Annex 2: Description Of Legislation Administered By The Ministry Of Consumer Affairs

Fair Trading Act 1986 The Fair Trading Act aims to maximise consumer protection in the "pre-sale period (before a purchase is made). It attempts to ensure that all trading activities are based on accurate and honest information. The Act has five major parts. Part I prohibits misleading and deceptive conduct in trade, false representations, and certain unfair trading practices. Part II provides for the making of consumer information standards, so that pertinent information can be supplied to consumers to help them in their purchasing decisions. Three such standards have been made so far: Country of origin labelling for clothing and footwear products Fibre content of clothing and textiles Care labelling for clothing and textiles (minor amendments to this standard have been approved and are currently being drafted by Parliamentary Counsel). A further standard is being developed for information on second-hand motor vehicles. Parts III and IV deal with product and service safety standards. Product-safety standards exist for children's nightwear, children's toys (inhalation and ingestion hazards to children under the age of three) and bicycles. No service-safety standards exist, nor are any contemplated. The Minister is required under the Act to consult with interested and affected parties, and to consider their views before recommending the making of a consumer information or a product safety standard. Unsafe products may also be banned or compulsorily recalled by the Minister of Consumer Affairs under powers granted by Part III of the Act. Part V provides for enforcement and remedies. Enforcement of the Act is carried out by the Commerce Commission. The Consumer Guarantees Act The Consumer Guarantees Act covers consumer protection in the "post-sale" period (after a purchase is made). It creates a statutory guarantee that is automatically conferred each time a consumer purchases a good or a service from a trader. A consumer is defined as a person who buys goods or services of a kind ordinarily bought for household, domestic or personal use. The Act also provides clear remedies for consumers if a breach of the guarantee occurs. The Act has four major parts. Part I sets out the guarantees for goods. These guarantee that the goods: Are of "acceptable quality" (which is defined in the Act) Are fit for their particular purpose Comply with their description Comply with the sample shown to the consumer Are of a reasonable price (if no price is set before the sale) Will have spare parts and repair facilities available (but only if the consumer is the initial purchaser of the goods within New Zealand). Part II sets out buyers' rights when the goods do not meet the statutory guarantees. Buyers can reject the goods if the fault is serious or cannot be fixed. They can accept a repair or replacement if the fault is minor. In both instances, they can claim money for loss suffered as a result of the fault. If the original supplier will not remedy the fault, or cannot in a reasonable time, the consumer can get a third party to do so, and can claim the cost of repairs from the original supplier. Part III sets out rights against the manufacturer or importer of goods which do not meet the guarantees. This right is significant in that it cuts across the traditional rule of contract privacy, which meant that consumers could only claim against a party with whom they had a contractual relationship i.e. the person who sold it to them. Part V sets out the guarantees for services. These guarantee that the service is: Carried out with due skill and care Fit for a particular purpose Completed within a reasonable time (unless previously agreed) A reasonable price (unless previously agreed). Consumers can reject the service if the fault is serious or cannot be remedied. They can ask for repairs if the fault is minor. They can also get a third party to remedy the fault (if the original supplier will not) and claim the cost of repairs from the original supplier. Subject to limited exceptions relating to business transactions any attempt to contract out of the Consumer Guarantees Act is a breach of the Fair Trading Act. The Consumer Guarantees Act replaced the Sale of Goods Act 1908 for consumer transactions. Unsolicited Goods and Services Act 1975 The Unsolicited Goods and Services Act provides protection for people who receive unsolicited goods, or invoices for unordered goods or services. The Act sets out procedures that consumers should follow when they receive unsolicited goods they do not want. If the sender of the goods has not taken them back after the end of these procedures, the recipient can treat the goods as an unconditional gift and can keep them. The Act makes it an offence to send invoices for unordered goods or services, or to make demands for payment where there is no obligation to pay. Layby Sales Act 1971 The Layby Sales Act sets out rules for "layby sales" - where the goods being bought are not available to the buyer until the purchase price is paid off (usually by instalment). The purchaser only pays the cash price; there is no credit involved. The Act does not apply to layby sales where: The purchase price exceeds $1,000 The goods are a motor vehicle and the seller is a licensed dealer. The Act has three main effects. The layby can be cancelled by the purchaser at any time before the final payment is made. Consumers are entitled to a refund of the money they've paid, less a certain amount to reimburse the seller for any selling costs and any loss in the item's value while it has been laid aside. The Act also provides "rules of priority" when a seller winds up the business or goes into receivership or bankruptcy. The buyer is entitled to a current financial statement about the layby, and the seller may charge a fee for this. Hire Purchase Act 1971 The Hire Purchase Act give certain protections to consumers who enter into the "hire purchase" agreements. Most hire purchase agreements are a type of credit agreement (unless they are interest-free). When a hire purchase involves credit, then the Credit Contracts Act 1981 also applies. The Credit Contracts Act is administered by the Ministry of justice. Schedules to the Act. It also requires that the agreement disclose certain information such as the amount of instalments, the number of instalments and financial details such as the finance rate. Debtors who repay the agreement earlier than agreed are entitled to a statutory rebate, the equation for which is also set out in the Act. The Act also regulates the way in which a seller or financier can repossess goods if the debtor defaults in payments or breaches another term of the agreement. The repossessions provisions of this Act have been substantially altered by the Credit (Repossessions) Bill 1996. The Act also sets out rules for insurance of goods bought on hire purchase. It also sets out the rules relating to guarantors of hire purchase agreements. Weights and Measures Act 1987 and amendments The Weights and Measures Act protects New Zealand's system of weights and measures. It is an essential element in encouraging the fair, accurate and competitive exchange of goods in the marketplace. The principal Act has six major parts. Part I sets out the metric system of weights and measures to be used in New Zealand. It also specifies standards to be used in weights and measures and in verifying weighing and measuring equipment. The standards themselves must be uniform and accurate, and so they are verified at set intervals to ensure they comply with international standards. Part II prescribes the use of weights and measures for trade. It requires that the metric system must be used for goods sold or advertised for sale in New Zealand. It also requires that imported goods not originally using metric weights or measures must have their weights recalculated before being sold here. Part III defines the sale of goods by weight, measure or number. It requires all pre-packaged goods sold by weight, measure or number to have a statement of their weight, measure or number, and that goods meet their stated weight. It also specifies that net (and not gross) weight or measure must be used in statements of weight or measure. Part IV sets out procedures for the verification and approval of weights and measures, and weighing and measuring equipment. All new types of equipment must undergo extensive testing to ensure they are accurate under all conditions (such as extreme temperatures) and that they cannot be manipulated for fraudulent use. Part V deals with administration, and Part VI specifies penalties for offences. The 1991 amendments to the Act made three main changes, introducing: Accredited persons Infringement offence notices Certificates of accuracy. "Accredited persons" are appropriately qualified individuals and firms who are accredited by the Trade Measurement Unit (TMU) to undertake the verification and certification responsibilities formerly done by TMU itself They come mainly from companies already in the business of servicing weighing and measuring instruments. To be accredited, they are required to provide and operate a quality management system which can be audited by TMU or other competent bodies or organisations. To date, 40 organisations and 300 individuals throughout New Zealand have become accredited. "Infringement offence notices" (I0Ns) are part of an active strategic enforcement programme. They provide for an immediate $500 fine, and are an effective alternative to formal prosecution. Since their introduction in 1991, over 300 infringement notices have been issued. "Certificates of accuracy" are an option for traders who wish to make sure their weighing or measuring equipment continues to be accurate. While all equipment is required to be verified (by an accredited person) when it first comes into use, the owner of equipment is responsible for its continuing accuracy and can be fined or prosecuted when equipment is inaccurate. Traders now have the option of having their equipment tested every 12 months. If the equipment is accurate, it receives a certificate of accuracy - which provides a defence against prosecution if the equipment is found to be inaccurate at some point over the 12 months that the certificate is valid for.

Previous

Contents