Understanding the Guarantee of "Acceptable Quality" in New Zealand Consumer Law
New Zealand consumer law provides important protections for individuals purchasing goods and services. Two key pieces of legislation underpin these protections: the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA). This article focuses on the guarantee of "acceptable quality" for goods, primarily under the CGA, and touches upon relevant provisions of the FTA.
The Consumer Guarantees Act 1993: Guarantee of Acceptable Quality
The Consumer Guarantees Act 1993 establishes a set of minimum guarantees that suppliers automatically provide to consumers when goods are supplied. A consumer is defined as a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption, and not 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 any person who supplies goods or services in trade [Source: Consumer Guarantees Act 1993, s 2].
One of the fundamental guarantees is that goods must be of acceptable quality [Source: Consumer Guarantees Act 1993, s 6, s 7].
What Constitutes "Acceptable Quality"?
Goods are considered to be of acceptable quality if they are:
- Fit for all the purposes for which goods of the type in question are commonly supplied [Source: Consumer Guarantees Act 1993, s 7(a)(i)].
- Acceptable in appearance and finish [Source: Consumer Guarantees Act 1993, s 7(a)(ii)].
- Free from minor defects [Source: Consumer Guarantees Act 1993, s 7(a)(iii)].
- Safe [Source: Consumer Guarantees Act 1993, s 7(a)(iv)].
- Durable [Source: Consumer Guarantees Act 1993, s 7(a)(v)].
When determining whether goods are of acceptable quality, a reasonable consumer's perspective is considered, taking into account factors such as:
- The nature of the goods [Source: Consumer Guarantees Act 1993, s 7(b)(i)].
- The price at which the goods were supplied (if relevant) [Source: Consumer Guarantees Act 1993, s 7(b)(ii)].
- Any statements made about the goods on packaging or labels [Source: Consumer Guarantees Act 1993, s 7(b)(iii)].
- Any representations made by the supplier or manufacturer [Source: Consumer Guarantees Act 1993, s 7(b)(iv)].
- All other relevant circumstances [Source: Consumer Guarantees Act 1993, s 7(b)(v)].
This guarantee applies even if the goods were supplied at a reduced price, unless any defect was specifically drawn to the consumer's attention before they agreed to buy [Source: Consumer Guarantees Act 1993, s 7(c), s 7(d)].
Remedies for Failure to Meet Acceptable Quality
If goods fail to meet the guarantee of acceptable quality, the CGA provides specific remedies for consumers. The type of remedy depends on whether the failure is minor or substantial.
Minor Failure
A failure is considered minor if it can be remedied to comply with the guarantee within a reasonable time [Source: Consumer Guarantees Act 1993, s 18(2)]. For a minor failure, the consumer can require the supplier to remedy the failure [Source: Consumer Guarantees Act 1993, s 18(a)]. The supplier must remedy the failure within a reasonable time [Source: Consumer Guarantees Act 1993, s 19(1)]. Remedying the failure may involve repairing the goods, replacing the goods with goods of identical type, or providing a refund [Source: Consumer Guarantees Act 1993, s 19(1), s 2(1)].
If the supplier refuses to remedy the failure, or does not do so within a reasonable time, the consumer can either:
- Have the failure remedied elsewhere and recover all reasonable costs from the supplier [Source: Consumer Guarantees Act 1993, s 18(b)(i)].
- Reject the goods [Source: Consumer Guarantees Act 1993, s 18(b)(ii)].
Substantial Failure
A failure is considered substantial if:
- The goods would not have been acquired by a reasonable consumer fully aware of the nature and extent of the failure [Source: Consumer Guarantees Act 1993, s 21(a)].
- The goods depart in a significant respect from their description or any sample or demonstration model [Source: Consumer Guarantees Act 1993, s 21(b)].
- The goods are substantially unfit for a purpose for which goods of the type are commonly supplied and cannot easily be remedied to make them fit for that purpose [Source: Consumer Guarantees Act 1993, s 21(c)].
- The goods are unsafe [Source: Consumer Guarantees Act 1993, s 21(e)].
For a substantial failure, the consumer can choose to either:
- Reject the goods [Source: Consumer Guarantees Act 1993, s 22(a)]. Rejection allows the consumer to choose a refund of any money paid or a replacement with goods of the same type and similar value [Source: Consumer Guarantees Act 1993, s 23(2)].
- Obtain compensation from the supplier for any reduction in the value of the goods below the price paid or payable [Source: Consumer Guarantees Act 1993, s 22(b)].
Consumers also have the right to claim consequential loss or damage resulting from the failure, provided it was reasonably foreseeable [Source: Consumer Guarantees Act 1993, s 22(c), s 23(1)(b)].
The Fair Trading Act 1986: Misleading Conduct and False Representations
The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct in trade and false representations. While it does not establish guarantees in the same way as the CGA, it is highly relevant to statements made about the quality of goods.
Section 9 of the FTA states that no person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This means that suppliers cannot make statements about the quality of goods that are false or misleading.
Specifically, section 13(a) of the FTA prohibits false or misleading representations concerning the nature, characteristics, suitability for a purpose, or quantity of goods [Source: Fair Trading Act 1986, s 13(a)]. This means that if a supplier falsely represents that goods are of a certain quality, or possess certain characteristics related to quality, they may be breaching the FTA.
The FTA focuses on the conduct of the supplier in trade, ensuring that consumers are not misled about what they are buying. Breaches of the FTA can result in pecuniary penalties, and the Commerce Commission can take enforcement action [Source: Fair Trading Act 1986, s 40]. Consumers who have been misled may also be able to seek remedies such as damages or orders to vary or cancel a contract [Source: Fair Trading Act 1986, s 43].
Exclusion Clauses
Generally, suppliers cannot contract out of their obligations under the Consumer Guarantees Act 1993, meaning they cannot tell a consumer that the guarantees, such as acceptable quality, do not apply [Source: Consumer Guarantees Act 1993, s 43(1)]. However, there is a limited exception for goods supplied in trade to a consumer who is acquiring them for the purpose of a business, where the parties can agree to contract out, provided it is fair and reasonable to do so [Source: Consumer Guarantees Act 1993, s 43(2)].
When to Seek Independent Legal Advice
Individuals seeking to understand their specific rights or obligations regarding consumer guarantees, or when facing complex disputes related to faulty goods or misleading conduct, may benefit from obtaining independent legal advice. For general guidance, information can be found through official government channels. For free advice and assistance, individuals may contact Community Law Centres throughout New Zealand.