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When consumers buy products in New Zealand, they expect their products to provide good value for their money and meet their needs. The law implies specific standards so that businesses will meet these expectations. However, this works differently depending on the product you are selling and to whom you are selling. A key distinction of this nature is between consumer and commercial products, as they both have different standards attached to them. This article will explain: 

  • the difference between consumer and commercial products; and 
  • some of your obligations when you sell them.

Consumer Products

A consumer is someone that buys products for their everyday personal or domestic use. The products they buy are sometimes known as consumer products. This covers a wide variety of products, ranging from candles to vacuum cleaners. Anyone can buy consumer products as a consumer, including businesses.

For example, if you run a small vegan grocer, the specialised vegan products you sell will still classify as consumer products.

Any business that sells consumer products needs to meet the consumer guarantees that the law implies. This applies regardless of:

  • what kind of business you are; and 
  • whether you sell online or from a physical storefront. 

As long as you are ‘in trade’, then these guarantees apply. Your business will be in trade if you regularly sell goods or services for a profit.

Consumer Products and Guarantees

Under the Consumer Guarantees Act, when you sell consumer products, you need to uphold their attached consumer guarantees. Therefore your products need to be: 

  • fit for their intended purpose;
  • delivered on time and in good condition;
  • sold legally;
  • of acceptable quality;
  • the same as you described; and
  • priced reasonably where no set price.

‘Acceptable quality’ will depend on your context and the nature of the product. However, it generally means that the product is fit for its intended purpose, safe and as durable as can be expected. 

For example, if you sell work boots designed for safety on construction sites, customers can expect that they would fit that purpose and last for a reasonably long time.

If you fail to uphold one of these consumer guarantees, you must give your customer a remedy

Commercial Products

Commercial products are items that a business would typically buy for trading purposes, such as for:

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

For example, if you process and manufacture fabric and sell that to other businesses for designing garments, the fabric you supply would be a commercial product. The clothing business then uses your fabric to make their goods and sell them to consumers.

It is important to note that commercial products do not have the same guarantees attached to them as consumer products do. However, this does not mean that you can sell faulty commercial products.  

Under the Contract and Commercial Law Act, if you regularly sell or provide a particular type of commercial product, such as photocopiers, you are expected to maintain proper standards for those products. These exist as a kind of warranty when you sell. You need to ensure that your products are: 

  • fit for purpose; and 
  • not faulty. 

You also need to have the legal right to sell that product and not mislead other businesses about the goods you sell.

Contracting Out

When selling to another business, you have the option to contract out of the laws that provide these standards for products. Contracting out means that you sign a written agreement with another business saying that these obligations do not apply, where it is fair and reasonable to do so.

Instead of relying on the law for remedies if something goes wrong, you rely on any remedies you outline in the contract. Note that you cannot contract out of the law’s requirements for consumers that are members of the public, just other businesses.

For example, suppose you buy stationery for your business from an office wholesaler and contract out of the Consumer Guarantees Act. In that case, you could not rely on consumer guarantees if there were issues with that stationery.

Comparing Consumer and Commercial Products

Commercial Products

Consumer Products

Goods used for trade purposes, such as resupply and manufacturing new products.

Products that consumers buy for personal or household use.

Consumer guarantees do not apply.

Consumer guarantees apply.

Commercial warranties apply.

Cannot contract out of guarantees to members to the public.

Can contract out of commercial warranties given by the Contract and Commercial Law Act.

Can contract out of consumer guarantees when selling to other businesses.

Key Takeaways

Consumer products are items that a consumer would buy for personal or domestic use. Alternatively, commercial products are goods that a business would buy for trading purposes. You will have different obligations depending on the kind of product you sell, and the industry they are for. If you would like more information or help with meeting standards for the products you sell, 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 are consumer products?

Consumer products are goods that an average consumer would buy for personal or domestic use. Anyone can be a consumer, including businesses.

What are commercial products?

Commercial products are not goods an average consumer would purchase. These are goods that businesses buy for business purposes, such as resupply or manufacturing goods for trade.

Does the Consumer Guarantees Act apply to products my business buys?

In the first instance, if you buy consumer products for their intended purpose then the Consumer Guarantees Act will apply. However, if you have contracted out of the act, then you cannot rely on its protections for these goods.

Can I contract out of the Consumer Guarantees Act?

You can contract out of the Consumer Guarantees Act with another party if that party is also in trade (such as another business), the agreement is in writing, and it is fair and reasonable to do so. You cannot contract out of this act with average consumers or the general public.

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