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consumer

Online auctions: TradeMe rights for "in-trade" vs. private sellers

Key Takeaway

In New Zealand, consumer rights in online auctions like TradeMe depend on whether the seller is "in trade" or a private seller. "In-trade" sellers are generally subject to the Consumer Guarantees Act 1993 and Fair Trading Act 1986, offering buyers significant protections. Private sellers typically are not, meaning buyers have fewer statutory rights.

Online Auctions: "In-Trade" vs. Private Sellers in New Zealand

When participating in online auctions, such as those on TradeMe, the legal rights and obligations of both buyers and sellers in New Zealand are significantly shaped by whether the seller is considered to be acting "in trade" or as a private individual. This distinction determines the applicability of key consumer protection legislation, specifically the Consumer Guarantees Act 1993 and the Fair Trading Act 1986.

What is an "In-Trade" Seller?

A seller is considered to be acting "in trade" if their activity relates to any trade, business, industry, profession, occupation, or activity involving the supply or acquisition of goods or services [Source: Fair Trading Act 1986, s 2(1)]. This definition is broad and can include individuals or businesses who regularly sell items online, even if they do not consider themselves a formal business. The number of items sold, frequency of sales, and the nature of the items can all be factors in determining if a seller is acting "in trade".

Obligations of "In-Trade" Sellers

When a seller is acting "in trade", they are generally subject to the full extent of the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA).

Consumer Guarantees Act 1993

The Consumer Guarantees Act 1993 establishes a set of minimum standards, known as consumer guarantees, that goods and services supplied by a person "in trade" to a consumer must meet [Source: Consumer Guarantees Act 1993, s 2(1) definition of 'supplier' and 'consumer']. These guarantees include:

  • Acceptable Quality: Goods must be of acceptable quality, 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 a Particular Purpose: Goods must be fit for any particular purpose that the consumer makes known to the supplier, either expressly or by implication [Source: Consumer Guarantees Act 1993, s 7].
  • Match Description: Goods must match any description given by the seller [Source: Consumer Guarantees Act 1993, s 8].
  • Match Sample or Demonstration Model: If goods are sold by sample or demonstration model, they must correspond with the sample or model [Source: Consumer Guarantees Act 1993, s 9].
  • Reasonable Price: If no price is agreed, the consumer is not liable to pay more than a reasonable price for the goods [Source: Consumer Guarantees Act 1993, s 10].
  • Timely Delivery: Goods must be delivered within an agreed time, or if no time is agreed, within a reasonable time [Source: Consumer Guarantees Act 1993, s 11].

If these guarantees are not met, a consumer may be entitled to remedies such as repair, replacement, refund, or compensation for any loss or damage resulting from the failure [Source: Consumer Guarantees Act 1993, s 18].

Fair Trading Act 1986

The Fair Trading Act 1986 prohibits conduct that is misleading or deceptive or likely to mislead or deceive, when engaged in "in trade" [Source: Fair Trading Act 1986, s 9]. For sellers, this means they must not:

  • Make false or misleading representations about goods or services, including their nature, characteristics, suitability, quantity, or history [Source: Fair Trading Act 1986, s 13].
  • Engage in misleading conduct in relation to goods, such as regarding their manufacturing process, composition, or approval [Source: Fair Trading Act 1986, s 14].
  • Offer gifts or prizes without intending to provide them or without providing them as offered [Source: Fair Trading Act 1986, s 17].

Breaches of the Fair Trading Act 1986 can lead to various remedies, including orders for damages, injunctions, or corrective advertising [Source: Fair Trading Act 1986, s 43].

Private Sellers

When a seller is not acting "in trade" (i.e., a private seller making a one-off or infrequent sale of personal goods), the primary consumer protection statutes, the Consumer Guarantees Act 1993 and the Fair Trading Act 1986, generally do not apply.

The Consumer Guarantees Act 1993 does not apply to goods or services supplied by a person who is not "in trade" [Source: Consumer Guarantees Act 1993, s 2(1) definition of 'supplier']. This means a buyer from a private seller does not have statutory guarantees regarding acceptable quality, fitness for purpose, or durability under this Act.

Similarly, the Fair Trading Act 1986 primarily applies to conduct that occurs 'in trade' [Source: Fair Trading Act 1986, s 9]. Therefore, for typical, isolated private sales, the statutory prohibitions against misleading or deceptive conduct or false representations under this Act do not apply to the private seller. Buyers in private sales rely primarily on the general principles of contract law and the accuracy of the seller's description.

However, it is important to note that if an individual's private selling activities are frequent, extensive, or appear to be part of an ongoing commercial activity, they may be considered to be acting "in trade" by law, even if they do not view themselves as a business [Source: Fair Trading Act 1986, s 2(1) definition of 'in trade']. In such cases, the protections of both the Consumer Guarantees Act 1993 and the Fair Trading Act 1986 could apply.

Summary of Key Differences

Feature "In-Trade" Seller Private Seller (Typically)
Consumer Guarantees Act Applies, offering rights like acceptable quality, fitness for purpose. Generally does not apply.
Fair Trading Act Applies, prohibiting misleading or deceptive conduct. Generally does not apply regarding statutory prohibitions on misleading conduct.
Buyer's Recourse (Statutory) Stronger statutory rights under CGA/FTA for faulty goods or misleading claims. Fewer statutory rights; reliance on contract law and seller's representations.

When to Seek Independent Legal Advice

Determining whether a seller is acting "in trade" can be complex, and the specific application of consumer law to a particular online auction dispute can vary. Individuals who require clarification on their rights or obligations, or who are considering pursuing or defending a claim related to an online auction, should seek independent legal advice. Information and assistance can also be obtained from Community Law Centres throughout New Zealand [https://communitylaw.org.nz/].

Key Resources