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As a provider of goods and services, your business has obligations to consumers implied by the law. This centres around ensuring consumers get a fair deal and discourages businesses from engaging in unfair sales tactics. But do the same laws that protect consumers also protect your business? In some cases, the answer is yes, if you meet the requirements. This article will explain how consumer laws protect your business, and if they do not, other options you may have if the situation arises. This article will look at three pieces of law that protect consumers, in particular, the:

  • Consumer Guarantees Act (CGA);
  • Fair Trading Act (FTA); and 
  • Privacy Act.

Who Does Consumer Law Protect?

Who each law applies to will vary depending on the kind of right the act is protecting. Your business may classify in some cases, and in others, it may not.

Consumer Guarantees

Anyone who is in trade (someone who regularly sells consumer goods or services to customers) has consumer guarantees that they need to uphold. Your business needs to meet the guarantees outlined by the CGA, which means goods and services must meet the following requirements.

Goods must:

Services must be:

  • be of acceptable quality;
  • be fit for purpose;
  • match their description;
  • be reasonably priced if there is no predetermined price;
  • be delivered on time;
  • have spare parts or repairs available; and
  • be sold legally.
  • done with reasonable skill;
  • fit for purpose;
  • provided within a reasonable time; and
  • priced reasonably if no predetermined price.

If a business fails to meet one of these guarantees, then they have to give a remedy.

Note that these guarantees only apply to consumer products. These are products or services that someone would purchase for personal or household use. Commercial products, like food ingredients for your cafe or fabric for your clothing products, would not come under this definition.

Misleading Statements

Applying to anyone in trade, the Fair Trading Act prohibits:

  • misleading and deceptive conduct;
  • making unsubstantiated claims (meaning statements without facts to prove their truth);
  • unfair sales tactics, such as bait advertising; and
  • unfair contract terms.

It also provides standards for customer information and product safety. This is so that consumers can rely on the claims that businesses make without doubting their truth or accuracy.

Privacy

The Privacy Act protects the personal information of identifiable individuals. Such personal data includes:

  • email addresses;
  • full names;
  • photos;
  • IP addresses; and 
  • financial details.

Identifiable individuals are living beings that can you can identify using the relevant information. So, this law does not necessarily protect companies and similar groups.

Do These Consumer Laws Apply to My Business?

In most cases, the applicability of these consumer laws will depend on:

  • how you structure your business; and
  • the kind of purchase or transaction you are engaging in.

Consumer Guarantees Act

This will apply to your business if your transactions are for consumer products. An exception is if those products are for:

  • resupply in trade;
  • manufacturing new products for trade; or
  • repairing other goods in trade.

Then, these are commercial products. However, as long as you do not intend to use them to sell other products, you will be protected by the CGA’s guarantees. 

For example, if you buy a laptop for use at your business, this can be classified as a consumer product. Hence, you will have access to a remedy if there is a fault.

Fair Trading Act

This act focuses on the kind of conduct that businesses engage in. If another business misleads you about a product or service they offer, the FTA would protect you.

Privacy Act

The applicability of this law to your business depends on the kind of business you operate. If you structure your business as a company, you would not be able to seek legal action using this act. Your company is not an identifiable individual, so it does not come under the act’s range. But, if you are a sole trader and act in your personal capacity, then this privacy law may protect you.

Both the CGA and FTA allow businesses to contract out of their obligations under these acts if both parties to a transaction:

  • are in trade;
  • agree in writing to contract out; and
  • it is fair and reasonable to do so.

Consequently, you cannot seek compensation under these laws against that other party. Be sure to thoroughly read through any documentation to be clear about your position.

Other Options

If you have a dispute with another business, these previously mentioned laws are not your only options for legal protections. Depending on the nature of the problem, you may have contractual remedies available as well.

Key Takeaways

Your business has certain consumer obligations that it must meet as a provider of consumer goods or services. However, in some cases, those consumer laws may protect your business as well. In particular, if you are buying consumer products or you operate your business in your personal capacity. Note that some of these laws will not apply if you have contracted out of them. If you would like more information or guidance around whether consumer law protects your business, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is a consumer product?

Consumer products are goods or services that a member of the public could by for personal or household use. Examples include computers, stationery, or furniture.

What are my business’ obligations to consumers?

As a provider of consumer goods or services, your business has to uphold the inherent guarantees that come with those goods or services. This includes product quality and fitness for purpose.

Does consumer law protect my business?

Consumer law protects your business in its capacity as a consumer or as an individual if you are a sole trader. The Fair Trading Act is a consumer law that prohibits misleading statements, and this also protects your business.

Can my business contract out of its consumer law obligations?

Your business cannot contract out of its consumer law obligations to the general public. However, you can contract out of your consumer law obligations under the Consumer Guarantees Act and the Fair Trading Act with another party that is in trade. Both parties must fairly agree and have this agreement in writing.

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