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consumer

"As is, where is" sales: Are they legal?

Key Takeaway

In New Zealand, "as is, where is" clauses in sales generally cannot override consumer protections under the Consumer Guarantees Act 1993 and Fair Trading Act 1986 when buying from a business. However, these clauses have more weight in private sales between individuals, where statutory protections are limited. Misleading conduct remains prohibited in trade transactions.

"As Is, Where Is" Sales in New Zealand: Understanding Your Rights

The phrase "as is, where is" is commonly used in sales, particularly for second-hand goods or property. It typically indicates that the buyer accepts an item in its current condition and location, implying that the seller will not be responsible for any defects or faults discovered after the sale. However, the legal effect of such a clause in New Zealand depends significantly on who is selling the item and whether the buyer is a consumer.

The Key Distinction: Sales "In Trade" vs. Private Sales

New Zealand consumer law draws a crucial distinction between sales made by a person "in trade" (a business or professional seller) and sales made by a private individual who is not acting in trade.

  • In trade: A person is considered to be "in trade" if they are carrying on any trade, business, industry, profession, occupation, or activity relating to the supply or acquisition of goods or services [Source: Fair Trading Act 1986, s 2(1)]. This includes companies, regular sellers, and individuals whose selling activity is business-like.
  • Private sale: A sale between two individuals where neither is acting in trade.

Consumer Guarantees Act 1993 (CGA) and "As Is, Where Is"

The Consumer Guarantees Act 1993 provides a set of automatic guarantees for goods and services purchased by consumers from suppliers who are "in trade." A "consumer" is a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption, and not for the purpose of resupplying them in trade, or consuming them in a manufacturing or repair process [Source: Consumer Guarantees Act 1993, s 2(1)].

Crucially, these guarantees cannot be contracted out of for sales to consumers [Source: Consumer Guarantees Act 1993, s 43(1)]. This means that if you buy goods from a business, an "as is, where is" clause generally does not override your rights under the CGA.

Key guarantees that apply when purchasing from a seller "in trade" include:

  • Acceptable Quality: Goods must be fit for all purposes for which goods of that type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable [Source: Consumer Guarantees Act 1993, s 6].
  • Fitness for Particular Purpose: Goods must be reasonably fit for any particular purpose that the consumer makes known to the supplier [Source: Consumer Guarantees Act 1993, s 7].
  • Match Description: Goods must correspond with any description given by the supplier [Source: Consumer Guarantees Act 1993, s 8].

If goods purchased from a business do not meet these guarantees, even with an "as is, where is" clause, the consumer may be entitled to remedies such as repair, replacement, or a refund [Source: Consumer Guarantees Act 1993, Part 2].

It is important to note that the CGA does not apply to goods purchased from a private seller who is not acting "in trade" [Source: Consumer Guarantees Act 1993, s 2(1) - definition of 'supplier'].

Fair Trading Act 1986 (FTA) and "As Is, Where Is"

The Fair Trading Act 1986 prohibits misleading and deceptive conduct "in trade" and false representations about goods and services. This Act applies to any person who is "in trade" [Source: Fair Trading Act 1986, s 2(1)].

  • Misleading and Deceptive Conduct: A person "in trade" must not engage in conduct that is misleading or deceptive, or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9].
  • False Representations: A person "in trade" must not make false or misleading representations about goods, including their nature, characteristics, suitability for a purpose, or previous use [Source: Fair Trading Act 1986, s 13].

An "as is, where is" clause cannot be used by a seller "in trade" to escape liability for misleading or deceptive conduct or false representations. For example, if a seller makes false statements about an item's condition or history, an "as is, where is" clause will not protect them from breaching the FTA. The FTA allows for various remedies, including orders for repair, refund, or compensation for loss suffered [Source: Fair Trading Act 1986, Part 4].

"As Is, Where Is" in Private Sales

In a private sale between individuals where neither party is "in trade," the legal landscape changes significantly:

  • The Consumer Guarantees Act 1993 does not apply [Source: Consumer Guarantees Act 1993, s 2(1) - definition of 'supplier'].
  • The Fair Trading Act 1986 generally does not apply unless the private seller's activities could be considered "in trade" for that specific transaction, which is rare for a one-off sale [Source: Fair Trading Act 1986, s 2(1) - definition of 'in trade'].

In such cases, the principle of caveat emptor (Latin for "let the buyer beware") is more prevalent. This means the buyer has a greater responsibility to inspect the goods and make inquiries before purchasing. An "as is, where is" clause will have greater legal effect in limiting the seller's liability for undisclosed defects in a private sale. However, a private seller still cannot actively misrepresent an item. If a seller knowingly makes false statements about the item that induce the buyer to purchase, general contract law principles regarding misrepresentation may apply.

Conclusion

While "as is, where is" clauses are common, their legal impact varies. For items purchased from businesses, they generally cannot override the mandatory protections offered by the Consumer Guarantees Act 1993 and the Fair Trading Act 1986. For private sales, these clauses carry more weight, placing a greater onus on the buyer to exercise due diligence, though outright misrepresentation by the seller may still be actionable under contract law.

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights and obligations regarding an "as is, where is" sale, or who believe a seller has breached their statutory duties, should seek independent legal advice. The Commerce Commission provides guidance on consumer rights, and individuals can also contact Community Law Centres for free legal information and assistance nationwide [https://communitylaw.org.nz/].

Key Resources