3.2 Consumer Guarantees Act 1993

The Consumer Guarantees Act creates statutory guarantees that are automatically conferred each time a consumer purchases a good or a service from a supplier in trade. It provides for rights of redress against suppliers and manufacturers for any failure of those goods or services to comply with the guarantees which apply. Essentially, it covers consumer protection in the post-sale period (after a purchase is made). The right of redress against the supplier or manufacturer applies not only to the original consumer, but anyone (as long as that person meets the definition of consumer) who acquires the goods from or through the consumer.

Coverage of the Act

The Consumer Guarantees Act applies generally and sets out guarantees that goods and services must meet when sold by someone in trade - that is, a retailer or a person providing a service – to a consumer. A consumer is anyone who acquires goods or services ordinarily acquired for personal, domestic or household use, and not for resupply or use in production or manufacture by a business. The goods and services the Act covers include:

• goods of a type that people ordinarily buy for personal or household use, such as clothes, washing machines, cars
• services of a type that people ordinarily have carried out for a personal or household purpose, such as car repairs, haircuts, drycleaning, painting or work done by a tradesperson
• new and used goods.

From 8 July 2003, the Act was amended to clarify that it applies to electricity, gas, water and computer software after a High Court case⁵ held that utilities were neither goods nor services under the Act.

The Act does not cover:

• goods supplied by auction or by competitive tender
• goods bought from a private seller
• goods of a type that people ordinarily buy for personal or household use, but which are bought by a business which has contracted out of the Act
• commercial goods (goods of a type that are ordinarily bought for use in offices, factories or farms which are likely covered by the Sale of Goods Act 1908)
• commercial services - services of a kind that are ordinarily supplied to offices, factories or farms, for example, top-dressing, commercial property leases, commercial building maintenance, livestock transportation.

Guarantees

The Act sets out guarantees for goods and services. Goods and services must meet these guarantees.
The statutory guarantees include guarantees as to:

• title and the right to sell goods free from any undisclosed security interest (section 5)
• acceptable quality (defined as fit for purpose, acceptable in appearance and finish, free from minor defects, safe and durable, to the standard a reasonable consumer would regard as acceptable having regard to the nature and price of the goods, any statements made on labels or packaging, any representation made by a supplier or manufacturer and any other relevant circumstances) (sections 6 and 7)
• fitness for particular purposes made known by the consumer or represented by the supplier (section 8)
• compliance with description (section 9)
• conformance with samples (section 10)
• reasonable price (where the price is not specified by the contract) (section 11)
• reasonable facilities for repairs and spare parts reasonably available (section 12)

Remedies

Repair, replace or refund

If goods do not comply with the guarantees provided under the Act, the consumer can require the supplier to remedy the failure. If the failure can be repaired, the supplier can repair the goods or replace the goods or refund money to the consumer. The consumer may require the supplier to remedy the failure within a reasonable time (section 18).

If the supplier refuses, neglects to do this or does not do so in a reasonable time, the consumer can have the failure remedied elsewhere and claim the cost from the supplier or reject the goods.

If the failure cannot be repaired or is of a substantial character, the consumer can reject the goods and the supplier must replace the goods with an identical or superior type, or refund the purchase price. The consumer may also keep the goods and claim compensation for the drop in value. The consumer can choose which of these remedies is most acceptable.

In the case of a failure that is of a substantial character and can be remedied, the consumer has two choices:

• to require the failure to be remedied; or
• to reject the goods.

Rejection of goods

Where consumers reject the goods, they have to notify the supplier that they reject the goods and give the reasons for the rejection. The consumer is also obliged to return the goods to the supplier unless the cost of doing so is substantial.
Consumers cannot reject the goods after they have been satisfactorily repaired.
A consumer loses the right to reject goods if the right is not exercised within a reasonable period of time.

Right of redress against the manufacturer

Part III sets out the rights of redress for a consumer against a manufacturer. These rights are not as extensive as those against the supplier and are mainly restricted to claiming damages for any reduction in the value of the goods below the purchase price. The consumer has rights when the goods fail to comply with the statutory guarantees such as acceptable quality, access to repairs and spare parts, description of the goods, and express guarantee of the manufacturer.

Consequential loss

In all cases where consumers have a right of redress under the Act, they also have the right to obtain damages for any loss or damage resulting from the failure which was reasonably foreseeable as being likely to result from the failure. Damages can be claimed whether or not the failure was remedied, and whether or not the failure was of a substantial character.

Enforcement

The Act is self enforcing. This means the onus is on consumers if they wish to seek redress. 
 

Footnotes

5. Electricity Supply Association of New Zealand Inc v Commerce Commission (1998) 6 NZBLC 102,555.