Product Liability In New Zealand (2026 Updated)

If you sell products in New Zealand, product liability isn’t something to leave until “later”. One faulty batch, a misleading label, or a supplier issue can quickly turn into refunds, complaints, or even a legal claim.

This guide is updated for 2026 to reflect the current compliance focus for NZ businesses (especially online sellers and importers). We’ll walk you through what “product liability” means in plain English, what laws apply, who can be responsible, and the practical steps you can take to reduce your risk from day one.

And don’t worry - you don’t need to become a legal expert overnight. With the right setup, clear product information, and solid contracts, you can run your business confidently while keeping risk under control.

What Is Product Liability (And When Does It Become Your Problem)?

“Product liability” is a broad term for your legal responsibility when a product you supply causes loss or harm. That can include:

• Injury or property damage (e.g. a defective battery overheating and causing a fire)
• Financial loss (e.g. a product doesn’t do what it was marketed to do)
• Consumer complaints and refunds (e.g. products arriving not as described or failing quickly)
• Regulatory action (e.g. safety issues, misleading claims, or non-compliant labelling)

Product liability can affect almost any business that supplies goods, including:

• eCommerce stores and Shopify sellers
• importers (even if you didn’t manufacture the goods)
• market stall holders
• wholesalers and distributors
• businesses selling their own branded products (including white-label products)
• service businesses that also supply products (e.g. beauty, fitness, trades)

A common misconception is: “If I didn’t make it, it’s not my liability.” In practice, consumers often come to you first - and NZ consumer law can make you responsible even when the issue started earlier in the supply chain.

What Counts As A “Defective” Product?

A product can create liability risk if it’s:

• Unsafe (design defect, manufacturing defect, or inadequate warnings)
• Not of acceptable quality (it breaks early, doesn’t work properly, or is inconsistent)
• Not fit for purpose (it can’t do what a reasonable buyer would expect, or what you promised it would do)
• Misdescribed or misleadingly marketed (including photos, “before and after” claims, or performance promises)

Even if only a small number of customers are affected, a complaint can escalate quickly - especially if it involves safety or is shared online.

Which NZ Laws Apply To Product Liability?

In New Zealand, product liability isn’t usually one single “product liability statute”. Instead, your obligations come from several key areas of law. The main ones most small businesses need to know are:

Consumer Guarantees Act 1993 (CGA)

The Consumer Guarantees Act 1993 gives consumers automatic guarantees when they buy goods for personal, domestic, or household use (and sometimes in other contexts too). These guarantees can’t be contracted out of for consumer sales.

Under the CGA, goods generally must be:

• of acceptable quality (safe, durable, free from defects, and acceptable in appearance/finish)
• fit for purpose (including any specific purpose you told the customer it would meet)
• matching their description (including online listings, labels, and packaging)
• reasonably priced for the quality (price can influence what’s “acceptable quality”)

If a productq major problem occurs, consumers may have the right to reject the goods, get a refund or replacement, and potentially claim compensation for other reasonably foreseeable loss.

Fair Trading Act 1986 (FTA)

The Fair Trading Act 1986 is all about how you market and sell. It prohibits misleading or deceptive conduct and false representations.

This matters for product liability because many “product disputes” aren’t just about defects - they’re about expectations created by marketing, such as:

• “clinically proven” or “guaranteed results” claims
• misleading “limited stock” urgency tactics
• before-and-after photos that don’t reflect typical results
• hidden fees or unclear pricing
• claims about where a product is made or what it contains

If you’re running an online store, your website terms and customer communications should line up with what you’re advertising. Clear E-Commerce Terms and Conditions can help set expectations properly (for example, around delivery timeframes and what happens if an item arrives damaged).

Negligence And General Civil Liability

Separate from the CGA/FTA, a customer (or another party) may claim you were negligent - for example, if you supplied a product you should have known was unsafe, or you failed to provide adequate warnings.

Negligence claims often come up where:

• there’s injury or property damage
• the risk was reasonably foreseeable
• the harm could have been prevented by reasonable steps (quality control, warnings, instructions, recalls)

Product Safety And Recalls (Including Regulatory Expectations)

Depending on what you sell, you may also have product safety obligations under broader regulatory frameworks (for example, sector-specific rules, mandatory standards, or expectations around reporting and recalls).

The key practical point is: if there’s a safety issue, you should have a plan to act quickly - including how you’ll identify affected customers, issue warnings, and coordinate with your supplier/manufacturer.

Who Is Responsible: Manufacturer, Importer, Distributor Or Retailer?

In a perfect world, the “right” party pays. In real life, responsibility can overlap - and the customer will often pursue whoever is easiest to find and deal with (usually the seller).

Here’s how liability commonly plays out in NZ supply chains.

If You’re The Retailer

If you sell directly to consumers, you’re typically on the front line for CGA obligations. That means you’ll often need to handle:

• refunds, repairs, or replacements
• communications with customers
• managing reputational fallout

You may be able to recover your losses from a supplier - but that depends on what your supplier contract says (and whether the supplier is reachable and solvent).

If You’re The Importer

If you import products into New Zealand, you can carry extra risk because you’re effectively bringing the goods into the NZ market and may be treated as the responsible “supplier” in practice.

Importers should be especially careful about:

• verifying product safety and compliance before importing
• labelling and instructions (including any warnings)
• keeping traceability records (which batch went where)
• having strong supplier/manufacturer terms

If your importer relationship is based on a handshake deal or informal emails, it can be hard to enforce quality promises later. A properly drafted Supply Agreement can make a big difference when things go wrong.

If You’re The Manufacturer

If you manufacture or assemble products (including private label goods), you have direct control over design, materials, and processes - which can increase your exposure if there’s a defect or safety issue.

Manufacturers should pay close attention to:

• quality control processes and testing
• documenting specifications
• clear instructions and warnings
• traceability and recall planning

If You’re A Wholesaler Or Distributor

Even if you’re not selling to consumers, product liability can still hit you through:

• claims from retailers you supply
• indemnity disputes (who pays for refunds/returns)
• misleading marketing materials passed down the chain

This is where tight contract drafting matters - not just “who pays”, but how claims are handled, timeframes, proof requirements, and whether you can require a supplier to take back stock.

How Do You Reduce Product Liability Risk In Practice?

Product liability isn’t only about what happens after a complaint - it’s also about the choices you make before you sell anything.

Here are practical steps most NZ product businesses should consider.

1) Get Your Product Claims And Advertising Right

If you’re making claims like “waterproof”, “lasts 12 hours”, “safe for kids”, or “reduces anxiety”, those statements can create legal obligations and risk under the Fair Trading Act.

As a general rule:

• only make claims you can substantiate
• avoid absolute guarantees unless you truly mean them
• ensure photos and descriptions match what customers receive
• don’t hide key limitations (like compatibility requirements or maintenance needs)

If you’re unsure whether your marketing crosses a line, it’s worth getting advice early - fixing a website is far cheaper than defending a claim later.

2) Use Clear Warnings, Instructions, And Labelling

A product can be “fine” but still dangerous if it’s used incorrectly and you didn’t warn people properly.

Common examples include:

• flammable or heat-sensitive products
• products with choking hazards or age restrictions
• electrical items requiring correct chargers/adaptors
• skincare products with allergens or patch-test requirements

For many businesses, a good labelling and packaging process is part of quality control, not just branding.

3) Have A Returns/Refunds Process That Matches NZ Consumer Law

Your refund policy can’t override the Consumer Guarantees Act for consumer customers. But you can create a clear, fair process that helps you handle issues efficiently and consistently.

This often includes:

• how customers contact you about defects
• what evidence you need (photos, order numbers)
• timeframes for assessment and outcomes
• how you handle shipping for returns

Making this process clear in your Online Shop Terms and Conditions helps reduce misunderstandings and can prevent disputes from escalating.

4) Quality Control And Traceability (Especially If You Import)

If a product issue comes up, you’ll want to know quickly:

• which supplier batch is affected
• which customers purchased the affected products
• where you sold them (online store, marketplace, wholesale accounts)

Traceability is also what makes recalls manageable. Without it, you may end up pulling all stock, refunding more broadly than necessary, and taking a bigger reputational hit.

5) Make Sure Your Supplier Contracts Actually Protect You

When there’s a defect, your biggest practical question is often: who pays? If your supplier agreement is vague (or doesn’t exist), you might end up covering refunds and replacement costs yourself.

A strong supplier contract can cover things like:

• product specifications and standards
• warranties about quality, safety, and compliance
• indemnities (where the supplier covers your loss if their product causes harm)
• processes for investigating complaints and defects
• who pays shipping and handling for returns
• recall cooperation and cost allocation

If you rely on a manufacturer or supplier to meet deadlines or quality benchmarks, getting those obligations in writing (and enforceable) is crucial. In some business models, a broader Goods and Services Agreement can also be useful where products and services are bundled together.

6) Consider Your Business Structure And Personal Risk

Product liability issues can get expensive - not just because of refunds, but because of legal claims, downtime, and reputational damage.

While having a company doesn’t “make risk disappear”, the right structure can help manage personal exposure in many situations. If you’re still deciding how to set up, a proper Company Set Up can be part of building safer foundations from the start.

What Legal Documents Should Product Businesses Have In Place?

Legal documents won’t stop every issue, but they can make a huge difference in how manageable a problem becomes.

Here are some of the most common documents we recommend product-based businesses consider.

Customer-Facing Documents

• Website terms / online shop terms to set expectations about ordering, shipping, returns, and liability limits (where legally allowed)
• Warranty wording that aligns with consumer law and doesn’t overpromise
• Privacy documentation if you collect customer info (names, emails, addresses, payment details)

If you’re collecting personal information through your store, email marketing, or customer accounts, a clear Privacy Policy helps you meet your obligations under the Privacy Act 2020 and builds customer trust.

Supply Chain Documents

• Supplier / manufacturing agreements to lock in specs, responsibility, and remedies
• Distribution agreements if other businesses sell your products
• Quality assurance terms (including testing requirements and audit rights, where appropriate)

Business Operations Documents (Often Overlooked)

Even though they’re not “product contracts”, the way your team operates affects product risk - especially in packing, storage, and customer support.

If you employ staff, having a proper Employment Contract (and clear internal policies) helps set expectations about handling complaints, safety checks, and quality processes.

It’s also important to remember that you generally can’t contract out of the CGA for consumer customers, and liability exclusions have limits - so it’s worth getting your documents drafted properly rather than relying on generic templates.

Key Takeaways

• Product liability can arise from defective products, safety issues, misleading marketing, and products that aren’t fit for purpose - and it can affect retailers, importers, distributors, and manufacturers.
• The Consumer Guarantees Act 1993 and Fair Trading Act 1986 are two of the most important laws for product businesses, especially when handling refunds and making advertising claims.
• Even if you didn’t manufacture the product, you may still be responsible to the customer and will often need to manage refunds, replacements, and complaints first.
• Practical risk reduction includes accurate product claims, clear labelling and warnings, consistent returns processes, quality control, and traceability.
• Strong supplier contracts (including warranties and indemnities) are one of the best ways to shift risk back to the party who caused the problem.
• Customer-facing terms, privacy documentation, and properly drafted agreements help you set clear expectations and protect your business from day one.

If you’d like help getting your product business legally protected from day one - whether that’s drafting your customer terms, tightening supplier agreements, or reviewing your liability risk - you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.