Acceptable Quality Under The NZ Consumer Guarantees Act Explained

If you sell products, supply services, or run an online store in New Zealand, you’ve probably heard of the Consumer Guarantees Act 1993 (CGA). But one part of the CGA causes a lot of confusion for small business owners: acceptable quality.

“Acceptable quality” sounds simple, but in practice it can affect refunds, repairs, replacements, customer complaints, your marketing, your supplier arrangements, and even how you draft your terms and conditions.

This guide breaks down what “acceptable quality” means under the CGA, how the rules work in real-life scenarios, and what practical steps you can take to stay compliant (without making your customer experience painful or your processes overly complicated).

What Does “Acceptable Quality” Mean Under The Consumer Guarantees Act?

Under the CGA, when you supply goods to a consumer in trade, there’s an automatic guarantee that those goods are of acceptable quality.

This is a key part of the Consumer Guarantees Act that many people look up as “acceptable quality” - and it matters because it’s a guarantee you generally can’t contract out of when dealing with consumers.

Acceptable Quality Is About What A “Reasonable Consumer” Would Expect

Goods are of acceptable quality if they are fit for all the purposes for which goods of that type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable.

That doesn’t mean “perfect”. It means what a reasonable consumer would regard as acceptable, considering things like:

• The nature of the goods (e.g. a budget kettle vs a commercial-grade appliance)
• The price paid (higher price usually increases expectations)
• Statements on packaging or labels
• Anything you said in advertising or sales discussions
• Any other relevant circumstances (e.g. if the buyer told you they needed it for a particular use)

It’s Not Just The Product-It’s The Whole Customer Expectation

“Acceptable quality” often becomes a dispute about expectations. For example:

• If you sell a “waterproof” jacket and it leaks in light rain, the customer will argue it’s not acceptable quality.
• If you sell handmade ceramics with minor variations, those variations may be acceptable if you’ve clearly set expectations (and they’re consistent with “handmade”).
• If you sell a refurbished laptop, the standard is not “brand new” quality-but it still needs to be safe, durable for a reasonable period, and match how it was described.

This is why your product descriptions and sales scripts matter more than you might think.

Who Needs To Comply (And When Does The CGA Apply)?

If you’re a small business, the CGA will usually apply when you sell goods or services to customers who are purchasing for personal, domestic, or household use.

In other words, it’s mostly a B2C law.

Common Small Business Examples Where The CGA Applies

• Retailers (in-store and online)
• Trades and home services (e.g. repairs, installations, maintenance)
• Hospitality businesses selling products (e.g. packaged goods, merchandise)
• Beauty and wellness businesses (services and retail products)
• Fitness studios selling memberships, sessions, and retail items
• Importers and resellers

What About Business-To-Business Sales?

The CGA can sometimes be contracted out of for business-to-business sales, but only if it’s done properly (including being in writing) and it’s fair and reasonable in the circumstances.

This is one of those areas where it’s worth getting advice early-because if you get it wrong, you may think you’ve “excluded the CGA” when you actually haven’t.

Why This Matters Even If Your Supplier “Caused” The Problem

From the customer’s perspective, they bought from you. So even if the issue traces back to a manufacturing defect or damage in transit, you’re often the first point of contact and may still have legal obligations to provide a remedy (depending on the circumstances and who the CGA places responsibility on).

That means compliance isn’t only about your customer-facing policies-it’s also about having strong supplier terms and internal processes.

Acceptable Quality In Practice: What Customers Are Entitled To

When goods aren’t of acceptable quality, the CGA gives consumers certain rights. What you need to do depends on whether the problem is considered a minor failure or a substantial failure.

Minor Failure (Usually Means You Can Fix It)

If the issue can be fixed and isn’t major, you’ll usually be able to choose the remedy. In many cases, that means you can offer:

• a repair, or
• a replacement, or
• a refund

The key point is timing: you need to remedy the problem within a reasonable time. If you don’t, the customer may be entitled to have the issue fixed elsewhere and recover reasonable costs, or (in some situations) reject the goods.

Substantial Failure (Customer Can Reject The Goods)

If the failure is substantial, the customer may be entitled to reject the goods and choose a refund or replacement. “Substantial” can include situations where:

• The goods are unsafe
• The goods are significantly different from the description or sample
• The goods are unfit for purpose and can’t easily be fixed
• A reasonable consumer wouldn’t have bought the item if they’d known about the problem

For small businesses, the tricky part is that “substantial” can be debated. A problem that feels minor to you can feel major to a customer-especially if it prevents them using the item for its main purpose.

Durability: The Most Common “Acceptable Quality” Dispute

A lot of acceptable quality complaints come down to durability-how long something should reasonably last.

Even if the item worked when it was sold, it might still fail the acceptable quality guarantee if it breaks too soon. What is “too soon” depends on the product type, the price, and how it was marketed.

This is where policies about warranties can get confusing. A manufacturer warranty might be 12 months, but CGA rights can sometimes extend beyond that depending on what’s reasonable for the item.

Common Compliance Mistakes Small Businesses Make (And How To Avoid Them)

Most CGA problems aren’t caused by bad intentions-they happen because businesses rely on “standard retail habits” that don’t fully align with NZ consumer law.

Mistake 1: “No Refunds” Signs Or Blanket Refund Policies

You can set change-of-mind rules (like “no refunds for change of mind”), but you can’t refuse remedies where the CGA applies.

In other words: you can’t override the acceptable quality guarantee with signage, website terms, or staff scripts.

If you want your approach to be clear (and legally safer), it helps to have a properly drafted refund framework that matches NZ expectations around returns, refunds and exchanges.

Mistake 2: Advertising Claims That Raise The Standard

Be careful with words like “premium”, “guaranteed”, “lasts forever”, “waterproof”, “scratch-proof”, or “unbreakable”. These claims can increase what a reasonable consumer expects-and that can make “acceptable quality” harder to meet.

Pricing and promotions matter too. If your customer believes they were misled about the advertised price, that can create disputes that sit alongside CGA claims (including under the Fair Trading Act 1986).

Mistake 3: Leaving Complaint Handling To “Case-By-Case” Decisions

When you decide outcomes on the fly, you can end up with:

• inconsistent remedies (which frustrates customers and staff)
• accidental admissions of liability
• refunds you didn’t need to provide (hurting your margins)
• refusals you shouldn’t have made (increasing complaint escalation risk)

A simple internal process and a consistent customer script can reduce the pressure massively.

Mistake 4: Not Aligning Supplier Agreements With Your Customer Obligations

If you’re an importer, reseller, or white-label brand, you’re often “holding the bag” when a product fails. Even if the supplier is at fault, you still need to keep the customer experience compliant.

This is where supplier terms, warranties, and back-to-back remedies become a commercial must-have, not just a legal nice-to-have.

A Practical Compliance Checklist For “Acceptable Quality” (Without Overcomplicating It)

If you want a straightforward way to improve compliance, focus on these building blocks. They’ll help you meet your obligations under the CGA’s acceptable quality rules while keeping your business efficient.

1) Tighten Up Product And Service Descriptions

Set expectations clearly and accurately. Check your:

• website product pages
• packaging and labels
• in-store signage
• sales messages (including DMs and email quotes)

If something is “seconds”, “refurbished”, “used”, “handmade”, or “pre-order”, spell out what that means in practical terms.

2) Train Staff On What They Can And Can’t Say

Staff don’t need to memorise the CGA, but they do need clear guidance on:

• when a customer is entitled to a remedy
• what information to collect (proof of purchase, photos, how the fault occurred)
• what you can offer for minor vs substantial failures
• when to escalate to a manager

This reduces the risk of “on the spot” promises that create legal and operational headaches later.

3) Get Your Terms Right (Especially For Online Sales)

Having well-written business terms won’t let you contract out of the CGA for consumers, but it can help by:

• setting clear change-of-mind return rules
• explaining how fault assessments work (e.g. inspection timeframes)
• covering delivery processes, address errors, and what happens if something goes missing or is damaged in transit
• reducing misunderstandings about what you do and don’t cover

The goal is clarity. When customers understand the process, complaints usually drop.

4) Document Your Refund/Repair/Replacement Process

You don’t need a 40-page manual. A one-page internal checklist is often enough, such as:

• How to log the complaint (date, product, issue, evidence)
• How to assess whether it’s likely a minor or substantial failure
• Who approves refunds and under what thresholds
• Repair and replacement timeframes
• How to communicate outcomes (templates help)

5) Make Sure Any Extra “Warranty” Documents Are Compliant

If you provide written warranties or “warranties against defects”, these need to be carefully drafted so they don’t accidentally misstate consumer rights or create obligations you can’t realistically meet.

For some businesses, having a compliant Warranties Against Defects Policy is a practical way to set a professional, consistent standard across your customer experience.

6) Know When You Need Tailored Advice

Some business models are more complex, like:

• marketplace sellers and drop-shipping setups
• bundled goods and services (e.g. supply + install)
• subscriptions or memberships that include product supply
• high-value items where durability disputes are more intense

If that’s you, it can be worth speaking with a consumer lawyer to pressure-test your policies before issues come up.

How To Handle “Not Acceptable Quality” Complaints Without Damaging Your Brand

Even when you’re legally in the right, a complaint can still become a reputational issue if it’s handled poorly.

Here are practical ways to manage CGA complaints while keeping customers (and your team) calm.

Start With A Simple Intake Process

Ask for:

• proof of purchase (receipt, order number, bank record)
• a description of the issue (what happened, when, how often)
• photos/videos if relevant
• how the item was used (to check if there’s misuse or abnormal wear)

This isn’t about creating barriers-it’s about making a fair, informed decision quickly.

Avoid Absolute Language

Train yourself and staff to avoid statements like:

• “We don’t do refunds.”
• “That’s not covered.”
• “You have to deal with the manufacturer.”

Instead, use language like:

• “Thanks for letting us know-let’s assess the issue and work out the right remedy.”
• “We’ll inspect it and come back to you with next steps within days.”

This keeps you compliant and reduces escalation.

Be Careful With “Wear And Tear” Arguments

Wear and tear can be relevant, but it’s not a magic phrase that cancels CGA rights. The real question is whether the product has been durable for a reasonable period given its type, price, and description.

If you’re going to decline a remedy, document why (and keep the explanation factual).

Close The Loop In Writing

After you decide on a remedy, confirm it by email. This helps prevent misunderstandings and creates a record if the issue escalates later.

Key Takeaways

• The Consumer Guarantees Act 1993 includes a guarantee that goods supplied to consumers are of acceptable quality, based on what a reasonable consumer would expect.
• “Acceptable quality” isn’t the same as “perfect” quality, but it does include durability, safety, freedom from defects, and fitness for common purpose.
• If goods aren’t of acceptable quality, the customer may be entitled to repair, replacement, or refund depending on whether the issue is minor or substantial-and whether the problem is fixed within a reasonable time.
• Blanket “no refunds” policies can be risky if they’re applied to CGA situations-your change-of-mind rules need to sit alongside consumer guarantees.
• Your advertising and product descriptions can increase the acceptable quality standard, so be careful with strong claims (especially around durability and performance).
• A simple complaint-handling process, staff training, and well-drafted terms can reduce disputes and help you comply with the CGA’s acceptable quality requirements.

If you’d like help reviewing your customer-facing terms, refund processes, warranties, or overall consumer law compliance, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.

Note: This article is general information only and does not constitute legal advice. If you need advice about your specific situation, speak with a lawyer.