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If you or your business makes, sells or imports consumer products, you need to be aware of your obligations.
The Consumer Guarantees Act 1993 (the Act) applies to all New Zealand businesses and people in trade that make, sell and/or import products, or provide services, which are usually for personal or domestic use.
The Act exists to ensure consumers get what they paid for, sets minimum guarantees for all products and services and provides a business with guidelines on what they must provide to their customers. If a consumer receives a faulty product or subpar service it also allows them to get a refund, repair or replacement.
If a complaint is received from a consumer and an agreement is not reached, the consumer is able to take matters to the Disputes Tribunal or District Court.
Below is an outline of the requirements under the Act for those who sell products, provide services, or manufacture, import or distribute. Also outlined are the required remedies in case of a complaint and circumstances where guarantees don't apply.
If you sell products
The products must:
- Match the description given
- Match the sample, model or demonstration provided
- If a price was not given beforehand the products must be sold at a reasonable price
- Be able to be legally sold
- Be of acceptable quality
- Be fit for purpose
Products not covered:
- Commercial products – goods bought for commercial use
- Private sales
- Products bought by auction
- Products donated by charity
If you do not meet one of the guarantees covered by the Act, and depending on the size of the issue, a customer may be entitled to a repair, replacement or refund. If agreement is not reached the customer can take the matter to the Disputes Tribunal or District Court.
If you provide services
What you must do:
- The service must have been carried out with a reasonable level of skill and care
- The service must be fit for the purpose agreed on
- If a price was not given beforehand the service must be a reasonable price
- If a timeframe wasn’t decided on beforehand, it must be completed in a reasonable time
If you manufacture, import or distribute
Your products must:
- Match the description
- Be safe and durable
- Be of reasonable quality
- Have no undisclosed defects
- Have spare parts
- Have repair facilities available
You must also:
- Follow any terms of the manufacturer’s warranty
- Follow other relevant consumer law
If you do not meet one of these guarantees, you must repair or replace the product within a reasonable time, or pay damages for the loss in value compared to the purchase price.
When these guarantees don’t apply
You don’t have to give a remedy if the customer:
- Got what they asked for but changed their mind afterwards
- Misused or modified a product in any way that created the problem, for example through ignoring or not following the usage instructions
- Damaged, discarded or lost the products after they were delivered
- Was aware of the fault or flaw before they purchased the product
- Requested that a service be carried out in a certain way against your advice, or was unclear about their wishes
- Took an unreasonable time to cancel the service or return the products
- Encountered a service problem which was outside your control, e.g. a natural disaster, or was caused by a person you are not responsible for
- The Act also may not apply if you sell a product or service to another business and you have contracted out of the Act.
If you need advice on consumer law contact our Business and Commercial Law Team.
Author: Richard Williams