Automatic guarantees when buying from a business
Buying goods – Automatic guarantees
Which goods are covered by the Consumer Guarantees Act?
What’s considered a “good” under the Act?
A good is a piece of personal property. It can be tangible (like a car or a washing machine) or it can be intangible (like computer software).
The Consumer Guarantees Act covers goods usually bought for personal, domestic or household use – for example, household appliances, computer games, clothes, furniture and cars. It also includes animals and plants.
The Act also specifically covers water and gas that is provided in cylinders or tanks (called “non-reticulated gas”). Gas that is piped into your home (called “reticulated gas”) and electricity are generally not covered by the Act, but they still have to meet a level of acceptable quality.
To be covered under the Act, you must be buying the goods from someone or a business who is in the business of selling (called “in trade”). Second-hand goods are covered as long as you buy them from a second-hand dealer (see: “What if the goods are bought second-hand?” below).
What goods aren’t covered by the Act?
The Consumer Guarantees Act does not cover:
- goods normally bought for commercial or business purposes (for example, a photocopier for your business)
- goods bought through a private sale – for example, garage sales, the “For sale” columns of newspapers, and buying from an ordinary person selling on Trade Me or Facebook Marketplace
- goods bought if you intend to resell them as part of your business
- goods bought to be used in a manufacturing process
- goods given to you by a charity.
Note: If you are buying goods that would usually be used for personal, domestic or household use, but you intend to use it for business purposes (for example, buying a car to make business deliveries), the seller can contract out of the Consumer Guarantees Act. For more information, see: “Can a trader decide not to be covered by the Consumer Guarantees Act?”.
What if goods are bought second-hand?
Second-hand goods are covered by the Act if:
- you buy the goods from a second-hand dealer, and
- they’re goods that are usually bought for personal, domestic or household use.
There are some small differences if you buy something second hand:
- The test for “acceptable quality” is different (see: “The goods must be of an acceptable quality“). For example, acceptable quality for a five-year-old computer is different than for a brand-new computer. What is considered “acceptable quality” will depend on:
- the age and condition of the goods
- the price you paid for the goods
- what the second-hand dealer said about the condition of the goods.
- There isn’t a requirement to have repair facilities and spare parts – unlike when you buy something new (see: “Repair facilities and spare parts must be available”), unless you’re buying something that is imported and you’re the first person to buy it in New Zealand.
Am I covered by the Act if I buy something on Trade Me?
- you are buying the goods for personal or household use, and
- the seller is in the business of selling (“in trade”).
The same rules apply if you win a Trade Me auction, or you buy at a fixed price (using “Buy now”).
If the person or business selling the item is in the business of selling (if they’re “in trade”), they need to make this clear. This includes if they are using websites like Trade Me. These websites also have a responsibility to make sure that the person or business selling makes it clear that they’re in trade.
Traders and websites that don’t do this may be fined by the Commerce Commission.
What protections are available if the Consumer Guarantees Act does not apply?
First, check that the Consumer Guarantees Act really does not apply. If it applies, the trader can’t escape their obligations, regardless of what they tell you or what is said in your contract (see: “Can a trader decide not to be covered by the Consumer Guarantees Act?”)
Even if your situation isn’t covered by the Consumer Guarantees Act, there may be remedies for you:
Automatic guarantees for goods under the Consumer Guarantees Act
The goods must be of an acceptable quality
Goods are of an acceptable quality when they are:
- fit for all purposes that goods of their type are commonly used for
- acceptable in appearance and finish
- free from minor defects
Note: Some products (such as children’s nightwear, toys and sunscreen) have mandatory safety standards they must comply with – you can see these safety standards at www.productsafety.govt.nz (or go to www.comcom.govt.nz, and navigate to “Your Business,” then “Your obligations as a business,” and then click on “Product safety standards”).
The goods must meet a standard that is acceptable to a “reasonable consumer”. This takes into account:
- whether the goods are new or second-hand (see: “What if the goods are bought second-hand?“)
- the state and condition of the goods, and whether this matches the description you were given
- any defects (unless you are told about the defect or problem before you buy it, but even in that case, the goods should be of acceptable quality excluding that defect)
- the price and nature of the goods
- any statements made by the supplier or the manufacturer
- the nature of the supplier
- the context in which the goods are supplied.
Gas that is piped into your home (called “reticulated gas”) and electricity are generally not covered by the Act, but there a specific guarantees in the Act to make sure that they are safe, reliable, and able to be used consistently as a reasonable consumer would expect.
The goods must be fit for their purpose
Goods must be:
- fit for their usual purpose
- fit for any purpose that you tell the trader you intend to use the goods for, or that you imply to the trader you want to use the goods for (for example, if you ask the trader for a laptop capable of doing a certain function, the laptop they give you must be able to do the function you asked for)
- fit for any purpose the trader says the goods are fit for.
The goods must match their description
If you buy goods that were described to you (for example, in an advertisement or demonstration), the goods must match that description. If you buy something after being shown a sample or demonstration model, the actual goods you receive must be the same as that model.
The goods must be at a reasonable price if no price is agreed in advance
If you haven’t already agreed on a price, you don’t have to pay the trader more than a reasonable price for the goods. A reasonable price is usually determined by what other traders charge.
If you’ve already paid for the goods, it’s too late and you don’t have a right to a refund.
Repair facilities and spare parts must be available
The manufacturer or importer must make sure (as far as reasonably possible) that repair facilities and spare parts are available for a reasonable period of time after you buy the goods.
This doesn’t apply if you are told about limited availability before you buy.
No one else owns, or has a security interest, over the goods
You’re guaranteed full rights to the goods, free of any security interest (unless the trader tells you about it before you buy). This means that you’re guaranteed that the trader has the right to sell the goods and there’s no money owing on the goods to someone else, such as money owing under a hire-purchase contract.
Delivery must be at the agreed time, or within a reasonable time
If the trader is responsible for delivering the goods to you, or for arranging delivery, you have a guarantee that you’ll receive them at the agreed time or within the agreed period. If no particular time or period has been agreed, the goods must be delivered within a reasonable time.