Consumer Guarantees Act

This Topic Includes:
Goods covered by the Act
Services covered by the Act
Goods and services not covered by Act

The Consumer Guarantees Act (CGA) is about the quality of goods and services. It offers protection to customers who have had poor quality work carried out for them by a tradesperson or purchased goods, from a person in trade, that do not meet reasonable expectations.

The Act came into effect on 1 April 1994. It covers goods and services provided from that date on.

You cannot choose to opt out of this Act. The only exception is if you are providing a service or selling goods to a business. If you try to contract out, you will be breaching the Fair Trading Act. The Fair Trading Act says you cannot mislead a customer about their rights. The penalties for doing so are substantial - up to $60,000 for an individual and up to $200,000 for a business. 

Goods covered by the Act

The Act applies to all goods normally bought for personal or household use - eg, clothes, food, appliances, furniture.

It includes goods used in a house - e.g. roofing iron, wall boards - but not an entire house. Vehicles, pets, plants and trees, and second hand goods are also covered.

The Act applies to goods sold by hire purchase and goods hired out for use.

If you sell goods that are not normally bought for household use - eg, a hardware shop may sell tools that only professional tradespeople use -sales of these goods will not be covered by the Act even when they are bought by a consumer for household use.

The test is ...

• what do customers usually do with the goods?
• are they normally bought for personal use?
• you do not have to consider what each individual customer is buying the goods for.

From 8 July 2003, the Consumer Guarantees Act applies to

• Electricity
• Gas
• Water
• Computer software

This means that from 8 July 2003 you must meet the guarantees contained in the Consumer Guarantees Act when you supply those goods to consumers.

Services covered by the Act

Any service that is normally bought for personal or household use is covered by the Act, e.g. when a mechanic changes the oil on a family car the work will be covered by the Act. If the same mechanic works on a racing car during a major car race the work will not be covered by the Act. High speed repairs for specialist racing engines are not a service that is normally provided to New Zealand households.

Most of the work done by tradespeople - e.g. painting, plumbing, building work - will be covered by the Act because it is work normally done for household use.

Many other service providers will also be covered - e.g. appliance repairers, insurance companies, banks, dry-cleaners, hairdressers, movie theatres and all the professional services such as doctors, lawyers and dentists.

From 8 July 2003, the Consumer Guarantees Act covers services relating to the supply of electricity, gas, telecommunications, water, and the removal of wastewater.

 This means that from 8 July 2003, when you supply those services to consumers, your services should meet the guarantees under the Act, and consumers can seek a remedy from you where your services fail to meet any of the guarantees.

Goods and services not covered by this Act

Goods not covered

• goods normally acquired for business use, eg commercial goods such as farming machinery
• used in a manufacturing process
• that will be onsold - eg, the retailer is not covered for the contract between the shop and the wholesaler
• goods sold by auction
• goods sold by competitive tender
• supplied by a charity for the benefit of the person to whom they are supplied.

Goods sold to a business are covered by this Act if the goods are the type normally supplied for personal, domestic or household use eg dishwashing liquid and tea towels bought for the office kitchen are covered.

However, you can choose to contract out of the Act when the goods are being sold to a business. You do this by providing a written agreement that says that the work will not be subject to the Consumer Guarantees Act. Schools, hospitals and government departments will be considered to be businesses.

Services not covered

Work normally carried out for a business will not be covered by the Act - e.g. commercial leasing agreement drawn up by lawyer or the installation of a PABX system for business premises.

Work done for a business will be covered by this Act provided it is a type of work that is normally done for personal or household use - eg plastering done for a shop and painting an office block are covered.

Work supplied by a charity for the benefit of the person to whom they are supplied.

However, you can choose to contract out of the Act when the work is being done for a business. You do this by providing a written agreement that says that the work will not be subject to the Consumer Guarantees Act. Schools, hospitals and government departments will be considered to be businesses.