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Trade Me is a widely used online marketplace and auction site in New Zealand. Its users range from everyday people taking part in private sales to your business selling to its customers. The site is convenient and well-known, so it may be a good option for your online business. However, you still have legal obligations as an online seller even when using someone else’s online marketplace. These obligations will vary, depending on whether you are a private individual or a commercial trader. This article will explain what your legal obligations are when you sell on Trade Me.

Using Trade Me

Like many online marketplaces, users will sell their products by posting a listing. They can offer a product at a set price or allow users to bid on it in an auction. Once the bidding time period ends on the auction, the highest bidder buys that product. Trade Me takes a portion of your profit from the sale. If an auction is unsuccessful, your listing may open to fixed price sales.

When you create an account on Trade Me, you agree to their terms and conditions and Code of Conduct. These operate on three basic principles, expecting you to:

  • conduct yourself honestly and in good faith;
  • comply with all laws, including the sale of goods and intellectual property laws; and
  • comply with the terms and conditions.

General Seller Legal Obligations

Trade Me has certain expectations of sellers, including that they have a legal right to sell the goods they offer. They also expect that sellers:

  • describe items fully and accurately;
  • answer questions promptly;
  • ship items efficiently, and charge reasonable shipping;
  • do not engage in retaliatory behaviour against other sellers;
  • do not post negative buyer feedback without a good faith attempt at sorting out the issue; and
  • do not spam previous buyers.

If buyers are unhappy with you as a seller, they can file a dispute report. If things escalate to a point where this process is not sufficient, they have the option of going to the Disputes Tribunal. For example, some forms of negative feedback may qualify as defamation. Buyers have legal remedies available if they can prove that you defamed them, so you should be careful about what you say in your feedback.

When you upload content to Trade Me, you also agree to give them a licence to use your intellectual property. They provide a list of circumstances of when they may do so in their terms and conditions. Your intellectual property may be used by Trade Me for marketing or advertising purposes.

Private Sales vs Being In Trade

Outside of what you agree to in Trade Me’s terms and conditions, you also have consumer law obligations if you are ‘in trade’. This applies to you if you:

  • regularly or habitually offer goods or services;
  • make, buy, or obtain goods with the intention of selling them;
  • have staff or assistants to help manage sales;
  • have incorporated as a company or a different trading structure; or
  • are GST registered.

Private sales are those between individuals in their personal capacity. They are usually one-off transactions, and the seller only completes such transactions occasionally.

For example, if you are cleaning out your closet and selling old clothes, then you are not ‘in trade.’ These are private sales. However, if you purchase clothes with the express purpose of selling them on Trade Me, then you are in trade.

Legal Obligations as a Trader

If you sell items on Trade Me and are in trade, certain legal obligations will apply to you. You must disclose whether you are in trade or not on your seller profile. There is a label for this, which you can display next to your username. Ultimately, you decide whether you are in trade. However, if you fail to disclose this fact to your customers, you can face legal consequences for breaching your consumer law obligations. 

As a professional trader selling goods online, you must make sure your products comply with customers legal consumer guarantees. If they do not, then you must provide a remedy for the affected customer. For example, if you make a sale of a faulty product, you have failed to meet one of your consumer guarantees. Under the Consumer Guarantees Act, you must give the customer a replacement, repair, or refund.

You also have a legal obligation to be honest with your customers. Under the Fair Trading Act, you cannot:

  • engage in misleading or deceptive conduct;
  • make false or misleading claims about your products;
  • make unsupported claims about your products; or
  • engage in unfair sales tactics or set unfair contract terms.

Key Takeaways

Selling goods on Trade Me can be a convenient source of revenue for your business. However, both private and professional traders can sell goods on the site, so you need to make it clear which category you fall under. That way, your customers know that you are bound by consumer law, and they have remedies available if something goes wrong. If you would like more information or help with your legal obligations when selling on Trade Me, contact LegalVision’s NZ 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 you sell goods to consumers as a professional trader. You must uphold consumer guarantees and comply with other consumer law requirements.

When am I in trade?

 There are various factors that contribute to being in trade. For example, you are in trade if you regularly sell goods or purchase materials/products with the express purpose of selling them.

Does consumer law still apply when I sell on Trade Me?

If you are in trade when you sell on Trade Me, then consumer law still applies to you online. If you want to operate in your personal capacity, you need to set up a different account.

Are Trade Me auctions legally binding?

Once your customer places a final bid above the reserve price and the bidding time period has finished, then they have created a legally binding contract with you. This also applies if they decide to click the ‘Buy Now’ button on an auction.

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