New Zealand consumer law aims to protect individuals when they acquire goods and services in trade. The two primary pieces of legislation governing this area are the Consumer Guarantees Act 1993 (CGA) and the Fair Trading Act 1986 (FTA).
Who is a "Consumer" under the Consumer Guarantees Act 1993?
The Consumer Guarantees Act 1993 (CGA) defines a "consumer" as a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption [Source: Consumer Guarantees Act 1993, s 2(1)]. This definition is crucial for determining if a transaction falls under the protection of the CGA.
Key aspects of this definition include:
- Type of acquisition: The goods or services must be of a type that are ordinarily acquired for personal, domestic, or household use. This means it's about the nature of the product, not solely the buyer's intention. For example, a vehicle is ordinarily for personal use, even if a business occasionally uses it [Source: Consumer Guarantees Act 1993, s 2(1)].
- Purpose of acquisition: The acquisition must not be for certain commercial purposes. Specifically, a person is not a consumer if they acquire goods:
- For the purpose of resupplying them in trade [Source: Consumer Guarantees Act 1993, s 2(1)(a)(i)].
- For consuming them in the course of a manufacturing or production process [Source: Consumer Guarantees Act 1993, s 2(1)(a)(ii)].
- In the case of goods, for repairing or treating in trade other goods or fixtures on land [Source: Consumer Guarantees Act 1993, s 2(1)(a)(iii)].
It is important to note that a supplier and a consumer cannot contract out of (agree to bypass) the provisions of the CGA, unless the transaction is between parties who are both "in trade" and they agree in writing to contract out, and it is fair and reasonable to do so [Source: Consumer Guarantees Act 1993, s 43(2)]. "In trade" means carrying on any trade, business, industry, profession, occupation, or activity relating to the supply or acquisition of goods or services [Source: Consumer Guarantees Act 1993, s 2(1)].
Rights and Guarantees for Consumers under the CGA
The CGA establishes a set of automatic guarantees that goods and services supplied to consumers must meet. These guarantees apply regardless of any warranty offered by the manufacturer or retailer.
Guarantees as to Goods
When goods are supplied to a consumer, they come with guarantees including:
- Acceptable quality: Goods must be 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. The standard considers the nature of the goods, price, and statements made about them [Source: Consumer Guarantees Act 1993, s 6].
- Fitness for a particular purpose: Goods must be reasonably fit for any particular purpose that the consumer makes known to the supplier, and for any purpose for which the supplier represents they are fit [Source: Consumer Guarantees Act 1993, s 8].
- Match description: Goods must correspond with any description given [Source: Consumer Guarantees Act 1993, s 9].
- Match sample or demonstration model: If goods are sold by reference to a sample or demonstration model, the goods must correspond with the quality and characteristics of the sample [Source: Consumer Guarantees Act 1993, s 10].
- Reasonable price: If no price is agreed, the consumer is not liable to pay to the supplier more than a reasonable price [Source: Consumer Guarantees Act 1993, s 11].
- Spare parts and repair facilities: Manufacturers guarantee that spare parts and facilities for repair are reasonably available for a reasonable period, unless the consumer is told otherwise before purchase [Source: Consumer Guarantees Act 1993, s 12A].
Guarantees as to Services
When services are supplied to a consumer, they come with guarantees including:
- Reasonable care and skill: Services must be carried out with reasonable care and skill [Source: Consumer Guarantees Act 1993, s 28].
- Fitness for purpose: Services and any products resulting from the services must be fit for any particular purpose that the consumer makes known to the supplier [Source: Consumer Guarantees Act 1993, s 29].
- Reasonable time: If the time for completion of the service is not fixed, the service must be completed within a reasonable time [Source: Consumer Guarantees Act 1993, s 30].
- Reasonable price: If the price for the service is not fixed, the consumer is not liable to pay more than a reasonable price [Source: Consumer Guarantees Act 1993, s 31].
If these guarantees are not met, the CGA provides remedies depending on whether the failure is minor or substantial. Remedies can include repair, replacement, refund, or compensation for loss or damage [Source: Consumer Guarantees Act 1993, ss 18-27, 32-36].
How the Fair Trading Act 1986 Protects Consumers
The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct "in trade." Unlike the CGA, the FTA does not specifically define "consumer" in a way that limits its application to individuals acquiring goods for personal use. Instead, its prohibitions apply broadly to all persons involved in trade, meaning any business or activity relating to the supply or acquisition of goods or services.
Prohibited Conduct under the FTA
The core of the FTA is its prohibition against misleading or deceptive conduct:
- Misleading and deceptive conduct generally: 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 applies to advertisements, packaging, sales pitches, and any other commercial communication.
- False or misleading representations: The FTA specifically prohibits making false or misleading representations about goods or services. This includes claims about quality, standard, grade, composition, history, newness, price, or the existence of benefits or rights [Source: Fair Trading Act 1986, ss 10-16].
- Unsubstantiated representations: A person must not make an unsubstantiated representation in trade. An unsubstantiated representation is one that the person making it does not have reasonable grounds for believing, at the time the representation is made [Source: Fair Trading Act 1986, s 12A].
- Unfair contract terms: The FTA also addresses unfair contract terms in standard form consumer contracts. A term is unfair if it causes a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term, and would cause detriment to a party if applied or relied on [Source: Fair Trading Act 1986, s 46L].
Enforcement of the FTA
The Commerce Commission is responsible for enforcing the FTA. It can take action against businesses that breach the Act, which can result in significant penalties, including fines [Source: Fair Trading Act 1986, s 36B, Part 5].
When to Seek Independent Legal Advice
When navigating complex consumer law matters, such as determining if a specific transaction falls under the definition of a "consumer" for the purposes of the Consumer Guarantees Act 1993, or understanding the full scope of rights and remedies under the Fair Trading Act 1986, individuals may benefit from seeking independent legal advice. Information about consumer rights is available from government agencies like the Ministry of Business, Innovation and Employment (MBIE), and free legal assistance may be available through Community Law Centres.