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consumer

Returning Faulty Goods in New Zealand: What Retailers Must Do

Key Takeaway

In New Zealand, consumers have rights when goods are faulty or defective, primarily under the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA). The CGA provides guarantees regarding acceptable quality and fitness for purpose, outlining remedies such as repair, replacement, or refund depending on whether the fault is minor or substantial. The FTA addresses misleading conduct and false representations about goods.

Returning Faulty or Defective Goods in New Zealand

New Zealand law provides consumers with protections when goods they purchase are faulty or defective. The primary legislation governing these rights is the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA).

Consumer Guarantees Act 1993 (CGA)

The Consumer Guarantees Act 1993 (CGA) provides a set of guarantees to consumers when they acquire goods or services ordinarily for personal, domestic, or household use or consumption, and not for resupply in trade [Source: Consumer Guarantees Act 1993, s 1A, s 2]. These guarantees apply automatically, regardless of any manufacturer's warranty.

Key Guarantees for Goods:

  • 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. This standard considers factors like the nature of the goods, price, and any statements made about them [Source: Consumer Guarantees Act 1993, s 6].
  • Fitness for Particular Purpose: If a consumer makes known to the supplier (the person who supplies goods to the consumer in trade) a particular purpose for which the goods are being acquired, and relies on the supplier's skill or judgment, the goods must be reasonably fit for that purpose [Source: Consumer Guarantees Act 1993, s 7].
  • Match Description: Goods must correspond with any description applied to them [Source: Consumer Guarantees Act 1993, s 8].
  • Match Sample or Demonstration Model: If goods are supplied by reference to a sample or demonstration model, they must correspond with the sample/model in quality and be free from defects not apparent in the sample/model [Source: Consumer Guarantees Act 1993, s 9].
  • Reasonable Price: If a price for goods is not determined, the consumer is liable to pay a reasonable price [Source: Consumer Guarantees Act 1993, s 10].
  • Spare Parts and Repair Facilities: The manufacturer (the person who produced or assembled the goods, or whose name or brand is on them) guarantees that reasonable action is taken to ensure that facilities for repair and spare parts are reasonably available for a reasonable period after the goods are supplied [Source: Consumer Guarantees Act 1993, s 12].

Goods are generally considered faulty or defective if they fail to meet one or more of these consumer guarantees.

Remedies for Failure to Comply with Guarantees (Against the Supplier):

When goods fail to comply with a guarantee, a consumer is entitled to a remedy, which refers to the legal means by which a consumer's right is enforced or protected. The type of remedy depends on whether the failure is minor or substantial.

  • Minor Failure: If a failure to comply with a guarantee can be remedied easily and within a reasonable time, the consumer may require the supplier to remedy the failure. The supplier may choose to repair the goods, replace the goods with identical goods, or provide a refund [Source: Consumer Guarantees Act 1993, s 20]. If the supplier refuses to remedy the failure or fails to do so within a reasonable time, the consumer may have the failure remedied elsewhere and recover the reasonable costs from the supplier, or reject the goods [Source: Consumer Guarantees Act 1993, s 20(2)].

  • Substantial Failure: A failure is substantial if [Source: Consumer Guarantees Act 1993, s 21]:

    • The goods would not have been acquired by a reasonable consumer fully aware of the nature and extent of the failure.
    • The goods depart significantly from their description or sample.
    • The goods are substantially unfit for a common purpose and cannot easily be made fit within a reasonable time.
    • The goods are substantially unfit for a particular purpose made known to the supplier and cannot easily be made fit within a reasonable time.
    • The goods are not of acceptable quality because they are unsafe.

    If there is a substantial failure, the consumer may choose to:

    • Reject the goods and obtain a refund (the return of money paid for goods) or a replacement of the same type and value [Source: Consumer Guarantees Act 1993, s 23(2)(a), s 25].
    • Obtain damages for any reduction in the value of the goods below the price paid [Source: Consumer Guarantees Act 1993, s 23(2)(b)].

    The consumer may also claim consequential losses, which are any loss or damage resulting from the failure that was reasonably foreseeable [Source: Consumer Guarantees Act 1993, s 23(3)].

    To reject goods, the consumer must notify the supplier of their decision and the reason for the rejection [Source: Consumer Guarantees Act 1993, s 24]. The goods must then be returned to the supplier or made available for collection [Source: Consumer Guarantees Act 1993, s 24(2)]. The right to reject goods can be lost if the consumer delays too long or uses the goods inconsistently with the supplier's ownership [Source: Consumer Guarantees Act 1993, s 20(3), s 24(3)].

Remedies Against the Manufacturer:

If goods fail to comply with a guarantee, the consumer may also have rights of redress directly against the manufacturer, typically for damages representing any reduction in value of the goods and any consequential losses [Source: Consumer Guarantees Act 1993, s 27].

Fair Trading Act 1986 (FTA)

The Fair Trading Act 1986 (FTA) aims to protect consumers from misleading and deceptive conduct and unfair trading practices by businesses [Source: Fair Trading Act 1986, s 1A].

  • Misleading or Deceptive Conduct: A person in trade must not engage in conduct that is misleading or deceptive, or likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This applies to statements, advertisements, and representations about goods, including their quality, standard, or characteristics.
  • False or Misleading Representations: The FTA specifically prohibits making false or misleading representations about goods, such as their standard, quality, history, or fitness for purpose [Source: Fair Trading Act 1986, s 13].

Remedies under the FTA:

If a breach of the FTA occurs, courts can make various orders. These include declaring a contract void, varying a contract, directing a refund, directing repair, or ordering the payment of damages to compensate for loss or damage [Source: Fair Trading Act 1986, s 43]. The Commerce Commission can also take enforcement action against businesses that breach the Act [Source: Fair Trading Act 1986, s 40].

When to Seek Independent Legal Advice

Consumers facing disputes regarding faulty or defective goods, especially when negotiations with a retailer or manufacturer are unsuccessful, may consider seeking independent legal advice. This is particularly relevant for complex situations, significant financial losses, or when clarification of rights and obligations under the Consumer Guarantees Act 1993 or Fair Trading Act 1986 is needed. Consumers can contact official bodies such as the Citizens Advice Bureau or Community Law Centres for free assistance and guidance.

Key Resources