The Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA) are key pieces of legislation protecting consumers in New Zealand. The CGA provides statutory guarantees for goods and services, while the FTA prohibits misleading and deceptive conduct in trade.
Guarantee of Reasonable Care and Skill for Services
When a service is provided to a consumer (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 process of production or manufacture, or repairing or treating other goods or fixtures on land in trade [Source: Consumer Guarantees Act 1993, s 2]) by a supplier (a person who supplies goods or services in trade [Source: Consumer Guarantees Act 1993, s 2]), the CGA includes a guarantee that the services (services provided for reward, including services provided by a bank, an insurer, a finance company, or any other financial institution, and the supply of electricity, gas, or water, or telecommunication services [Source: Consumer Guarantees Act 1993, s 2]) will be carried out with reasonable care and skill. This means the service provider must perform their work to the standard that a reasonable and competent provider in that field would exercise [Source: Consumer Guarantees Act 1993, s 28].
This guarantee applies to a wide range of services, including those provided by tradespeople, professionals (like lawyers or accountants), and service providers in sectors such as telecommunications or transport [Source: Consumer Guarantees Act 1993, s 6].
Remedies for Breach of Guarantee
If a service fails to comply with the guarantee of reasonable care and skill, the consumer may be entitled to a remedy. The type of remedy available depends on whether the failure is a minor failure or a substantial failure [Source: Consumer Guarantees Act 1993, s 32].
Minor Failures
A minor failure is one that can be remedied and does not deprive the consumer of a substantial benefit from the service, or is not of a substantial character [Source: Consumer Guarantees Act 1993, s 32].
For a minor failure, the consumer can require the supplier to remedy the failure within a reasonable time. If the supplier refuses or fails to remedy the failure, or does not do so within a reasonable time, the consumer may either:
- Have the failure remedied by someone else and recover all reasonable costs incurred from the supplier; or
- Cancel the agreement for the supply of the service [Source: Consumer Guarantees Act 1993, s 33].
Substantial Failures
A substantial failure is a failure that is not a minor failure, or where the service would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure, or is unfit for a particular purpose made known to the supplier and cannot easily be remedied, or creates an unsafe situation [Source: Consumer Guarantees Act 1993, s 32].
If the failure is substantial, the consumer may choose to:
- Cancel the agreement for the supply of the service; or
- Obtain from the supplier damages for any reduction in value of the service below the price payable [Source: Consumer Guarantees Act 1993, s 34].
In addition to these remedies, consumers may also recover damages for any consequential loss (loss or damage resulting from the failure that was reasonably foreseeable as liable to result from the failure [Source: Consumer Guarantees Act 1993, s 35]) resulting from the failure, provided the loss was reasonably foreseeable [Source: Consumer Guarantees Act 1993, s 35].
Contracting Out of the CGA
Suppliers cannot contract out of the guarantees provided by the CGA for services supplied to consumers. Any term in a contract that attempts to exclude, restrict, or modify the application of the CGA is generally void [Source: Consumer Guarantees Act 1993, s 43]. This ensures that consumers' basic rights are protected.
Fair Trading Act 1986 and Misleading Conduct
The Fair Trading Act 1986 (FTA) also plays a role in consumer protection regarding services. The FTA prohibits persons in trade from engaging in conduct that is misleading or deceptive, or likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This includes making false or misleading representations about the nature, standard, quality, or fitness for purpose of any services [Source: Fair Trading Act 1986, s 13]. For example, if a service provider advertises they have a particular qualification or will use a specific high-quality technique, and they do not, this could breach the FTA.
When to Seek Independent Legal Advice
If a person believes their rights under consumer law have been breached, or if they are a supplier seeking to understand their obligations, it is advisable to consult with a legal professional or an advocacy service. Community Law Centres across New Zealand provide free legal advice for those who qualify. Information may also be available from government agencies such as the Ministry of Business, Innovation and Employment (MBIE).
Key Resources
- Consumer Guarantees Act 1993: https://www.legislation.govt.nz/act/public/1993/0091/latest/whole.html
- Fair Trading Act 1986: https://www.legislation.govt.nz/act/public/1986/0121/latest/whole.html
- Consumer Protection (MBIE): https://www.consumerprotection.govt.nz/
- Community Law Centres: https://communitylaw.org.nz/