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Sellers automatically make certain guarantees to consumers when they buy goods or services for personal use. Under the Consumer Guarantees Act, if the goods are faulty or the services are sub-standard, consumers can seek:

  • repairs;
  • replacements; or
  • refunds.

This article sets out what those guarantees are and what your business must do to meet them. 

When the Consumer Guarantees Will Not Apply

Consumer guarantees do not apply if:

  • you are a private seller;
  • you sell or supply commercial products or services, like hospital equipment or vehicles;
  • your business sell goods that someone intends to resell;
  • the consumer fails to follow the instructions you or the manufacturer provided in a way that causes the problem;
  • the consumer loses or damages the goods after delivery; or
  • you made the consumer aware of particular faults before they bought the goods and provided what they asked for, but they changed your mind.

Goods

Under the Consumer Goods Act 1993 (the CGA), the meaning of goods includes most household items, such as:

  • coffee machines;
  • televisions; and
  • furniture.

It also includes personal items, such as: 

  • animals; and 
  • plants.

It also covers:

  • goods received as a gift;
  • products that consumers hire; and 
  • secondhand goods.

The CGA does not apply to:

  • money;
  • houses (but it does cover home repairs); or
  • goods donated by a charity.

Online Sales

If you sell goods online, you will have to meet the same requirements and guarantees as a physical retailer. 

Overseas Sellers

If you are based overseas and sell goods to consumers in New Zealand, the Consumer Guarantees Act might still apply, but it might be harder to rectify any problems.

As a seller, you must guarantee that the goods will:

  • be of acceptable quality;
  • be fit for a particular purpose;
  • match the description, sample or demonstration model;
  • be a reasonable price;
  • be owned by the consumer after purchase; or
  • arrive by the agreed time (or within a reasonable time if no time has been agreed) and in good condition.

Manufacturers

Manufacturers must make spare parts and repair facilities available for a reasonable period after they supply the goods. They may also choose to provide an express guarantee with your products for a set period which is additional to the Consumer Guarantees Act guarantees. If they make these guarantees, they must honour it.

All repaired, replaced or substituted goods will continue to receive the benefit of the express guarantee for the time remaining on the original guarantee period. After it expires, the guarantee under the CGA will continue to apply.

If the goods you sell are manufactured outside New Zealand, and the foreign manufacturer does not have an office in New Zealand, the importer will be deemed to be the manufacturer under the CGA.

Services

Examples of services include:

  • mechanics;
  • hairdressers;
  • painters;
  • plumbers;
  • accountants; and 
  • dentists.

As a service provider, you must guarantee your services will be:

  • carried out with reasonable care and skill;
  • fit for the particular purpose you supply them;
  • completed by the agreed time (or within a reasonable time if no timeframe has been agreed); and
  • charged at a reasonable price when you have not agreed on a price.

If you provide electricity and gas services, you must also meet a specific guarantee of acceptable quality.

The CGA does not apply:

  • if you sell products or services to be used for commercial use;
  • when a consumer buys from someone who is not in trade (private sales); or 
  • work done by a charity to a consumer.

The only time you can contract out of the Consumer Guarantees Act is if the goods are used for commercial purposes and both parties agree to this in writing.

As a seller, you should take care not to:

  • knowingly sell faulty goods or supply sub-standard services;
  • display a sign saying “no refunds or exchanges”;
  • wait or delay if a consumer complains; or
  • refuse to deal with complaints about goods that arrive damaged after being delivered.

What You Must Do if Something Goes Wrong

Upon becoming aware of a problem with the goods or services you provide, consumers should stop using the goods and contact you.

Where you can fix the failure, consumers can require you to remedy it within a reasonable time. If this does not happen, the consumer can ask someone else to rectify the problem and: 

  • ask you to reimburse them for all reasonable costs;
  • reject the goods; or
  • in the case of services, end the contract.

Where the failure is major, and you cannot remedy it, consumers can:

  • decline the goods;
  • cancel the services; or
  • claim compensation from you for the reduced value.

Whether the problem is major or not, you may also have to compensate consumers for any other reasonably foreseeable loss or damage from a failure in the goods or service. A major failure means:

  • it would have stopped a consumer from buying it if they had known about it;
  • the goods are unsafe;
  • the goods are significantly different from their description; or
  • they are unfit for their purpose.

For example, if a consumer buys a coat from you and later discovers that a button is missing from it, this would be a minor failure, and the consumer could ask you to provide a replacement coat.

A major failure would occur if a consumer employs a cleaning service to clean their house, and they use products that permanently discolour and disfigure floors and surfaces. The service would be substantially unfit for its ordinary purpose.

Key Takeaways

Under the CGA, sellers automatically provide consumers with guarantees when they purchase goods or services in New Zealand. These ensure that goods are:

  • safe,
  • fit for purpose;
  • off an acceptable quality; and
  • that services are carried out with reasonable care and skill. 

If sellers and manufacturers do not meet the guarantees, they will have to provide a remedy and possibly compensation too. If you have any questions about the consumer guarantees, contact LegalVision’s Regulatory and Compliance lawyers on 0800 005 570 or fill out the form on this page.

FAQs

When do consumer guarantees not apply?

The consumer guarantees will not apply in limited circumstances. Including if you are a private seller, you sell or supply commercial products or services, your sell goods for resale, the consumer doesn’t follow instructions, the consumer damages the goods, or you had made the consumer aware of any faults and they bought the product with that in mind.

What does the Consumer Guarantees Act apply to?

The Consumer Guarantee Act applies to goods and services sold by sellers to consumers for personal use.

What do I do if a product is faulty?

Upon becoming aware of a problem with the goods or services you provide, consumers should stop using the goods and contact you. Where you can fix the failure, consumers can require you to remedy it within a reasonable time. If you cannot fix the problem, you should provide a refund.

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