FAIR TRADING ACT – EXTENDED WARRANTIES

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Under the Consumer Guarantees Act 1993 (CGA) consumers have certain rights in relation to goods and services they buy. These are:

•Goods will be of ”acceptable quality”

•Goods will be “reasonably fit” for the purpose represented

•Goods will be delivered “at a time, or within a period, agreed”

•Goods will “correspond with the description” supplied

•Goods will “correspond with the sample or demonstration model” in quality

•“Facilities for repair of goods and supply of parts” are “reasonably available for a reasonable period”

•That any Manufacturer’s Warranty will be enforceable under Law.

The new Extended Warranty provisions under the Fair Trading Act is intended to help businesses and consumers who enter into extended warranty agreements understand their rights and obligations, particularly as they relate to the Consumer Guarantees Act. Businesses must not misled consumers about those rights.

What is an extended warranty agreement?

It is an agreement that:

•Is between a consumer and a “warrantor” in relation to the purchase of goods or services

•Is entered into around the same time as the goods or services are purchased

•Provides specific warranties, guarantees or udnertakins (either directly or through a third person) for those goods or services

•Is purchased at an additional cost to the goods or services

It is different to a warranty, which is typically a guarantee given on the performance of a product or service at no extra charge.

Who is a warrantor?

A warrantor is someone who provides an extended warranty agreement, such as a retailer who sells extended warranties with the goods or services they are selling; and/or an insurer or manufacturer.

Disclosure rules- what does the warrantor have to provide?

The warrantor must provide a written copy of the extended warranty agreement to the consumer when the extended warranty si purchased. The agreement must be in plain language, legible and clearly presented. It must contain:

•A summary of the consumer’s rights and remedies under the Consumer Guarantees Act

•A comparison of these CGA rights and remedies and the additional protections provided by the extended warranty agreement

•A summary of the consumer’s rights to cancel under the Fair Trading Act (FTA)

•The warrantor’s name, street address, telephone no. and email address.

The agreement must be dated and include all of its terms and conditions. This includes how long it lasts, when it expires and the total price payable.

Prior to entering into the agreement, orally tell the consumer about the right to cancel the agreement within five working days.

For further information, visit, call or email us. You can also visit our website: www.cab.org.nz.

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