Is my NZ business liable for manufacturer defects?

Published date28 February 2024
Law FirmLegalVision
AuthorMs Tayler Berridge-Smith

When running a business in New Zealand, several responsibilities apply to the products you sell. You will generally be responsible if your business sells faulty or damaged goods to consumers. Consumer law, such as the Fair Trading Act and the Consumer Guarantees Act, establishes standards for the products you sell. The law requires you to offer a remedy to consumers where products are damaged or faulty. If you sell products from a manufacturer, you will still have to follow consumer laws. This article examines whether your business is liable for manufacturer defects.

Your Obligations Under Consumer Law

When you sell products to consumers in New Zealand, consumer law requires you to meet various guarantees about these products. These guarantees aim to protect consumer interests and maintain consumer standards. When you sell products to consumers, you guarantee that they are:

  • fit for purpose. Goods must be fit for their intended purpose. If a consumer purchases a product with a specific purpose in mind, the product should be able to fulfil that purpose;
  • shipped on time and in good condition;
  • of safe and acceptable quality. Products must be of acceptable quality, which means they should be free from defects, safe, and durable. They should also meet the reasonable expectations of an average consumer;
  • the same as your description or sample. If you advertise a product with specific features or qualities, it must live up to those claims;
  • priced reasonably; and
  • sold legally.

As a seller of goods, you are responsible for ensuring your products meet these guarantees, even where a third party has manufactured the goods for you. If something goes wrong, you are a customer's first point of contact and can be held liable for providing a remedy. This remedy might involve repairing the product, replacing it, or refunding the purchase price.

However, if the fault is due to a manufacturer's defect, the manufacturer may be responsible for reimbursing you or replacing the defective product.

Manufacturer Warranties

Manufacturers may offer an express warranty at the time you purchase products from them. These express warranties usually guarantee that a manufacturer will repair or replace faulty goods within a specific timeframe. They usually come as part of the purchase price. These warranties can then be passed on to the consumer who purchases the product from you.

Suppose a customer encounters a manufacturing defect within this warranty period. In that case, you...

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