The Consumer Guarantees Act 1993
By Sarah Sheppard
The Consumer Guarantees Act 1993 (the "CGA") establishes a set of ‘guarantees' which apply to goods and services.
These guarantees apply to goods or services ‘ordinarily acquired for personal, domestic or household use and consumption'. This definition covers goods or services provided to consumers (as opposed to businesses), but may also extend to goods or services supplied to businesses if they are ‘ordinarily' acquired for personal, domestic or household use. For example, a vacuum cleaner bought by a business to vacuum its office.
If you supply these kinds of goods or services, then you will need to be aware of, and compliant with, your obligations under the CGA.
So what are your obligations?
In relation to goods, the CGA provides that goods must:
- be of an acceptable quality
- be fit for their purpose
- match any description or sample you have provided
- be of a reasonable price
You must also have the right to sell the goods you are selling and be able to give clear title (free of any security interests) to the goods, to the consumer.
In relation to services, the CGA provides that services will be:
- performed with reasonable care and skill
- completed within a reasonable time frame
- fit for their purpose
- of a reasonable price
The CGA sets out remedies for the consumer if you fail to comply with these guarantees. The appropriate remedy depends upon the seriousness of the failure but can include repairing the goods or services, providing a refund, or paying damages for consequential losses (for example, paying for new carpet if a faulty washing machine floods and ruins the carpet).
Complying with the CGA
To ensure compliance with the CGA, you should check your labelling, packaging and advertising of goods and services. You should also check the terms of trade with your own suppliers, to ensure you have a right of recourse against them, should their goods be defective.
Your terms of trade may contain a reservation of title, which allows you to retain ownership in goods, until such time as payment is received in full for them. If the goods are covered by the CGA, then these types of clauses can only be enforced if certain steps are followed. For example, having the consumer sign your terms of trade.
Can I contract out of my obligations under the CGA?
No, you cannot - and it is an offence to attempt to do so. It is however possible to contract out in respect of goods or services supplied to businesses. Thought should accordingly be given to whether it would be worthwhile developing separate terms of trade for dealing with private consumers and other businesses.
If you would like to discuss the implications of the Consumer Guarantees Act 1993 contact Fitzherbert Rowe now.
