Selling goods to consumers

N.B. The consumer guarantees apply to goods and services purchased from 1 January 2011. Information on your obligations for goods and services purchased prior to this date can be found on the warranty and refund pages.

Consumer guarantees on goods

Acceptable quality

Goods are of acceptable quality if a reasonable consumer would consider they are:

  • safe, durable and free from defects
  • acceptable in appearance and finish
  • do all the things that the goods are ordinarily used for

Taking into account the nature and price of the goods, and any statements made about them on packaging or labelling.

Example
A consumer purchases a television which won’t turn on six months after purchase. The television is not of acceptable quality as a reasonable consumer would expect a television to last much longer than six months.
If the television broke down after 10 years it is much more likely that the television is of acceptable quality and the consumer would not be entitled to a remedy under the consumer guarantees.

Fit for specified purpose

Goods must be fit for any purpose that you told the consumer they would be fit for prior to them purchasing the goods. Goods must also be fit for any purpose that the consumer made known to you before purchasing the goods.

Consumers can make their purpose known either expressly—by saying what they want to use the good for—or the purpose can be implied from the circumstances. The purpose will be implied from the circumstances if it is so obvious that the consumer does not need to say what they will use the goods for—a fridge is used to store food and drink, fruit and vegetables to be consumed, a dress to be worn.

Example
A consumer goes to a furniture store looking to purchase a bookcase capable of holding heavy appliances. The consumer explains to the sales assistant that each shelf needs to be able to hold at least 30kg. The sales assistant recommends a particular model.
Each shelf can only hold 10 kg and breaks a few months after purchase. This bookshelf is not fit for the purpose specified by the consumer.

Description

Any description of a good—through verbal statements made to the consumer or representations made on packaging or labels—must be accurate.

Example
A consumer purchases a new set of blue towels online based on a colour chart available on the website. When the towels are delivered they are red. The towels do not match the description given by the seller.

Match sample or demonstration model

Just like all descriptions of goods must be accurate, all goods must match any sample or demonstration shown prior to the time of sale.

Example
A consumer test drives a new car and confirms that the model they have purchased is the same as the demonstration model. When the new car is delivered it has a lesser capacity engine than the demonstration model. The car does not match the demonstration model shown to the consumer.

Express warranties

Sellers must also abide by any express warranty that they make about goods.

Example
A consumer purchases an iron and is told by the sales assistant that it will last for at least two years. If the iron breaks within this time, the seller must honour this warranty in addition to the other consumer guarantees.

Clear title, free from securities and charges, uninterrupted possession

Sellers guarantee that the goods come with a clear title, unless you told the consumer otherwise before the sale, and do not carry any hidden securities or charges. Sellers also guarantee that no-one has a legal right to take the goods away or prevent the consumer from using the goods.

What if the guarantees aren’t met?

If a seller does not meet any of the guarantees listed above, the consumer is entitled to a remedy—either a repair, replacement, refund or compensation for any drop in value from the original price paid—depending on the circumstances.

Generally, sellers will be able to choose whether they remedy the problem with a replacement, repair or refund. However, if the problem is major or cannot or is not fixed within a reasonable time, the consumer may choose to:

  • reject the goods and obtain a full refund; or
  • keep the goods and seek compensation for the difference between the amount paid for the goods and the value of the goods with the problem.

Major failure

A major failure to comply with a consumer guarantee is one where a reasonable consumer would not have purchased the goods had they known of the full extent of the problem, the goods differ significantly from any description, sample or demonstration model or the goods are unsafe.

Example
A consumer purchases a ski jacket and pants for the upcoming ski season which are described as ‘100% waterproof’. After a few runs the consumer realises that the jacket and pants are not waterproof and cannot wear them while skiing.
The ski jacket and pants are not of acceptable quality, fit for their purpose and don’t match the description given to them.
As the consumer would not have purchased the jacket and pants had they known they weren’t waterproof, this is a major failure to comply and the consumer is entitled to reject the goods and obtain a full refund.

The consumer’s rights would be different if the ski jacket and pants were waterproof but the jacket has some minor loose stitching. In this situation the jacket is fit for its purpose and matches the description but it may not be of acceptable quality.
This is a minor failure to comply and the seller is entitled to decide whether they want to provide a refund, replace the jacket or repair it.

When a supplier deals with a problem that is the manufacturer’s responsibility

It is important to remember that if you don’t comply with a consumer guarantee, your customers have a right to take action against you. This is the case even if the problem with the good was caused by the manufacturer.

The consumer guarantees do, however, provide sellers with rights against manufacturers or importers of goods if the seller provides a remedy to a consumer for a problem which is caused by the manufacturer or importer.

Example
A consumer purchases an air conditioner which has a manufacturing fault causing it to leak and damage carpet and paint. The seller replaces the air conditioner, pays for it to be installed and provides compensation to the consumer for the damage to their property. As this is a manufacturing fault, the seller is entitled to take action against the manufacturer to recover the costs of the air conditioner, the installation and the compensation for damage to the paint and carpet.

If the goods are not of a kind ordinarily acquired for domestic, household or personal use, the manufacturer may be entitled to limit their liability to the seller to the cost of replacing the goods, having the goods repaired or obtaining equivalent goods (whichever is lowest).