Skip to main content

Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

SimplifiedLaw.co.nz
consumer

How to tell if an online seller is "in trade"

Key Takeaway

Determining if an online seller is 'in trade' is crucial for understanding consumer rights in New Zealand. If a seller is 'in trade', they are subject to protections under the Consumer Guarantees Act 1993 and Fair Trading Act 1986. Key indicators include the regularity of sales, profit motive, and the nature of items sold.

Understanding 'In Trade' for Online Sellers in New Zealand

In New Zealand, the distinction between a private seller and a seller operating 'in trade' is fundamental for determining the consumer rights and protections available to buyers. When a seller is 'in trade', specific legal obligations under the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA) apply.

What 'In Trade' Means

The term 'in trade' refers to any activity that constitutes a trade, business, industry, profession, occupation, or any activity related to the supply of goods or services [Source: Consumer Guarantees Act 1993, s 2; Fair Trading Act 1986, s 2]. This definition is broad and is not limited to registered businesses. An individual can be considered 'in trade' if their selling activities demonstrate a commercial nature, even if they operate from home or online.

The Consumer Guarantees Act 1993 (CGA)

Application of the CGA

The Consumer Guarantees Act 1993 (CGA) provides a set of automatic guarantees for goods and services purchased by a consumer from a supplier who is in trade [Source: Consumer Guarantees Act 1993, s 4].

  • A consumer is a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption, and does not acquire them for the purpose of resupplying them in trade, consuming them in the course of a manufacturing process, or in repairing or treating other goods or fixtures on land [Source: Consumer Guarantees Act 1993, s 2].
  • A supplier is a person who is in trade and supplies goods or services to a consumer [Source: Consumer Guarantees Act 1993, s 2].

If a seller is not 'in trade', the CGA generally does not apply. In such cases, the buyer's rights typically rely on the terms of the contract of sale and general contract law principles.

Key Consumer Guarantees

When a seller is 'in trade', the goods supplied must meet several consumer guarantees, including:

  • 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].
  • Fit for a particular purpose: Goods must be 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 by which they are supplied [Source: Consumer Guarantees Act 1993, s 8].
  • 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 10].

Similar guarantees apply to services supplied in trade [Source: Consumer Guarantees Act 1993, Part 2].

The Fair Trading Act 1986 (FTA)

Application of the FTA

The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct and false representations by any person in trade [Source: Fair Trading Act 1986, s 9, s 13]. This Act protects consumers from unfair trading practices and ensures that information provided by sellers is accurate.

Prohibited Conduct under the FTA

Key prohibitions under the FTA for those 'in trade' include:

  • Misleading and 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 can include omissions or silence if it creates a misleading impression.
  • False representations: Prohibits making false or misleading representations about goods or services, such as their quality, standard, performance characteristics, or origin [Source: Fair Trading Act 1986, s 13]. This also includes false representations regarding price, existing warranties, or the need for goods/services.

How to Determine if a Seller is 'In Trade'

There is no single definitive test to determine if an online seller is 'in trade'; rather, it involves assessing the overall nature of their selling activity. The determination is based on whether the activity falls within the broad definition of 'trade' [Source: Consumer Guarantees Act 1993, s 2; Fair Trading Act 1986, s 2]. Factors that may indicate a seller is 'in trade' include:

  • Regularity of sales: Regularly selling items, rather than isolated or infrequent transactions of personal possessions, may suggest an ongoing 'business' or 'occupation' [Source: Consumer Guarantees Act 1993, s 2; Fair Trading Act 1986, s 2].
  • Intention to profit: A clear motive to generate profit through selling, as opposed to simply recouping costs for unwanted personal items, is characteristic of 'trade' [Source: Consumer Guarantees Act 1993, s 2; Fair Trading Act 1986, s 2].
  • Business setup: Operating under a business name, having a dedicated business website or social media presence, or being GST registered are strong indicators of engaging in 'trade' [Source: Consumer Guarantees Act 1993, s 2; Fair Trading Act 1986, s 2].
  • Type and quantity of goods: Selling new items, multiple items of the same type, or items that have been specifically acquired for resale (as opposed to personal items) suggests a 'supply of goods' in the course of a 'business' [Source: Consumer Guarantees Act 1993, s 2; Fair Trading Act 1986, s 2].
  • Advertising methods: Advertising that includes business-like elements, such as offering warranties, bulk discounts, or professional product descriptions, can indicate commercial activity [Source: Consumer Guarantees Act 1993, s 2; Fair Trading Act 1986, s 2].
  • Seller's own statements: While not always conclusive, a seller's self-description (e.g., 'trading as', 'business seller') can be an indicator [Source: Consumer Guarantees Act 1993, s 2; Fair Trading Act 1986, s 2].

No single factor is determinative; rather, a combination of these elements helps to establish whether an online seller is operating 'in trade' for the purposes of consumer law.

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights or obligations concerning an online transaction, or who are unsure whether a seller is 'in trade', may find it beneficial to consult with a legal professional. This information is general in nature and does not constitute legal advice. Organisations such as the Commerce Commission and Community Law Centres can provide further guidance and assistance.

Key Resources