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consumer

Who gets to choose between a repair, replacement, or refund?

Key Takeaway

In New Zealand, consumer rights to a repair, replacement, or refund depend on whether a product or service failure is minor or serious. For minor failures, the supplier usually chooses the remedy. For serious failures, the consumer typically has the choice. These rights are protected by the Consumer Guarantees Act 1993 and the Fair Trading Act 1986.

Consumer Rights in New Zealand: Repair, Replacement, or Refund?

New Zealand consumer law provides rights and remedies for individuals when goods or services fail to meet certain standards. The determination of who decides between a repair, replacement, or refund often depends on the severity of the failure. This framework is primarily governed by the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA).

The Consumer Guarantees Act 1993 (CGA)

The Consumer Guarantees Act 1993 (CGA) sets out statutory guarantees for goods and services ordinarily acquired for personal, domestic, or household use [Source: Consumer Guarantees Act 1993, s 2]. A supplier is defined as a person who supplies goods or services, and a consumer is the person who acquires them. These guarantees are automatic and generally cannot be contracted out of by suppliers in sales to consumers [Source: Consumer Guarantees Act 1993, s 43].

Guarantees for Goods

When a consumer purchases goods, the CGA provides guarantees that the goods will be:

  • Of acceptable quality – meaning they are fit for all the purposes for which goods of that type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable [Source: Consumer Guarantees Act 1993, s 6].
  • Fit for a particular purpose – if the consumer makes their specific purpose known to the supplier, and the supplier represents the goods are suitable [Source: Consumer Guarantees Act 1993, s 7].
  • Match description – the goods supplied must correspond with their description [Source: Consumer Guarantees Act 1993, s 8].
  • Match sample or demonstration model – if goods are sold by reference to a sample or model, they must correspond with it in quality and other respects [Source: Consumer Guarantees Act 1993, s 9].
  • Reasonable price – if no price was agreed [Source: Consumer Guarantees Act 1993, s 10].
  • Spare parts and repair facilities available – for a reasonable period, unless the consumer was advised otherwise [Source: Consumer Guarantees Act 1993, s 12].
  • Manufacturer's express guarantees honoured [Source: Consumer Guarantees Act 1993, s 14].

Guarantees for Services

When a consumer acquires services, the CGA guarantees that the services will be:

  • Carried out with reasonable care and skill [Source: Consumer Guarantees Act 1993, s 28].
  • Fit for a particular purpose – if the consumer makes their purpose known [Source: Consumer Guarantees Act 1993, s 29].
  • Completed within a reasonable time – if no time is fixed by agreement [Source: Consumer Guarantees Act 1993, s 30].
  • Of a reasonable price – if no price is fixed by agreement [Source: Consumer Guarantees Act 1993, s 31].

Remedies for Failed Guarantees (Goods)

When goods fail to meet a guarantee, the type of remedy available, and who chooses it, depends on whether the failure is minor or serious.

Minor Failures of Goods

A minor failure is a problem that can be remedied to make the goods comply with the guarantee [Source: Consumer Guarantees Act 1993, s 18(1)(a)].

  • Supplier's Choice: For minor failures, the supplier gets to choose the remedy. The supplier must either repair the goods, replace the goods with identical goods (or goods of similar value if identical goods are not available), or provide a refund [Source: Consumer Guarantees Act 1993, s 18(2)(a)].
  • Reasonable Time: The supplier must remedy the failure within a reasonable time [Source: Consumer Guarantees Act 1993, s 18(2)(b)].
  • Consumer's Options if Supplier Fails: If the supplier fails to remedy the minor problem within a reasonable time, or refuses to do so, the consumer then has the right to either get the problem fixed elsewhere and recover the reasonable costs from the supplier, or reject the goods [Source: Consumer Guarantees Act 1993, s 18(3)].

Serious Failures of Goods

A serious failure, also known as a failure of a substantial character, is a problem that cannot be remedied, is substantial, makes the goods unfit for a common purpose, makes them unsafe, or significantly differs from their description or sample [Source: Consumer Guarantees Act 1993, s 21].

  • Consumer's Choice: For serious failures, the consumer gets to choose the remedy. The consumer can either:
    • Reject the goods and choose to receive a replacement of identical type and value, or a full refund of the purchase price [Source: Consumer Guarantees Act 1993, s 18(3)(a)].
    • 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 18(3)(b)].
  • Rejecting Goods: When rejecting goods, it must be done within a reasonable time frame, considering the type of goods, their expected lifespan, and the use to which they have been put [Source: Consumer Guarantees Act 1993, s 22].

Remedies for Failed Guarantees (Services)

Similar to goods, remedies for services depend on the nature of the failure.

Minor Failures of Services

For minor failures of services, the supplier must remedy the failure free of charge within a reasonable time [Source: Consumer Guarantees Act 1993, s 32]. If the supplier fails to do so, the consumer may either have the service remedied by a third party and recover the reasonable costs from the supplier, or cancel the agreement for the service [Source: Consumer Guarantees Act 1993, s 32].

Serious Failures of Services

A serious failure of services is a problem that cannot be remedied or is of a substantial character, meaning it makes the service unfit for its common purpose or fails to achieve a specific result promised [Source: Consumer Guarantees Act 1993, s 32A].

  • Consumer's Choice: For serious failures, the consumer gets to choose the remedy. The consumer can either:
    • Cancel the agreement for the service [Source: Consumer Guarantees Act 1993, s 32].
    • Obtain compensation from the supplier for any reduction in the value of the service below the price paid or payable [Source: Consumer Guarantees Act 1993, s 32].

Compensation for Consequential Loss

In addition to the remedies for the goods or services themselves, consumers may also claim for any loss or damage that resulted from the failure, provided that loss or damage was foreseeable. This is known as consequential loss. For example, if a faulty refrigerator spoils food, the cost of the spoiled food might be claimed as consequential loss [Source: Consumer Guarantees Act 1993, s 19 (goods), s 32 (services)].

The Fair Trading Act 1986 (FTA)

The Fair Trading Act 1986 (FTA) primarily prohibits misleading and deceptive conduct, false representations, and unfair trading practices by businesses. Unlike the CGA, which focuses on product and service quality, the FTA addresses the accuracy of information provided to consumers.

Key Prohibitions under the FTA

  • 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].
  • False or Misleading Representations: This prohibits making false or misleading representations about goods or services, such as their standard, quality, history, or price [Source: Fair Trading Act 1986, s 13].

Remedies under the FTA

If a business breaches the FTA, the Commerce Commission, which enforces the Act, can take enforcement action, including issuing warnings, fines, or pursuing court action. Individual consumers who suffer loss or damage due to a breach of the FTA can apply to the courts for various orders, including damages, injunctions, or orders to vary or cancel a contract [Source: Fair Trading Act 1986, s 43]. The courts have discretion in determining the appropriate remedy.

Summary of Choice

  • Minor Failure (Goods or Services): The supplier generally chooses the remedy (repair, replacement, or refund for goods; remedy service for services).
  • Serious Failure (Goods or Services): The consumer generally chooses the remedy (reject goods for refund/replacement, or compensation for goods; cancel service or compensation for services).

When to Seek Independent Legal Advice

Understanding consumer rights can be complex, particularly in nuanced situations or when disputes arise. Consumers experiencing issues with goods or services are encouraged to first engage directly with the retailer or service provider to attempt to resolve the matter. If a resolution cannot be reached, further assistance can be sought. Information and guidance are available from agencies such as the Ministry of Business, Innovation and Employment (MBIE) or Consumer Protection. For free, independent legal advice, individuals can consult a Community Law Centre.

Key Resources