The Fair Trading Act and the Consumer Guarantees Act are designed to protect consumers in New Zealand. Many New Zealanders are aware of the existence of these Acts but are not sure which Act applies in which circumstances. This article will outline each Act to clarify the main differences between them.

The Fair Trading Act prohibits misleading or deceptive conduct, false representations and unfair practices. Accordingly, a trader must not engage in conduct that is likely to or does mislead or deceive consumers.  Examples of false or misleading representations include claims that goods were new when they are not and goods were made in New Zealand and where not. Unfair practices include bait advertising where a product is advertised at a low price to encourage buyers to come to a shop or go to a website but a similar, more expensive item is offered instead.  Essentially, this Act relates primarily to trading conduct before a sale takes place.

Whereas, The Consumer Guarantees Act is a series of “guarantees” relating to goods and services, after sale.

Goods must:

1. Be fit for purpose- either specified by the supplier or enquired about by the consumer;

2. Be of Acceptable quality- in appearance and finish, free from minor defects, do what they were made to do, safe and durable;

3. Match the description or sample;

4. Be a reasonable price; and

5. Repair facilities and spare parts must be available for a reasonable time.

Services must be:

1. Performed with reasonable care and skill;

2. Fit for the particular purpose they were supplied for;

3. Completed in a reasonable time; and

4. A reasonable price, if no price was previously agreed.

These guarantees protect consumer rights and allow the consumer a right of redress if goods and services would not be acceptable to a reasonable consumer. Usually the remedies involve repairing or replacing the item or in some circumstance a refund of the purchase price.

In conclusion, the Fair Trading Act applies to statements and claims made about goods and services by any trading entity and is designed to give consumers protection against unfair trade practices. Whereas the Consumer Guarantees Act creates a right of redress against suppliers and manufacturers if goods or services fail to comply with the guarantees set out in the Act.

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