Christmas shopping – know your consumer rights before purchasing.

As a consumer in New Zealand, every time you purchase goods or services from a supplier in trade, the Consumer Guarantees Act 1993 (“the Act”) provides you with certain protections against the supplier of those goods or services (and possibly against the manufacturer).

The Act applies to all goods and services purchased (except those bought for commercial use) and includes second-hand goods, provided they are purchased from a supplier in trade and not a private seller. The protections of the Act apply to all goods purchased in trade, whether it be a high-performance sports car or an inexpensive children’s toy.

The protections in the Act are expressed as “guarantees” and they are provided by suppliers and manufacturers to you at no extra cost. They are not to be confused with “extended warranties”, which do come at an extra cost, provide slightly different benefits and are governed by the Fair Trading Act 1986.

This article will provide a summary of the workings of the guarantees under the Act, and of the concept of extended warranties.

What guarantees are provided by suppliers of goods and services?

Goods sold by suppliers must:

  • be of acceptable quality.
  • be fit for any particular purpose that you communicated to the supplier.
  • comply with a description provided in any sales brochure or advertisement, or provided by a sales representative.
  • comply with any samples or demonstration models provided to you by the supplier.
  • be sold by a supplier entitled to sell the goods, so that the consumer can actually own the goods.
  • be sold at a reasonable price.
  • be delivered at the time agreed between the parties, or otherwise within a reasonable time, when the supplier is responsible for delivering or organising delivery of the goods to the consumer.

Services provided by suppliers must:

  • be performed with reasonable care and skill.
  • be fit for any particular purpose that you communicated to the supplier.
  • be completed by the supplier within a reasonable timeframe.
  • be completed at a reasonable price, if you have not previously agreed with the supplier to a particular price or a pricing formula.

Determining whether or not goods are of “acceptable quality”, or services are performed with “reasonable care and skill”, will require case-by-case analysis, as it will vary depending on the good or service purchased.

If you have purchased particularly expensive goods or services which you think do not meet the standards in any of the guarantees listed above, we would recommend that you seek legal advice regarding your rights.

How do I go about fixing a problem where a supplier has breached a guarantee?

If a supplier has breached any of the above guarantees, you have the right to demand that the supplier fixes the problem. You must notify the supplier at an early stage and provide them with the first opportunity to remedy the problem.

If the problem with the goods or services is minor and is able to be repaired, the supplier can choose to repair or replace the goods or services or to refund the purchase price. If the supplier decides to repair the goods or services it must complete the repair work within a reasonable timeframe.

However, the situation is different if the problem with the goods or services is substantial, irreparable, or is a problem that cannot be repaired within a reasonable timeframe. In that case, you may elect:

  • to reject any goods that fail to comply with the guarantees as to goods.
  • to claim compensation from the supplier for any reduction in value of the goods below the price paid or payable.
  • to approach another supplier to repair the goods or services if the original supplier refuses to repair them or fails to repair them within a reasonable timeframe. 
  • to cancel the service contract, and pay for the existing work in order to approach another supplier to complete the repairs.

Determining whether or not a problem is “substantial, irreparable, or cannot be repaired within a reasonable timeframe” is a complex issue for which you may need to obtain legal advice.

Is it necessary to buy an extended warranty?

Every extended warranty contains different terms and conditions which require specific scrutiny, but most will not offer you any more protection than the guarantees under the Act.

However, on occasion extended warranties will go beyond the scope of the guarantees in the Act – for instance, allowing you to immediately obtain a replacement product without having to go through the repair process outlined above.

There is also a practical benefit to an extended warranty: while you may have to fight for your rights under the Act to be recognised by a supplier, a valid claim under an extended warranty is more likely to be accepted without any further hassle.

Are all defects covered by extended warranties?

Generally – no. If you are considering purchasing an extended warranty, or you have recently purchased an extended warranty, it is critical that you read the terms and conditions. The terms and conditions will likely include a set of exclusions which will list certain defects and other circumstances that will exclude certain claims.

Can I cancel my extended warranty?

Yes, the Fair Trading Act 1986 allows you to cancel an extended warranty by notifying the supplier within five working days of the day you received a copy of the extended warranty agreement (which is likely to be the day you purchased it). A supplier must also notify you of this right to cancel before the agreement is entered into. You are entitled to give notice either in writing or orally, so long as you make it abundantly clear to the supplier that you intend to cancel the extended warranty. At that point, the supplier is obliged to provide you immediately with a full refund of the purchase price of the extended warranty.

Contact us

If you have any queries about consumer law, or are involved in a dispute relating to consumer goods or services, please contact one of our team for advice.


For further information please contact

CJB

Che Bunce

Email: che.bunce@harkness.co.nz

Direct Dial: +64 7 834 2631

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