Did you know that you cannot contract out of the Consumer Guarantees Act?
In New Zealand, the Consumer Guarantees Act 1993 dictates the rights of consumers and the responsibilities of those who serve them – that’s you, the entrepreneur.
In a nutshell, the act covers everything that might ordinarily be purchased for personal, domestic or household use, and sets out basic standards for quality, representation and price.
If your business is selling these goods, you cannot exempt yourself from your obligations under the Act, even if you put it in a contract.
For instance, if a retailer puts up a sign saying ‘We do not provide refunds or exchanges’ it is meaningless. Customers still have full rights under the Act and the Commerce Commission can prosecute traders who attempt to contract out of the Act, under the Fair Trading Act.
However, sellers can contract out of the Act when such 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, or a vacuum cleaner (for a cleaning business) for example – the Act will allow a seller to contract out of the Act. This contracting out has to be in writing at the time and point of sale and it has to be fair and reasonable for the seller to contract out. In general, this means that the contracting out has to be subject to negotiation, and simply including it on the fine print on the sales docket is not sufficient.