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consumer

Does the CGA apply to second-hand goods?

Key Takeaway

The Consumer Guarantees Act 1993 generally applies to second-hand goods bought from businesses in New Zealand, with the standard of 'acceptable quality' adjusted for the item's age and price. The Fair Trading Act 1986 prohibits misleading conduct by sellers of second-hand goods, regardless of their quality.

The purchase and sale of second-hand goods in New Zealand are governed by consumer protection legislation, primarily the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA). These Acts provide consumers with rights and impose obligations on sellers, even for used items, though the interpretation of 'quality' for second-hand goods has specific considerations.

The Consumer Guarantees Act 1993 and Second-Hand Goods

The Consumer Guarantees Act 1993 (CGA) provides a set of guarantees to consumers when they purchase goods or services. These guarantees apply to second-hand goods, provided they are bought from a supplier acting in trade [Source: Consumer Guarantees Act 1993, s 4(1)].

  • 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 the course of a process of production or manufacture [Source: Consumer Guarantees Act 1993, s 2(1)].
  • A supplier is a person who is in the business of supplying goods or services [Source: Consumer Guarantees Act 1993, s 2(1)]. This means that second-hand goods bought from a private seller (e.g., through an online marketplace from someone not in business) are generally not covered by the CGA [Source: Consumer Guarantees Act 1993, s 43(1)(a)].
  • Goods include items like second-hand cars, furniture, and electronics [Source: Consumer Guarantees Act 1993, s 2(1)].

Guarantee of Acceptable Quality

One of the fundamental guarantees is that goods must be of acceptable quality [Source: Consumer Guarantees Act 1993, s 6]. For second-hand goods, the standard of acceptable quality is not the same as for new goods. The CGA specifies that goods are of acceptable quality if they are:

  • fit for all the purposes for which goods of that type are commonly supplied;
  • acceptable in appearance and finish;
  • free from minor defects;
  • safe; and
  • durable.

However, when determining acceptable quality for second-hand goods, a reasonable consumer would take into account:

  • the nature of the goods (i.e., that they are second-hand);
  • the price;
  • any statements made about the goods on any packaging or label;
  • any representations made by the supplier or manufacturer; and
  • all other relevant circumstances of the supply of the goods [Source: Consumer Guarantees Act 1993, s 7(1)].

This means a second-hand item, even if it has some wear and tear, is still expected to be fit for its general purpose, safe, and reasonably durable for its age and price. For example, a used car sold by a dealer must still be roadworthy and reliable for its age and mileage, even if it's not expected to perform like a new car.

Other Guarantees

Other guarantees under the CGA that apply to second-hand goods include:

  • Fitness for particular purpose: If a consumer makes known a particular purpose for which they are buying the goods, and the supplier represents that the goods are fit for that purpose, the goods must be reasonably fit for that purpose [Source: Consumer Guarantees Act 1993, s 8].
  • Compliance with description: Goods must correspond with any description applied to them [Source: Consumer Guarantees Act 1993, s 9].
  • Match sample or demonstration model: If goods are supplied by reference to a sample or demonstration model, they must correspond with that sample or model [Source: Consumer Guarantees Act 1993, s 10].
  • Reasonable price: If no price is agreed, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 11].

Remedies for Breaches

If second-hand goods fail to meet a guarantee, the consumer may be entitled to a remedy. The nature of the remedy depends on whether the failure can be remedied easily or is of a substantial character [Source: Consumer Guarantees Act 1993, Part 2, ss 18-23]. Remedies can include repair, replacement, refund, or compensation for any reduction in value [Source: Consumer Guarantees Act 1993, s 18].

Exclusions from CGA

The CGA generally does not apply to:

  • Goods bought from a private seller not in trade [Source: Consumer Guarantees Act 1993, s 43(1)(a)].
  • Goods bought for business use if the parties agree to contract out of the Act, provided this is fair and reasonable [Source: Consumer Guarantees Act 1993, s 43(2)].
  • Goods sold by auction where the auctioneer acts as an agent for a private seller [Source: Consumer Guarantees Act 1993, s 43(1)(c)]. However, if the auctioneer is selling their own goods in trade or for a business, the CGA may still apply.

The Fair Trading Act 1986 and Second-Hand Goods

The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct in trade and applies broadly to any person in trade, not just suppliers as defined by the CGA. This Act is particularly relevant for the sale of second-hand goods because it prohibits sellers from making false or misleading representations about the condition, history, or characteristics of an item.

Misleading and Deceptive Conduct

The core prohibition under the FTA is that a person must not, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This applies to statements, advertisements, and even omissions about second-hand goods.

False Representations

The FTA also specifically prohibits false or misleading representations about goods, including concerning their:

  • Standard, quality, grade, quantity, or composition [Source: Fair Trading Act 1986, s 13(a)].
  • History or previous use (e.g., falsely claiming a car has not been in an accident) [Source: Fair Trading Act 1986, s 13(g), s 13(i)].
  • Place of origin [Source: Fair Trading Act 1986, s 13(f)].
  • Endorsements or approvals [Source: Fair Trading Act 1986, s 13(c)].

An unsubstantiated representation is also prohibited. This occurs when a person, in trade, makes a representation without reasonable grounds for it, regardless of whether the representation is true or false [Source: Fair Trading Act 1986, s 12A]. For second-hand goods, this could involve making claims about the item's performance or longevity without adequate basis.

Enforcement and Remedies under FTA

The Commerce Commission enforces the FTA and can take action against businesses that breach its provisions. Consumers who suffer loss or damage due to misleading conduct may apply to the courts for various remedies, including damages, injunctions, or orders varying contracts [Source: Fair Trading Act 1986, s 43].

Key Differences and Overlap

  • The CGA focuses on the inherent quality and fitness of goods supplied by a business, providing specific guarantees that apply to second-hand items with an adjusted standard for 'acceptable quality'.
  • The FTA focuses on the truthfulness of information provided by any person in trade, prohibiting misleading statements or conduct about goods, irrespective of their actual quality (though a lack of quality, if misrepresented, could breach the FTA).

Both acts aim to protect consumers, and a seller of second-hand goods in trade may breach both the CGA (e.g., by selling a faulty item that is not of acceptable quality) and the FTA (e.g., by misrepresenting the item's condition or history).

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights and obligations regarding second-hand goods, or who believe a guarantee has been breached or misleading conduct has occurred, should consult an independent legal professional. Further assistance and information can be obtained from the Commerce Commission for Fair Trading Act issues, Consumer Protection for general advice, or by contacting Community Law Centres for free legal advice across New Zealand. Community Law Centres

Key Resources