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If you sell consumer goods or services, then you are likely aware of the consumer guarantees that your business must uphold. These make sure that consumers are guaranteed products of a certain quality and can receive a remedy if something goes wrong. However, some types of sales do not have these consumer guarantees attached to them. In particular, consumer laws do not protect private sales. If you are buying things for your business from private sellers, then you need to know what options you have if something goes wrong. This article will explain how consumer law applies to private sales and what you can do if it does not.

What Are Private Sales?

Private sales are those that are typically between consumers in their personal capacity. They are usually one-off sales for household items. You may buy something for your business from a private seller, and this would classify as a private sale.

For example, you may decide to save on costs by sourcing your small office’s furniture from garage sales or people on Trade Me. These would classify as private sales.

Private sellers are not commercial traders because they usually do not qualify as being ‘in trade.’ A person is usually in trade if they:

  • regularly sell goods or services;
  • make or buy products for the purpose of selling on;
  • are GST registered;
  • operate from a company or other structure; or
  • have staff to manage sales.

If you buy something from a private seller, you may be getting a cheaper deal. However, you do not have the same rights as you would in a transaction with someone in trade. 

The Law and Private Sales

Two main pieces of consumer law cover sales of consumer goods or services and protect consumer rights. These are the:

For traders, these laws imply specific standards on the quality of the goods and the fairness of the sale. If the seller does not meet those standards, then they must provide the buyer with a remedy.

In most cases, neither of these laws protect buyers in private sales. Therefore, you are not entitled to consumer guarantees when you buy products in this way.

However, there are a few exceptions. Private sellers:

  • still have to make sure that their products meet the product safety standards of the Fair Trading Act; and 
  • must not engage in unfair selling tactics like pyramid schemes. 

There are also safety standards for electrical goods that still apply to private sales.

Private Sales vs Buying Second-Hand

Charity shops and other second-hand stores do not qualify as private sellers. Sellers of second-hand goods still need to meet consumer guarantees if they are in trade. They still need to make sure that their goods are:

  • fit for purpose;
  • safe;
  • free from defects;
  • of acceptable quality; and
  • reasonably durable.

However, the law does not expect secondhand goods to hold up to the same standard as brand new goods. What is acceptable quality will depend on:

  • the good itself;
  • how much you paid;
  • general wear and tear; and
  • what the seller told you.

If you buy secondhand goods in a private sale, these guarantees will not apply.

If Something Goes Wrong

If you buy something in a private sale, you will have fewer legal options available if there is an issue with the product. However, there are still a few things you can expect from private sales that the law protects. If a seller refuses to remedy the problem, you can go to the Disputes Tribunal.

You may have legal options available if the private seller:

  • misled you or made false claims;
  • did not have the right to sell or did not own the items; or
  • sold you a severely unsafe or faulty product.

The law implies certain warranties that apply to most sales, such as ensuring that the product:

  • matches its description;
  • is sold at a reasonable price if not agreed beforehand; and
  • is delivered within a reasonable time frame if that is relevant to the contract.

You enter into a contract when you make this kind of transaction, so you will likely have contractual remedies as well. You may be able to cancel the contract if the seller breached the contract in any way or misled you about the nature of the products.

Key Takeaways

If you run a small business, you may find yourself sourcing some of your resources from private sales. This can be convenient and cheaper than relying on other businesses or traders. However, you do have more limited rights in these kinds of transactions, so make sure that you do your due diligence when buying from a private seller. If you would like more information or guidance around private sales, contact LegalVision’s New Zealand regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What does ‘in trade’ mean?

‘In trade’ means that the seller must abide by the guarantees and other requirements that consumer law imposes. An entity that is in trade usually sells goods regularly for a profit.

What are private sales?

Private sales are typical consumer to consumer sales that take place privately, such as a one-off sale on Trade Me. The seller is not in trade.

Does consumer law apply to private sales?

Private sellers are not in trade, so they are not bound by the requirements that consumer law places on sellers of this nature. Therefore, they do not have to meet any consumer guarantees.

Do consumer guarantees apply to secondhand goods?

If secondhand goods are sold by someone who is in trade, then consumer guarantees still apply. However, potential buyers cannot hold secondhand goods up to the same standards that brand new products do.

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