Contracts Act 1981 ("CCA") was complicated and not well understood. Parry Field Lawyers provide legal advice on a range of commercial matters including entering credit contracts.

Which Contracts Does The Act Apply To?

The Act is mainly concerned with “consumer credit contracts”.  The key requirements for a consumer credit contract are:

The Act does not apply to companies, incorporated societies or family trusts.

The requirement for a loan to be primarily for personal, domestic or household purposes should make it relatively easy to determine whether or not the Act applies.  A good example is a loan for the purchase of a home.  Clearly that would be for personal, domestic or household purposes in which case the loan is a consumer credit contract.  However, if the loan is for the purchase of a rental property, it is not a consumer credit contract, as the debtors are not intending to occupy the house themselves.

In cases of doubt, the Act does provide that a declaration by the debtor that the credit is for use primarily for business or investment purposes (or both) rather than personal use, will generally be sufficient to ensure the contract falls outside the Act.

What Does the Act Require?

The Act aims to ensure that the interests of debtors who enter into credit contracts are protected by ensuring that proper information is given to them as to the calculation of costs, fees, charges and interest charges in relation to the credit contract.  It is also designed to prevent oppressive terms or conduct by creditors.

Should you need any assistance with this, or with any other Commercial matters, please contact Peter van Rij or Tim Rankin at Parry Field Lawyers (348-8480).