There are three situations in which disclosure will be required:
- at the start of the lease (initial disclosure);
- if the lessor and the lessee agree to change the terms of the lease (variation disclosure); and
- if the lessee requests it (request disclosure).
The Credit Contracts and Consumer Finance Act (CCCF Act) sets out the information that must be provided, and how and when it must be provided.
Initial disclosure
Initial disclosure must be provided to the lessee before the lease is made. The lessee must also be given a copy of all other terms of the lease either before or within five working days of when the lease is made. The law of contracts governs when a contract is ‘made’.
Schedule 2 of the CCCF Act sets out the key information that must be provided to the lessee for initial disclosure
Initial disclosure must include:
- Lessor’s full name and address
-
Nature of the lease
The fact that the lease is a consumer lease under the CCCF Act. - Term of the lease
-
The cash price
The cash price of the goods being leased . -
Option to purchase goods
Whether the lessee has an option to buy the goods, and if so, how much the lessee must pay to do so (or the method of calculating that amount). -
Payments required
The amount, timing and number of payments to be made under the lease. -
Amount paid at commencement
Any amount that is to be paid at the start of the lease or before the lessee takes the goods (such as a deposit). -
Total amount payable
The total amount payable under the lease (if ascertainable). -
Conditions of termination
A statement of how the lessee may terminate the lease including how any amount payable on termination is calculated. -
Services financed under lease
Particulars of any services that in substance are financed by the lease. -
Default fees or charges
Any default fees, charges or enforcement costs that may be payable. -
Other items
Any other information or warnings prescribed by the regulations to be information concerning a consumer lease.
Variation disclosure
If the parties agree to change the terms of a consumer lease the lessor must disclose full particulars of the change before it takes effect, unless the change reduces the lessee’s obligations under the transaction, in which case variation disclosure is not required.
Request disclosure
A lessee may request written disclosure of:
- the amount, timing and number of payments to be made under the lease;
- full particulars of any changes made to the lease since its start; and
- a copy of any disclosure statement that was provided or should have been provided before the request was made.
Request disclosure must be provided within 15 working days of receiving the request or, if a reasonable fee for disclosure is charged by the lessor, 15 working days from receiving that fee. If a lessor does not intend to provide the information until the lessee pays the fee they should let them know this in writing as soon as the request is received.
Request disclosure does not have to be provided if information has already been given to the debtor or guarantor in the previous three months or if the request is received more than a year after the contract has ended.
Failure to make disclosure
Debtors are entitled to recover statutory damages for a breach of these disclosure provisions and failure to make adequate disclosure to a lessee under a consumer lease is also an offence under the Act.
In addition, if a lessor fails to make initial or variation disclosure, they will be unable to enforce the lease nor will they have any right to recover the leased property or any security interest until disclosure has been made.
Termination payments
If a consumer lease is terminated before the end of its term the lessor may charge the lessee the lesser of:
- an amount not exceeding a reasonable estimate of the loss relating to the termination; or
- an amount worked out according to a method set out in the Act’s regulations (if any).
Credit-related insurance, extended warranties and repayment waivers
As with a consumer credit contract, a lessor may not require a lessee to unreasonably take out credit-related insurance, an extended warranty or a repayment waiver. If a lease does include provision for any of these services every party must be given a copy of the terms within 15 working days of when cover is arranged.
Definitions
Consumer lease: A contract for the hire of goods by a natural person for personal use for 12 months or more, or with an option to purchase the goods being leased and where the lessor carries on the business of leasing goods. The lease of some household goods are specifically defined as consumer credit contracts and are not therefore consumer leases.
Lessor: Someone (a person or a business) who hires out goods for others’ use.
Lessee: Someone who hires goods. In the case of a consumer lease, a private individual who is hiring the goods for personal use.
