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

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consumer

Pricing mistakes: Does a shop have to honour the wrong price tag?

Key Takeaway

In New Zealand, shops generally do not have to honour a wrong price tag if it is a genuine mistake discovered before the sale is completed. However, businesses must not engage in misleading conduct regarding prices under the Fair Trading Act 1986. The Consumer Guarantees Act 1993 primarily covers product quality after purchase, not pricing errors.

Pricing Mistakes: Does a Shop Have to Honour a Wrong Price Tag?

It is a common scenario: a product is advertised with a price that appears too good to be true, only for a customer to be told at the till that the price is a mistake. In New Zealand, the legal position on whether a shop must honour an incorrect price tag is primarily governed by the Fair Trading Act 1986 and general principles of contract law, with the Consumer Guarantees Act 1993 having a more limited role concerning pricing itself.

The Fair Trading Act 1986 and Misleading Prices

The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct by businesses, including in relation to pricing. A supplier (a person or business supplying goods or services [Source: Fair Trading Act 1986, s 2(1)]) must ensure their pricing information is accurate and not misleading.

  • General Prohibition on Misleading Conduct: Businesses must not engage in conduct that is misleading or deceptive, or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This includes representations made about the price of goods or services.
  • False or Misleading Representations: Specifically, a supplier must not make a false or misleading representation concerning the price of goods or services [Source: Fair Trading Act 1986, s 13(g)]. A representation is a statement or conduct that conveys a message about goods or services.

For a pricing error to breach the FTA, it typically needs to constitute misleading conduct or a false or misleading representation. A single, genuine mistake that is quickly identified and corrected before a sale is completed may not necessarily be considered misleading conduct under the FTA. The Act aims to prevent businesses from intentionally or negligently misleading consumers, rather than penalising honest errors.

If a business is found to have breached the FTA, the Commerce Commission, which enforces the Act, may take action, potentially resulting in pecuniary penalties (fines) or other orders [Source: Fair Trading Act 1986, s 40]. Consumers who have suffered loss or damage due to misleading conduct in breach of the FTA may also apply to a court for various orders, including an order for damages (financial compensation) [Source: Fair Trading Act 1986, s 43].

The Consumer Guarantees Act 1993

The Consumer Guarantees Act 1993 (CGA) provides a set of guarantees for consumers when they purchase goods or services from a supplier (a person or business in trade [Source: Consumer Guarantees Act 1993, s 2]). A consumer is a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption [Source: Consumer Guarantees Act 1993, s 2].

The CGA primarily focuses on the quality, fitness for purpose, and other aspects of the goods or services themselves. For example, it guarantees that goods are of acceptable quality and fit for any particular purpose that the consumer makes known to the supplier [Source: Consumer Guarantees Act 1993, s 6, s 7].

However, the CGA does not directly regulate pricing or compel a supplier to honour a mistaken price tag before a transaction has been finalised. Its provisions apply once goods or services have been supplied to a consumer.

When a Pricing Error is Discovered

  • Before the Sale is Completed: If a supplier discovers a pricing error before the transaction is finalised (i.e., before the customer has paid for the item and the item has been handed over, thereby forming a binding contract), they are generally able to correct the price. In such cases, the supplier is not typically legally obliged to sell the item at the incorrect, lower price due to a genuine mistake, unless their conduct in displaying the price is considered misleading under the Fair Trading Act 1986.
  • After the Sale is Completed: If a transaction has been completed at the mistaken price (i.e., the customer has paid the displayed price and taken possession of the goods), the supplier generally cannot then demand a higher price. At this point, a legally binding contract for sale at the incorrect price has usually been formed.

When to Seek Independent Legal Advice

Individuals facing specific issues regarding pricing errors, misleading conduct, or consumer rights should seek independent legal advice. Information about consumer law and options for resolution can be obtained from official government bodies such as Consumer Protection (www.consumerprotection.govt.nz) or by contacting Community Law Centres (https://communitylaw.org.nz/) for free legal guidance.

Key Resources