You have just moved into your newly built home, but unfortunately on the first rainy day you are surprised by a leak in the roof. What are your rights as a consumer?

The New Zealand law provides protection for consumers of goods and services, under the Consumer Guarantees Act (often called the CGA). The purpose of the CGA is to protect the interests of consumers, allow businesses to compete against one another effectively, and promote an environment which allows businesses and consumers to participate confidently.

In order to achieve this, the Act provides consumers with certain guarantees when purchasing goods or services from a supplier and certain rights if those goods or services do not meet the guaranteed standard.

For a person to rely on the guarantees contained in the Act, he or she must be a consumer who acquires goods or services from a supplier.  A consumer is someone who acquires good or services for personal, domestic or household use or consumption (not for commercial use or consumption). A supplier is a business or person in trade which, as part of its usual business, sells goods or provides services.

A supplier cannot avoid the CGA by making a consumer sign a contract.  However, if the purchaser is a business (that is buying the goods or services for commercial use or consumption), the supplier may contract out of the Act.

If the CGA does not apply, a consumer may still have rights under other New Zealand law including the Fair Trading Act 1986, the Contract and Commercial Law Act 2017, or the contract with the supplier directly.

The guarantees under the CGA

THE CGA creates automatic guarantees regardless of whether the supplier agrees. The Act guarantees that the services will be:

  • Supplied with reasonable skill and care;
  • Fit for a particular purpose;
  • Completed within a reasonable timeframe (if there is no agreement about timeframe); and
  • Carried out at a reasonable price (if there is no agreement about the price).

It is a breach of the Act for a supplier to provide services that do not meet the guaranteed standards. It is also a breach of New Zealand law for businesses to attempt to contract out of those guarantees. For example, a business which sells goods cannot have a sign that reads ‘no refunds’ because this attempts to restrict consumers’ rights and misleads consumers about their rights.

The consumer’s options

If a supplier provides a service which is defective or the end product is defective, it is a breach of the guarantees contained in the Act.

It is important to bring the defect to the supplier’s attention or discuss the breach or defect with the supplier first. Most suppliers will be eager to fix the defect because it was unintentional. It is in the best interests for businesses to keep their customers happy, this usually means providing quality services and doing its best to fix any problems which arise.

A consumer has options when things go wrong, but they are dependent on the seriousness of the defect.

If the defect is one which can be fixed by the supplier, then the consumer must give the supplier a reasonable amount of time to fix it. The supplier must do so at no extra cost to the consumer.

If a supplier has been required to remedy a defect but refuses, neglects, or fails to do so within a reasonable time, the consumer may choose to have the defect fixed elsewhere at the expense of the supplier (so long as that expense is reasonable).

If the defect is substantial and not fixable, the consumer can cancel the contract, or obtain compensation from the supplier for the reduction in the value of the service.  Depending on the value of a claim, the Disputes Tribunal, District or High Courts can be of assistance.

The consumer may also be entitled to compensation for the consequential losses which are reasonably foreseeable from the supplier’s failure to provide services which meet the guarantees. This is over and above the compensation for the reduction in value.  For example, if you have suffered water damage to your household goods as a result of the roof leak, you may claim compensation.

In one previous case, a consumer did not allow the supplier to fix the defect and the court held that the consumer was not entitled to cancel the contract. The supplier must be given a reasonable opportunity to fix the defect and must have failed, refused, or unacceptably delayed doing so.