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consumer

What is the Consumer Guarantees Act (CGA) 1993?

Key Takeaway

New Zealand's consumer law provides protections through the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA). The CGA ensures goods and services meet certain quality standards, while the FTA prohibits misleading and deceptive conduct in trade. These laws establish consumer rights and supplier obligations, with specific remedies available for breaches.

Understanding New Zealand Consumer Law: The Consumer Guarantees Act 1993 and Fair Trading Act 1986

New Zealand's consumer protection framework is primarily governed by two key pieces of legislation: the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA). These Acts aim to ensure that consumers receive goods and services of acceptable quality and are protected from unfair business practices.

The Consumer Guarantees Act 1993 (CGA)

What is the CGA?

The Consumer Guarantees Act 1993 is a law that provides guarantees for consumers when they purchase goods or services. It establishes minimum standards that goods and services must meet and outlines remedies available to consumers if these standards are not met. The Act's purpose is to protect consumers by ensuring that suppliers and manufacturers are accountable for the quality and fitness of their offerings.

Who is Covered by the CGA?

The CGA applies to the supply of goods and services "in trade" to a "consumer" by a "supplier."

  • 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 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, in the case of goods, repairing or treating other goods or fixtures on land [Source: Consumer Guarantees Act 1993, s 2(1)].
  • A supplier is a person who in trade supplies goods or services to a consumer [Source: Consumer Guarantees Act 1993, s 2(1)].
  • The term in trade refers to any trade, business, industry, profession, occupation, or activity relating to the supply of goods or services [Source: Fair Trading Act 1986, s 2(1)].

Guarantees for Goods

When a consumer buys goods from a supplier in trade, the CGA provides several guarantees:

  • Acceptable Quality: Goods must be fit for all purposes for which goods of the type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable. This is assessed against what a reasonable consumer would regard as acceptable, taking into account the nature of the goods, price, statements made about them, and the manufacturer's warranties [Source: Consumer Guarantees Act 1993, s 7].
  • Fitness for a Particular Purpose: Goods must be reasonably fit for any particular purpose that the consumer makes known to the supplier before or at the time of purchase [Source: Consumer Guarantees Act 1993, s 8].
  • Matching Description: Goods must correspond with any description given by the supplier or on the packaging [Source: Consumer Guarantees Act 1993, s 9].
  • Matching Sample or Demonstration Model: If goods are supplied by reference to a sample or demonstration model, they must correspond in quality, state, or condition with that sample or model [Source: Consumer Guarantees Act 1993, s 10].
  • Reasonable Price: If the price for the goods is not fixed, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 11].
  • Ownership and Undisturbed Possession: The supplier guarantees they have the right to sell the goods and that the consumer will have undisturbed possession of the goods [Source: Consumer Guarantees Act 1993, s 5, s 6].
  • Repairs and Spare Parts: Manufacturers guarantee that facilities for repair and spare parts are reasonably available for a reasonable period after the goods are supplied [Source: Consumer Guarantees Act 1993, s 12].

Guarantees for Services

When a consumer obtains services from a supplier in trade, the CGA provides the following guarantees:

  • Reasonable Care and Skill: Services must be carried out with reasonable care and skill [Source: Consumer Guarantees Act 1993, s 28].
  • Fitness for a Particular Purpose: Services, and any product resulting from the services, must be reasonably fit for any particular purpose that the consumer makes known to the supplier [Source: Consumer Guarantees Act 1993, s 29].
  • Reasonable Time for Completion: If no time for completion is agreed upon, the services must be completed within a reasonable time [Source: Consumer Guarantees Act 1993, s 30].
  • Reasonable Price: If the price for the services is not fixed, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 32].

Remedies for Consumers under CGA

When a guarantee under the CGA is breached, the available remedies depend on whether the failure is minor or substantial.

  • For Goods:
    • Minor Failure: A failure that can be remedied easily and does not render the goods substantially unfit for purpose. If there is a minor failure, the supplier may choose to repair the goods, replace the goods, or provide a refund [Source: Consumer Guarantees Act 1993, s 18(2)].
    • Substantial Failure: A failure where the goods would not have been acquired by a reasonable consumer fully aware of the nature and extent of the failure, or are substantially unfit for purpose, unsafe, or depart significantly from description or sample. If there is a substantial failure, the consumer can choose to reject the goods (and get a refund or replacement) or obtain compensation for any reduction in the goods' value [Source: Consumer Guarantees Act 1993, s 18(3), s 21].
  • For Services:
    • Minor Failure: If there is a minor failure in the services, the supplier may remedy the failure within a reasonable time [Source: Consumer Guarantees Act 1993, s 31].
    • Substantial Failure: A failure that renders the services substantially unfit for purpose, or results in a product of services that would not have been acquired by a reasonable consumer fully aware of the nature and extent of the failure. If there is a substantial failure, the consumer may cancel the agreement for the services or obtain compensation for any reduction in the services' value [Source: Consumer Guarantees Act 1993, s 32A, s 32B].
  • Consequential Loss: In addition to the above remedies, consumers may also claim for any reasonably foreseeable loss or damage resulting from the failure of the goods or services to comply with a guarantee [Source: Consumer Guarantees Act 1993, s 18(4) for goods, s 32C for services].

Contracting Out of the CGA

Generally, suppliers cannot contract out of the CGA when supplying goods or services to consumers for personal, domestic, or household use [Source: Consumer Guarantees Act 1993, s 43(1)]. However, parties in trade may agree to contract out of the CGA if the goods or services are supplied and acquired for business purposes, the agreement is in writing, and it is fair and reasonable to do so [Source: Consumer Guarantees Act 1993, s 43(2)].

The Fair Trading Act 1986 (FTA)

What is the FTA?

The Fair Trading Act 1986 is a law that prohibits misleading and deceptive conduct, false representations, and certain unfair trading practices by businesses. It aims to promote fair competition and protect consumers from being misled or exploited. The FTA applies to all persons engaged "in trade" [Source: Fair Trading Act 1986, s 9].

Prohibited Conduct under the FTA

Key prohibitions under the FTA include:

  • Misleading or Deceptive Conduct: 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 is a broad prohibition covering various forms of communication, advertising, and business practices.
  • False Representations: The Act specifically prohibits making false or misleading representations about goods or services. This includes misrepresentations about the quality, standard, grade, quantity, composition, style, model, history, or fitness for purpose of goods; the nature, characteristics, suitability, or quantity of services; prices; endorsements; or the existence of rights or remedies [Source: Fair Trading Act 1986, s 13].
  • Unsubstantiated Representations: A person must not, in trade, make a representation about goods or services without having reasonable grounds for making the representation, regardless of whether it is false or misleading [Source: Fair Trading Act 1986, s 12A]. This means claims must be provable.
  • Unfair Trading Practices: The FTA prohibits a range of specific unfair practices, such as bait advertising (advertising goods or services at a particular price when there is no intention to supply them at that price for a reasonable period or in reasonable quantities) [Source: Fair Trading Act 1986, s 19], pyramid selling schemes [Source: Fair Trading Act 1986, s 21], and the demanding of payment for unsolicited goods or services [Source: Fair Trading Act 1986, s 21C].

Enforcement and Remedies under FTA

  • Commerce Commission Enforcement: The Commerce Commission is responsible for enforcing the FTA. It can investigate alleged breaches and take enforcement action, which may include issuing warnings, seeking injunctions, or prosecuting offenders in court [Source: Fair Trading Act 1986, s 40, s 41].
  • Penalties: Breaches of the FTA can result in significant penalties. Individuals can face fines of up to $200,000, and companies can face fines of up to $600,000 per offence [Source: Fair Trading Act 1986, s 40].
  • Civil Remedies for Consumers: Consumers who have suffered loss or damage due to a breach of the FTA can apply to the courts for various orders. These orders may include declaring a contract void, varying a contract, directing a refund of money or return of property, or ordering payment of damages to compensate for the loss or damage suffered [Source: Fair Trading Act 1986, s 43].

Contracting Out of the FTA

The Fair Trading Act 1986 generally cannot be contracted out of. Any provision that purports to exclude, restrict, or modify the application of the FTA is void [Source: Fair Trading Act 1986, s 5C]. This ensures that the protections offered by the Act remain in place for consumers.

When to Seek Independent Legal Advice

When consumers face complex issues with goods or services, believe their rights under the Consumer Guarantees Act 1993 or Fair Trading Act 1986 have been breached, or require assistance in pursuing a claim, independent legal advice is recommended. Information on consumer rights and processes can be obtained from official government bodies such as Consumer Protection. For free legal assistance, individuals can contact Community Law Centres.

Key Resources