What is the Consumer Guarantees Act, and what does it mean for my business?

2 December, 2022 | Bret Gower

The Consumer Guarantees Act 1993 is a law that was created specifically to protect consumers. The legislation details the extent of quality guarantees that every business or person in trade (let’s call them a “supplier”) is obliged by default to provide to their customers (with some exceptions, discussed later in this article). In this context “in trade” means anyone who is selling products, regularly buying products to sell, or providing services to consumers.

The Consumer Guarantees Act provides statutory guarantees that entitle consumers to get what they pay for — and if this is not supplied they are entitled to repairs, refunds, or replacements of products that are faulty (within certain reasonable limits).

Obligations to consumers

A supplier who sells products must provide products that are fit for purpose, legal, reasonably priced, match the descriptions given and be of an acceptable quality. Suppliers must ensure that products are able to be repaired for a reasonable period after the products are first acquired, whether this means the supplier having spare parts or organising any repairs through a third party. The exception to this rule is where the supplier notifies the consumer that repair facilities and spare parts are not able to be provided prior to the consumer purchasing the product.

If a repair is not feasible then a replacement or refund must be offered — again, this obligation is only valid for a reasonable period after the goods were first acquired. If a supplier provides services, the services must be what the consumer agreed to and must be fit for the purpose, performed with a reasonable level of skill and care, and completed in a reasonable time frame. Depending how serious any problems are that arise in relation to the services performed and, for example, whether the services are capable of being re-performed, a consumer may be entitled to a repair, refund, or compensation.

Importing, Distributing and Manufacturing products

Similarly, if the supplier imports, distributes, or manufactures products the products must be durable, safe, of reasonable quality, and the supplier must carry spare parts and be able to provide repairs to products for a reasonable period of time after the products are first acquired. The same exception noted above applies, where the supplier notifies the consumer that repairs and spare parts are not available prior to the consumer purchasing the product.

The guarantee applies to both imported products whether secondhand or new, and where relevant the manufacturer’s warranty terms must also be adhered to.

When do guarantees not apply?

Guarantees do not always apply, and it is important to also know when you are not obliged to provide repairs, replacements, refunds, compensation etc. Guarantees do not apply, and you do not have to give a remedy when the consumer was aware of the faulty product before purchasing, they damaged or lost the product after delivery, they changed their mind, there was a problem with the product or service that was outside of your control, the consumer took an unreasonable time to return the product, they took an unreasonable amount of time to cancel the service, or they engaged in a service against the supplier’s advice — or as mentioned previously where they have been notified of a lack of spare parts or repair facilities prior to purchasing the product.

Consumer Guarantees Act Disputes

Problems that arise that cannot be settled between the consumer and the supplier can be taken to the Disputes Tribunal or the District Court to be settled (usually determined by the value of the remedy in dispute).

How can we help?

We regularly act for and advise business owners in relation to whether these statutory guarantees will or will not apply, whether they need to replace products or re-perform services, provide repair facilities and/or spare parts, and how to protect their businesses against unreasonable or invalid Consumer Guarantees Act claims (including by reviewing their terms and conditions).

We also act for and advise consumers in relation to their rights under the Consumer Guarantees Act, the extent of the guarantees that apply and what remedies might be available to them.

If you need advice on how to meet your obligations under the Consumer Guarantees Act, contact Commercial Law expert, Bret Gower to set up an appointment by phone on 09 837 6893 or email bret.gower@smithpartners.co.nz.