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What is a manufacturer’s warranty and how does it overlap with the CGA?

Key Takeaway

A manufacturer’s warranty is a voluntary promise about a product, separate from the statutory rights consumers have under the Consumer Guarantees Act 1993 (CGA). The CGA provides fundamental guarantees that cannot be excluded, such as acceptable quality and fitness for purpose, and outlines remedies. The Fair Trading Act 1986 prohibits misleading claims about warranties.

Understanding Manufacturer's Warranties and Consumer Rights in New Zealand

In New Zealand, consumers are protected by a combination of statutory rights and, in some cases, additional contractual promises. This article explains manufacturer's warranties and how they interact with the fundamental protections provided by the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA).

What is a Manufacturer's Warranty?

A manufacturer's warranty is a voluntary contractual promise or undertaking made by the manufacturer of a product to a consumer. It typically guarantees that the product will be free from defects in materials and workmanship for a specified period and outlines the conditions under which the manufacturer will repair, replace, or refund the product if it fails during that time. These warranties are offered in addition to, and do not replace, a consumer's statutory rights [Source: Consumer Guarantees Act 1993, s 43].

The Consumer Guarantees Act 1993 (CGA)

The Consumer Guarantees Act 1993 (CGA) provides a set of automatic guarantees for goods and services purchased by consumers in trade. These guarantees are statutory, meaning they are legally binding and cannot be contracted out of [Source: Consumer Guarantees Act 1993, s 43].

A consumer is generally 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, or consuming them in the course of a manufacturing or production process [Source: Consumer Guarantees Act 1993, s 2]. A supplier is the person who supplies the goods or services to the consumer in trade [Source: Consumer Guarantees Act 1993, s 2].

Guarantees for Goods

When goods are supplied to a consumer in trade, the CGA provides several key guarantees, including:

  • Acceptable quality: Goods must be of acceptable quality, which means they must be fit for all the purposes for which goods of the 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: If a consumer makes known a particular purpose for which they are acquiring the goods, and the supplier represents that they are fit for that purpose, the goods must be reasonably fit for that purpose [Source: Consumer Guarantees Act 1993, s 7].
  • Match description: Goods must match the description given to them [Source: Consumer Guarantees Act 1993, s 8].
  • Match sample or demonstration model: If goods are supplied by reference to a sample or demonstration model, they must correspond with the sample or model in quality, state, or condition [Source: Consumer Guarantees Act 1993, s 10].
  • Reasonable price: If no price is agreed upon, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 9].
  • Availability of repairs and spare parts: The manufacturer guarantees that facilities for the repair of the goods and the supply of spare parts are reasonably available for a reasonable period after the goods are supplied, unless the consumer is notified otherwise at or before the time of supply [Source: Consumer Guarantees Act 1993, s 12].
  • Manufacturer's express guarantees: Where an express guarantee is given by a manufacturer, the manufacturer must comply with that guarantee [Source: Consumer Guarantees Act 1993, s 14]. An express guarantee is a written or verbal undertaking, assertion, or representation made by a manufacturer about the quality, performance, or characteristics of goods [Source: Consumer Guarantees Act 1993, s 2].

Remedies under the CGA

When goods fail to comply with a guarantee under the CGA, consumers have rights of redress. The type of remedy depends on whether the failure is minor or major.

  • Minor failure: If a failure can be remedied easily, the supplier can choose to repair the goods, replace them, or provide a refund [Source: Consumer Guarantees Act 1993, s 18(2), s 19]. The supplier must remedy the failure within a reasonable time [Source: Consumer Guarantees Act 1993, s 19(1)(b)]. If they don't, the consumer can have the failure remedied elsewhere and recover costs from the supplier, or reject the goods [Source: Consumer Guarantees Act 1993, s 20, s 21].
  • Major failure: A major failure is one that cannot be remedied or is of a substantial character [Source: Consumer Guarantees Act 1993, s 21]. In such cases, the consumer can choose to reject the goods (and obtain a refund or replacement) or claim compensation for any reduction in value of the goods [Source: Consumer Guarantees Act 1993, s 18(3), s 23].

Consumers generally seek remedies from the supplier (retailer) of the goods. However, if goods fail to comply with a manufacturer's express guarantee or the guarantee as to availability of repairs and spare parts, the consumer has rights of redress directly against the manufacturer [Source: Consumer Guarantees Act 1993, s 27]. A supplier who remedies a failure caused by the manufacturer may also have rights to claim indemnity from the manufacturer [Source: Consumer Guarantees Act 1993, s 44].

Overlap and Distinction: Manufacturer's Warranty vs. CGA

The most important distinction is that CGA rights are statutory and apply automatically, while a manufacturer's warranty is contractual and voluntary. The CGA explicitly states that its provisions have effect despite any agreement to the contrary [Source: Consumer Guarantees Act 1993, s 43]. This means a manufacturer's warranty cannot reduce or remove a consumer's rights under the CGA.

A manufacturer's warranty often provides benefits in addition to the CGA. For example:

  • It might cover specific types of damage or defects not explicitly covered by the general 'acceptable quality' guarantee.
  • It might offer a longer period of coverage than what might be considered 'reasonable durability' under the CGA for certain components.
  • It might outline a simpler process for obtaining a remedy than navigating the CGA's provisions.

However, if a manufacturer's warranty has expired, or if its terms are less favourable than the CGA, the consumer can still rely on their CGA rights, provided the goods have not met an applicable guarantee under the Act. Furthermore, if a manufacturer makes an express guarantee, the CGA provides that the manufacturer must comply with it, giving that contractual promise statutory backing [Source: Consumer Guarantees Act 1993, s 14].

The Fair Trading Act 1986 (FTA)

The Fair Trading Act 1986 (FTA) protects consumers from misleading and deceptive conduct by businesses, including manufacturers and suppliers. It is separate from the CGA and focuses on fair trading practices rather than the quality or fitness of goods or services.

Key aspects of the FTA relevant to warranties 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 applies to representations made about products, including their warranties.
  • False or misleading representations: It is unlawful to make false or misleading representations concerning the existence, exclusion, or effect of any condition, warranty, guarantee, right, or remedy [Source: Fair Trading Act 1986, s 13(i)]. This means manufacturers and suppliers cannot misrepresent the scope, duration, or terms of a warranty, or imply that a warranty replaces or limits CGA rights.

If a manufacturer or supplier makes false or misleading claims about a warranty or a product's compliance with consumer law, they may breach the FTA, leading to potential penalties and remedies such as damages or orders to correct advertising.

Obligations of Manufacturers and Suppliers

Manufacturers have specific obligations under the CGA, particularly regarding the availability of repair facilities and spare parts, and adherence to any express guarantees they provide [Source: Consumer Guarantees Act 1993, s 12, s 14, s 27]. Suppliers (retailers) are the primary point of contact for consumers seeking remedies under most CGA guarantees [Source: Consumer Guarantees Act 1993, s 18]. Both manufacturers and suppliers must also ensure their marketing and representations about goods and warranties comply with the Fair Trading Act 1986 [Source: Fair Trading Act 1986, s 9, s 13(i)].

Key Takeaways

Consumers in New Zealand benefit from comprehensive protection. A manufacturer's warranty is an additional contractual promise that can offer specific benefits, but it does not diminish or override the fundamental statutory rights provided by the Consumer Guarantees Act 1993. Both manufacturers and suppliers must comply with their obligations under the CGA and ensure all representations about products and warranties are accurate and not misleading under the Fair Trading Act 1986.

When to Seek Independent Legal Advice

If a person is experiencing a dispute with a manufacturer or supplier regarding a warranty or their rights under the Consumer Guarantees Act 1993 or the Fair Trading Act 1986, or requires clarification on how these laws apply to their specific situation, it is advisable to seek independent legal advice. Information on legal assistance can be obtained from organisations such as Community Law Centres throughout New Zealand [https://communitylaw.org.nz/] or by consulting with a qualified legal professional.

Key Resources