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consumer

Buying a car from a dealer: Your CGA rights

Key Takeaway

When buying a car from a dealer in New Zealand, the Consumer Guarantees Act 1993 ensures cars are of acceptable quality and fit for purpose. The Fair Trading Act 1986 prohibits dealers from making misleading or false representations about vehicles. Consumers have rights to remedies if these guarantees or fair trading obligations are breached.

Buying a Car from a Dealer: Your Consumer Rights

When purchasing a car from a dealer in New Zealand, consumers are protected by two key pieces of legislation: the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA). These Acts establish certain rights and obligations for both buyers and sellers, ensuring goods are fit for purpose and that information provided is accurate.

Consumer Guarantees Act 1993

The Consumer Guarantees Act 1993 (CGA) provides guarantees for goods and services supplied to consumers by a person in trade. A 'person in trade' means someone who buys, sells, or exchanges goods or services in the course of a business [Source: Consumer Guarantees Act 1993, s 2]. These guarantees are automatic and apply regardless of any warranty offered by the dealer.

Key Guarantees for Goods (Cars)

  • Guarantee as to acceptable quality: Goods supplied by a person in trade must be of acceptable quality [Source: Consumer Guarantees Act 1993, s 6]. 'Acceptable quality' means the goods are fit for all the purposes for which goods of the type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable [Source: Consumer Guarantees Act 1993, s 6(2)]. This guarantee takes into account the nature of the goods, the price, any statements made about the goods, and all other relevant circumstances.
  • Guarantee as to fitness for a particular purpose: If a consumer makes known to the dealer, either expressly or by implication, any particular purpose for which the car is being acquired, the car must be reasonably fit for that purpose [Source: Consumer Guarantees Act 1993, s 7].
  • Guarantee that goods comply with description: If a car is supplied by description, it must correspond with that description [Source: Consumer Guarantees Act 1993, s 8]. This includes details like make, model, year, and specific features advertised.
  • Guarantee that goods comply with sample or demonstration model: If a car is supplied by reference to a sample or demonstration model, the car supplied must correspond with that sample or model in quality and character [Source: Consumer Guarantees Act 1993, s 9].
  • Guarantee as to repairs and spare parts: Manufacturers must take reasonable action to ensure that facilities for the repair of the goods and an adequate supply of parts are available for a reasonable period after the goods are supplied [Source: Consumer Guarantees Act 1993, s 12].

Remedies under the CGA

When a car fails to comply with a guarantee under the CGA, a consumer is entitled to a remedy. The type of remedy depends on whether the failure is 'minor' or 'substantial'.

  • Minor failure: If the failure can be remedied easily and within a reasonable time, the dealer must remedy (fix) the problem [Source: Consumer Guarantees Act 1993, s 19]. If the dealer fails to remedy the failure, or it cannot be remedied within a reasonable time, the consumer may reject the goods or have the failure remedied elsewhere and recover the reasonable costs from the dealer [Source: Consumer Guarantees Act 1993, s 19(2)].
  • Substantial failure: A 'substantial failure' is one where a reasonable consumer would not have acquired the goods if they had known of the extent of the failure, or if the car is unsafe, or deviates significantly from its description or purpose [Source: Consumer Guarantees Act 1993, s 21]. In the event of a substantial failure, the consumer can 'reject the goods' (return the car for a full refund or a replacement of the same type and value) or claim damages for any reduction in value of the goods [Source: Consumer Guarantees Act 1993, s 23].
  • Consequential loss: Consumers can also claim damages from the dealer for any loss or damage resulting from the failure, provided that loss was reasonably foreseeable [Source: Consumer Guarantees Act 1993, s 24].

No Contracting Out

Dealers cannot contract out of their obligations under the CGA when supplying goods to consumers [Source: Consumer Guarantees Act 1993, s 43]. Any attempt to exclude or limit the application of the Act, or to avoid liability, is generally void.

Fair Trading Act 1986

The Fair Trading Act 1986 (FTA) protects consumers from misleading and deceptive conduct, and unfair trading practices by persons in trade (businesses) [Source: Fair Trading Act 1986, s 2]. It applies to representations made by car dealers during the sales process.

Key Provisions of the FTA

  • Misleading or deceptive conduct: No person in trade shall engage in conduct that is misleading or deceptive or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This is a broad prohibition that covers any statement, action, or omission that could lead a consumer into error when considering a car purchase. For example, misrepresenting a car's history, condition, or features.
  • False or misleading representations: The FTA specifically prohibits false or misleading representations about goods [Source: Fair Trading Act 1986, s 13]. This includes representations about the car's quality, grade, origin, history, previous use, price, or any endorsement it may have.
  • Unsubstantiated representations: A person in trade must not make a representation about goods or services unless they have reasonable grounds for making the representation [Source: Fair Trading Act 1986, s 12A]. For example, a dealer claiming a car is 'low mileage' without having reasonable grounds (like verifiable records) for that claim would breach this provision.

Remedies under the FTA

If a dealer breaches the FTA, a range of remedies may be available through the courts. These can include orders declaring a contract void, varying a contract, directing a party to refund money or return property, or ordering payment of damages to compensate for loss or damage caused by the misleading conduct [Source: Fair Trading Act 1986, s 43]. The Commerce Commission is responsible for enforcing the FTA.

When to Seek Independent Legal Advice

If a consumer believes a car purchased from a dealer does not meet the guarantees under the Consumer Guarantees Act 1993 or that the dealer has breached the Fair Trading Act 1986, and attempts to resolve the issue directly with the dealer have been unsuccessful, it is advisable to seek independent legal advice. Information can be obtained from organisations such as the Citizens Advice Bureau, Community Law Centres, or Consumer Protection. Legal professionals can provide guidance on specific situations and available recourse.

Key Resources