Suppliers' Obligations are Changing (Part Two)

Olivia Porter
16 June 2014

posted in Legislation | Consumer Law | Fair Trading Act | Consumer Guarantees Act



Following on from Suppliers' Obligations are Changing (Part One), the following amendments also come into effect tomorrow and will be of interest to suppliers and consumers alike.

Collateral Credit Arrangements
Historically consumers who had obtained finance through a third party and then rejected the goods were committed to repaying any additional costs, including early repayment fees. The CGA now provides for a consumer’s rights or obligations under a collateral credit agreement to vest in the supplier if the consumer exercises its right to reject the goods under the CGA, provided the credit agreement was arranged by the supplier in the first place (effective 18 December 2013).

Uninvited Direct Sales
This includes where, for instance, a supplier approaches a consumer at the consumer’s home, workplace or over the phone offering to sell goods or services. As of Tuesday, 17 June 2014, the consumer will have a five working day cooling off period from receipt of the sale agreement. The consumer must be given oral notice of their cancellation right before entering into the agreement and the consumer must be provided with a written copy of the sale agreement either at the time of entering into the agreement, or within five working days. The goods or services must cost $100 or more (or be for a price that is uncertain at the time of supply) for the new rules to apply.

Unsolicited Goods and Services
This includes where, for instance, a supplier leaves toys or books at a workplace with their contact details. A recipient is not obliged to pay for unsolicited goods or services. As of tomorrow, the recipient will need to make the goods available for collection within ten working days after delivery, but if the goods are not collected within that timeframe, the recipient takes ownership. Gas and electricity are excluded. It will be an offence for the supplier, or any other person, to assert, or appear to assert, a right to payment.

Product Safety – Product Recall
Effective 18 December 2013, voluntary product recalls relating to product safety must now be notified to the appropriate body, whether the Ministry for Business, Innovation and Employment or the Ministry for Primary Industries.

Previously a supplier could be compelled to recall goods (compulsory product recall) which did not comply with a product safety standard, or which might cause injury to any person. In addition, a supplier can now recall goods if it appears to the Ministry of Consumer Affairs that a reasonably foreseeable use or misuse (that is, an unintended use of the goods) might cause injury to any person.

Layby Sales
A layby sale is where a consumer pays by instalments for goods that cost less than $15,000 and has no obligation to pay interest or fees (other than a cancellation fee). The new rules under the FTA require that the seller provide a written copy of the layby agreement to the consumer, which must specify certain information, including a summary of the consumer’s right to cancel and information about any cancellation fees.

The FTA now requires auction terms to be made available for consumers to view before and during an auction. There are also new rules around “vendor bids”. An auctioneer can only accept a vendor bid where the auction terms specify that vendor bids are permitted, a reserve price is set, the vendor bid is below the reserve price, and the auctioneer clearly identifies each vendor bid. These rules only apply to auctions conducted by auctioneers, where a fee or commission is charged. They do not apply to online “auctions” on sites such as Trade Me as the goods/services are not sold through an auctioneer.

In addition, the CGA now applies to goods sold at auction.

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