I Sell Products in NZ. What Consumer Guarantees Do I Owe My Customers?

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Table of Contents

• Does Consumer Law Apply to My Business?
• When Do Consumer Guarantees Not Apply to My Products?
• What Consumer Guarantees Apply When Selling Products?
• Remedying a Broken Consumer Guarantee
• Key Takeaways
• Frequently Asked Questions

All businesses that sell products in New Zealand to consumers are subject to consumer law protections. The law imposes product standards on businesses through consumer guarantees. As such, these are promises you make about your product’s quality, fitness for purpose, and other aspects of the sale. These guarantees also apply to services. This article will explain how consumer law applies to your business and what consumers guarantee you owe your customers.

Does Consumer Law Apply to My Business?

There are two key laws that your business should be aware of to protect consumer rights. These are:

• the Consumer Guarantees Act (CGA); and

• the Fair Trading Act (FTA).

In most cases, both of these laws apply to businesses or individuals ‘in trade’. You will likely be in trade if you:

• regularly sell goods or services;

• purchase or manufacture goods to sell them on;

• have staff;

• register for GST; or

• operate from a corporate structure.

When you are in trade, then you need to ensure your goods meet their relevant consumer guarantees.

When Do Consumer Guarantees Not Apply to My Products?

However, consumer guarantees will not cover all of your sales. The Consumer Guarantees Act only covers consumer goods that you sell to consumers for personal or domestic use. Examples include clothing products or personal electronics like laptops. It does not apply to commercial products which you sell to another business for business use.

For instance, if your business exclusively sells rolls of fabric to another business for manufacture, this is not for personal or domestic use. Therefore, you may not need to meet consumer guarantees.

If you sell your goods to another business, the parties can agree to contract out of the CGA, and consumer guarantees do not apply to your transaction. However, you cannot contract out of the CGA in sales with everyday consumers. Trying to do so and misleading consumers about their rights is against the law.

What Consumer Guarantees Apply When Selling Products?

The consumer guarantees that apply to your products set a minimum standard that customers can expect. The table below sets out what standards you need to meet if you sell products to consumers.

There are also extra guarantees if you manufacture goods or you are the first to sell the products in the country. You need to ensure that:

• there are spare parts and repair facilities available;

• you honour any written warranties with your products;

• products match their description; and

• products meet an acceptable standard of quality.

Remedying a Broken Consumer Guarantee

If you break one of your consumer guarantees, you need to give the affected customer a remedy, either a:

• repair;

• replacement; or

• refund.

If the fault or problem is minor, such as a toy car’s easily replaceable wheel falling off, then you get to choose the remedy. However, if there is a major problem, then the customer gets to choose the remedy. A problem is major if the customer would not have bought the product if they knew about the issue or if the product: 

• is unsafe;

• does not match its description at all; or

• is not fit for this purpose, and you cannot easily fix it.

You only have to give a remedy if you have broken a consumer guarantee. You do not have to provide a remedy if a customer changes their mind or damages the product themselves. For example, you have to provide a remedy for a laptop that does not turn on when the customer first uses it because it is clearly faulty and breaks a consumer guarantee. However, if the customer drops the laptop and cracks the screen, you may not have to provide a remedy.

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Key Takeaways

When you sell products to consumers, you must ensure that you meet your consumer guarantees. These guarantees ensure product quality and fair sales. In the case where you need to remedy a broken consumer guarantee, there are a couple of avenues you can take. This includes repairing or refunding, depending on the circumstances of your situation.

If you would like more information or assistance regarding consumer guarantees, our experienced regulatory and compliance lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions