Legal rights

Consumer Guarantees Act

Updated 01 Mar 2009
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Introduction

The Consumer Guarantees Act is a cornerstone piece of legislation. Its role is to protect consumers.

Under the Act, your consumer rights are expressed as a series of "guarantees" that a seller automatically makes to you when you buy any goods or services ordinarily purchased for personal use.

In this guide, we explain what those rights are, and what to do if you think your rights have been breached.

What it covers

The Act covers the goods (new and second-hand) and services ordinarily purchased for personal, domestic or household use.

Those "goods" include pretty much everything in and around the home - from appliances to vehicles, furniture to food. Gas, electricity, water and computer software are also covered.

"Services" include things done by tradespeople like plumbers and painters, professionals like dentists and lawyers, after-sales and repair services from shops, and all the services you get from insurers, petrol stations, travel agents ... in general, if you pay for it, it's covered.

The Act applies to gifts. If you are given something, you have the same rights as if you bought it yourself, and can seek redress directly for any problem. It also applies to goods that you hire.

What it doesn't cover

The Act only applies if you buy goods or services from sellers "in trade". This means it does not cover private sales or goods sold by auction or tender. However, it does cover goods sold in second-hand shops and sales, and goods sold over the internet by New Zealand businesses.

The Act does not cover the purchase of houses, although it does cover house repairs. Nor does it cover goods or services usually bought for commercial use, such as medical equipment or the installation of industrial machinery.

No contracting out

Sellers cannot exempt themselves from their obligations under the Act, even if they put it in a contract. So, if a retailer puts up a sign saying "No refunds or exchanges" it is meaningless. You still have full rights under the Act.

This also means guarantees and warranties cannot state "No consequential losses are covered," because attempts to contract out of the Act may mislead consumers about their rights.

The Commerce Commission may use the Fair Trading Act to prosecute traders who attempt to contract out of the Act.

However, sellers can contract out of the Act when goods are used for business. When a product is ordinarily purchased for domestic use but is also used for business purposes - like a mobile phone, for example - the Act will allow a seller to contract out of the Act. Any contracting out must be done in writing at the point of sale.

The guarantees

Under the Act, your consumer rights are expressed as a series of "guarantees" that a seller automatically makes to you when you buy any good or service ordinarily purchased for personal use. We explain them below.

Goods

Retailers and other such suppliers guarantee their goods will:

  • Be of acceptable quality (see definition below).
  • Be fit for a particular purpose that you asked about.
  • Match the description given in advertisements or sales brochures, or by the sales assistant.
  • Match the sample or demonstration model.
  • Be owned by the consumer, once purchased.
  • Be a reasonable price, if no price or pricing formula has been previously agreed.

Manufacturers (the definition includes importers) in New Zealand guarantee that:

  • Spare parts and repair facilities will be available for a reasonable time.
  • They will honour any written warranty that comes with their products.
  • Goods are of acceptable quality.
  • Goods match their description.

Services

Service providers guarantee their services will be:

  • Performed with reasonable care and skill.
  • Fit for the particular purpose they were supplied for.
  • Completed within a reasonable time.
  • A reasonable price, if no price or pricing formula has been previously agreed.

Acceptable quality

This means goods:

  • Do what they are made to do.
  • Are acceptable in appearance and finish.
  • Are free from minor defects.
  • Are safe and durable.

The Act's terms "reasonable" and "acceptable" are deliberately open-ended. It depends on what a reasonable consumer would think was acceptable based on the nature of the goods, the price, and any statements that have been made about the goods. A concert violin is required to meet a higher standard than a child's cheap instrument. Ultimately a tribunal referee or a judge may have to decide what is reasonable or acceptable in the circumstances.

If a defect was pointed out to you before you bought the good, then it doesn't count towards making it unacceptable.

Putting it right

If something goes wrong, you have the right to insist that the seller or service provider fixes things.

Generally speaking, this means the retailer who sold you the goods or services must sort out the problem. If the stitching comes apart on your fairly new shoes, you don't have to track down the manufacturer or importer, you simply take them back to the shop.

If the problem is minor, and can be fixed, the retailer can choose to either repair, replace or refund.

A service provider must fix the problem within a reasonable time.

If the problem cannot be fixed, or cannot be put right within a reasonable time, or is substantial, you can:

  • Reject the product and choose a replacement of the same type or similar value or a full refund of your purchase price; or
  • Claim compensation for any drop in the value of the product or service.
  • Cancel the service contract, pay for any satisfactory work already done, and get someone else to finish the repairs; or
  • Have it repaired elsewhere and recover the costs from the retailer, if they refuse to fix a faulty product, or fail to do so in a reasonable time.

When you have the right to reject the goods, sellers cannot just offer a credit note. If you want a refund, you are entitled to it - by cash, cheque or credit card charge reversal.

Substantial means:

  • A reasonable consumer wouldn't have bought the goods if they'd known about the fault.
  • The goods are significantly different from their description, sample or demonstration model.
  • The goods are substantially unfit for purpose.
  • The goods are unsafe.

Consequential loss

In addition to these rights, consumers may also claim for any reasonably foreseeable extra loss that results from the initial problem. If your new washing machine won't work properly you can claim for laundry costs or the cost of hiring a replacement machine while the first one is being fixed.

If you have to post or courier goods back to be repaired, you don't have to pay for those costs.

The compensation for consequential loss must put you back in the position you would have been in if the goods or service hadn't been faulty.

Guarantees on replacement models

When a faulty product is replaced, any manufacturer's warranty on the product usually runs only from the original purchase date.

So, if a six month old washing machine is replaced because it is faulty, and there was originally a 12 month manufacturer's warranty on it, then this warranty will have six months to run on the new machine.

However, the Consumer Guarantees Act applies to the replacement, so you will still have all the rights you're entitled to when buying a brand new machine.

Manufacturers and importers

If there is a problem you can complain to the manufacturer, if it has an office in New Zealand, or where the goods are imported, to the importer or distributor.

Where there has been a breach of the Act, manufacturers and importers are obliged to:

  • Pay compensation, and/or pay for any loss in value; and
  • Honour any express warranty they gave which gives the consumer greater protection than in the Act.

Complaining to the manufacturer is useful when, for example, the retailer has gone out of business or is proving hopeless to deal with. But in most cases it should be easier to insist on your rights directly with the retailer.

If a product has parts made by different manufacturers, you can claim against any or all of them. In practice however, your best bet may be to contact the one whose name is on the product.

Taking it further

You may be in the right, but what do you do if the trader refuses to accept what the law says?

If, for whatever reason, you can't get satisfaction on a complaint, you have several options:

For more help

Your questions answered

Below we've listed a range of commonly-asked questions about consumer rights and the Act, with our answers.

Goods

I bought a new lawnmower, but I'm having trouble starting it. What are my options?

The Act states that goods must be of "acceptable quality." Acceptable quality in this situation clearly means a new, reliable machine. You can ask the shop to repair the mower so it starts as it should.

If they are unable to do so within a reasonable time, or refuse to do so, you can ask for a replacement new mower without the fault, or get a refund. A refund under the Act means exactly that - a full cash refund - not a credit note, and not a refund less deductions for anything related to the failure of the goods.

My new mower came with a free TV, which blew up after a week. Is it covered by the Act?

Yes. Free gifts are covered, as are household goods that are hired, rented, leased or bought on hire purchase.

When I bought a pair of jeans on sale there was a sign saying, "No refunds on sale items". Is this legal?

No. The supplier is illegally attempting to contract out of the Act. If you find a defect in the jeans after you buy them, you have the right to return them and ask that they be repaired. If the supplier refuses or cannot repair them in a reasonable time, you can ask for a replacement pair or a refund.

The same applies to "seconds" (goods sold as damaged). However, you cannot complain about the defect that made the product a "second" in the first place, if you were told about that defect prior to buying it.

What does "contract out" mean?

To "contract out" is where a supplier says the Act does not apply to the goods or services they are selling.

Suppliers are not allowed to contract out when supplying goods or services to a consumer. They are allowed to when supplying customers who are in trade.

Contracting out must be done in writing or by prominently displaying a sign in the store stating trade purchases are not covered by the Act.

I bought a scooter to commute to work, but when I took a short-cut down an off-road track the wheel buckled. Can I claim against the supplier?

No. Scooters are designed for use on asphalt and concrete, not for off-road conditions. You are covered by the Act only if the goods are not fit for their ordinary purpose, or any proposed purpose you made known to the supplier prior to purchase, or if misrepresentations are made by the seller prior to the sale.

I recently ordered a plain green woollen jersey from a mail-order catalogue. When it arrived it had a large owl embroidered on the front. what can I do?

Return it and get a refund or replacement jersey, minus the owl. Goods must match the description or photograph shown in the catalogue. The company must also cover the cost of the return postage.

On the spur of the moment I bought a beautiful picture, but my wife hates it. Can I get a refund?

No. You can return a product only if it fails to live up to the guarantees in the Act. If you simply change your mind, then all you can do is tell the supplier and politely ask for your money back.

They are under no obligation to refund you, but some will, to promote good relations with customers. The money-back guarantee (with proof of purchase) offered by The Warehouse is well known, but there are many other stores that do the same. This exceeds the requirements of the Act.

I bought a washing machine with a three-year warranty. One week after the warranty expired, the gearbox seized up. The shop says it's too bad. Is that right?

No. Suppliers' warranties are in addition to those in the Act. If you have used your washing machine in a normal fashion, it should not have a major breakdown after just three years, so you may still have redress under the CGA. The dealer should repair the machine free of charge.

Many shops regard this as unfair - after all, you've had three years' good use out of the washer. But the fact is, you paid for a new machine and didn't expect after just three years to face major costs or end up with an inferior one.

If they refuse to accept this, you could have the machine repaired elsewhere and attempt to recover the cost from the dealer.

I was given a new microwave as a birthday present two years ago. I unpacked it only recently, to find it doesn't work. Can I take it back?

There are two issues here. First, gifts are covered by the Act just as if you have bought them yourself (you may need proof of purchase, of course).

Second, a claim under the Act must be made within a "reasonable time", which is defined as the period from when you obtained the goods to the point in time when it would be reasonable to expect the defect to become apparent.

Factors considered in deciding this period include the type of goods, their normal use, how long they usually last and how much they have been used.

You could probably expect a microwave to last 10 years under normal conditions. In this example, the microwave has never been used and would be covered by the Act - unless you have contributed to the problem yourself. For example, if the microwave doesn't work because it has been damaged by damp, then the supplier would be able to argue that you are no longer covered by the Act.

I bought a microwave on Tuesday knowing that I was hosting a dinner party on Saturday. The microwave is faulty and won't be repaired in time. Can I demand that the store gives me a loan one until mine is repaired?


Unfortunately there is nothing in the CGA to help you in this situation. The law doesn't give you a right to a continuous possession of a working appliance just because you have bought one. We suggest that you ask the store and appeal to their sense of customer service.

I told the shop assistant I wanted a heater for the bathroom, but he sold me one that short-circuited, started a fire and damaged the wall. Who pays?

The shop. In addition to replacing the heater with one suitable for bathroom use, they should reimburse you for the fire damage, because it was "reasonably foreseeable" that the fire might happen.

I missed a flight to Sydney that morning, because of the bathroom fire - and that meant I lost a big business opportunity. Can I claim for this too?

Unlikely. It was not reasonably foreseeable that the fire would cause you to miss your meeting.

I had a skylight installed in my house, but it leaked badly and my carpet was ruined. Now the firm that supplied and installed it has gone under. What can I do?

Assuming the installation was not the cause of the problem, you have rights of redress against the manufacturer. You can claim the cost of repair or the loss of value.

You can also claim for the damage to the carpet as a "consequential loss". If the installation was the cause of the problem see our advice about what to do about a Business collapse.

I bought an ordinary vacuum cleaner to clean the carpet of my business and it broke down. Am I covered by the Act?

Possibly. The ordinary purpose of the appliance is domestic, so it should be covered. However, traders are allowed to "contract out" of the Act when they are selling goods or services for commercial use. If this happened, the cleaner would not be covered.

I bought a second-hand fridge from a dealer, but now I find the last owner owes money on it. Will it be repossessed?

The fridge is yours to keep. The problem with the debt is the dealer's to resolve. If you feel uncomfortable about this option, you could return the fridge to the dealer and demand a full cash refund.

I bought a second-hand boat from a dealer a month ago and I've just discovered a spot of rot in the plywood. Should the dealer have told me about this?

Even though your boat is second-hand, it must be free from minor defects - unless the dealer told you about them before you bought the boat. If not, these should be pointed out to you by the dealer, preferably in writing.

If the dealer didn't do this, you should take it back. The dealer can then decide whether to repair the defect, or give you an identical replacement minus the rot, or take the boat back and give you a refund.

I have now discovered the "spot of rot" extends right throughout the hull. Does this change anything?

Yes. The Act says that in the case of a "failure of substantial character", you (and not the dealer) get to choose what to do. You can demand that the dealer replaces the boat with another of similar age and condition, or refunds your money.

This would apply if: you wouldn't have bought the boat if you'd known about the rot; if the boat is substantially unfit for the purpose for which it was supplied because of the rot; or if the boat is not of acceptable quality because it is unsafe.

I paid $50 for a beat-up old stereo from a second-hand shop. The shopkeeper told me it goes, but she didn't know how well. The sound quality is poor. can I take it back?

You can ask - but the shopkeeper is under no obligation to refund you. She could argue that, bearing in mind what she told you at the time of sale, plus the age, condition and price paid, it was of "acceptable quality" under the Act.

I bought a guitar from a music shop, but the tuning heads keep slipping. The retailer now says he sold it to me on behalf of someone else, so the sale wasn't covered by the Act. Is he correct?

No. The Act clearly states that a supplier includes a person who is acting "as an agent for another".

I bought my car at auction, and it broke down soon after. Am I covered by the Act?

No. The Act doesn't cover goods sold at auction (or by tender). If you buy at auction you should inspect the goods before you start bidding. When the hammer falls it's yours.

I bought my car over the internet, and it broke down soon after. Am I covered by the Act?

If you bid on it and won the auction, you're not covered. If you bought it from a private person you're not covered. However, if you bought it at a fixed price, like "Buy Now' from a person in trade, then the Act does cover you.

I bought a TV at a garage sale. The guy said it worked fine, but it doesn't work at all. Can I make him take it back?

Sorry, the Act does not cover private sales. However, if you can prove you were misled, you can demand your money back under common law. Take the guy to a Disputes Tribunal if he won't play ball.

Services

My home was burgled, but the police did very little. Later, I found the stereo hidden on the section - ruined by the rain. Do I have a claim against the police?

No. The supplier of the service must be "in trade" in order for you to claim against them, the police are not.

I asked my hairdresser for highlights, but I came out completely blond. What can I do?

Ask them to fix the problem. If they refuse or are unable to, they must give you a full cash refund.

I hired a guy to repaint my house. He didn't remove the old flaking paint properly and now, just six months later, the new paint is flaking off. What can I do?

You can insist that he repaints your house at no additional cost to you, and does a proper job. You must give him the opportunity to remedy his bad painting. If he refuses, or fails to do so in a reasonable time, you can cancel the contract and obtain a refund.

Alternatively, you could have the house repainted by someone else, and recover the costs from the original painter.

Actually, the painter warned me the paint I had supplied was for interior use only and would peel, but I told him to continue anyway. Does that affect my rights?

Yes. If you were warned the paint was unsuitable, you have no comeback against him.

I hired a lawyer to write to my neighbour over a boundary dispute. But the lawyer billed me for $750, which seems extortionate. Do I have to pay?

If you have not previously agreed to a price or pricing formula, you are required to pay only a "reasonable price". This applies to goods as well as services. A reasonable price is the market price - in this case, roughly what other lawyers charge for writing such a letter, which is probably around $200.

My plumber has been working on my waste-disposal unit on and off for some six months now. Do I have to wait till he's finished?

No. If you and your plumber did not agree on a date by which the work must be completed, then it has to be finished within a "reasonable time". A reasonable time is the amount of time it would take a competent person in the same trade to complete the job.

You can ask your plumber to complete the job by a specified date. If he doesn't, pay him for the work he has done so far, then cancel your contract with him and have another plumber finish it.

My plumber says he's done all he can and doesn't want to know about my broken waste-disposal unit any more. He says it's not his problem. Whose problem is it?

His. He must complete the job using reasonable skill and care. If he gives up, you can cancel your contract with him, refuse to pay his bill (except for work he has completed to a reasonable standard), and arrange for another plumber to complete the job.