Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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If you sell products in New Zealand (whether you’re a retailer, wholesaler, manufacturer, or eCommerce business), the law is doing a lot of “behind-the-scenes” work in your customer and supplier relationships.
Two of the most important pieces are the rules people often refer to as the Sale of Goods Act and the Consumer Guarantees Act 1993 (CGA).
Knowing how these protections work helps you do two things well: (1) reduce disputes over quality, delivery, and payment, and (2) write clearer customer-facing policies and contracts that actually match what the law expects.
Below, we’ll break down the “Sale of Goods Act” rules (as they’re commonly searched) and how they interact with the CGA, in plain English and from a small business perspective.
What Is The “Sale Of Goods Act” In NZ (And When Does It Apply)?
When people search for “sale of goods act” or “sale of goods act nz”, they’re usually looking for the legal rules that apply when goods (products) are sold under a contract.
In NZ, many of these sale-of-goods rules are now found in the Contract and Commercial Law Act 2017 (which consolidated and replaced several older commercial laws). However, the phrase “Sale of Goods Act” is still widely used as shorthand for the core legal principles around:
- when ownership (title) passes from seller to buyer
- who carries the risk if goods are damaged in transit
- what happens if goods don’t match their description or sample
- what rights a buyer has if goods are defective
These rules often matter most in business-to-business (B2B) scenarios, such as:
- you supply stock to another retailer
- you buy equipment or inventory from a supplier
- you manufacture products for a distributor
That said, if you sell to the public, the Consumer Guarantees Act 1993 often plays a bigger role (and can be harder to “contract out” of). We’ll cover that below.
Why This Matters Even If You “Already Have A Policy”
A common trap for product-based businesses is assuming your website returns policy (or an invoice sentence like “no returns”) sets the rules.
In reality, NZ law can imply certain rights and obligations into your sale contracts even if you never wrote them down. This is why having properly drafted Terms of Trade (and aligning your internal processes to them) is a big deal from day one.
What Does The Sale Of Goods Act Actually Protect In A Business Sale?
At a practical level, “Sale of Goods Act” rules help answer: what did the buyer bargain for, and what happens if they didn’t get it?
While the exact legal framing can depend on the contract and the situation, common protections (often treated as “implied terms”) include the following.
Goods Must Match Their Description
If you sell goods “by description” (which is extremely common online and in invoices/quotes), the buyer generally has the right to receive goods that match that description.
For example, if your invoice says “Brand X stainless steel fittings” and you deliver a different grade/material, you can end up in a dispute even if the goods are “similar” in your view.
Goods Must Match The Sample (If Sold By Sample)
If you provide a sample (or a demo unit) and the sale is based on that, the bulk goods should match the sample in quality.
This comes up a lot for wholesalers, importers, and manufacturers-especially where product batches can vary.
Title And “Right To Sell”
In simple terms: you generally need to have the right to sell what you’re selling.
If a buyer later discovers there’s a finance interest, third-party ownership claim, or you never had proper authority to sell, the fallout can be expensive (and can drag your business into someone else’s dispute).
Delivery, Timing, And Risk
One of the most commercially important issues is: when does the risk pass?
For example, if you ship goods to a customer and they’re damaged in transit, the “default” legal position may not match what you assumed operationally.
This is why businesses often spell out delivery terms, risk transfer, and claims timeframes in written trading terms-rather than leaving it to assumptions. Well-drafted Business Terms can reduce arguments about whether a delivery issue is the seller’s problem, the courier’s problem, or the buyer’s problem.
Remedies If Something Goes Wrong
If goods don’t meet the contract requirements, the buyer’s remedies might include (depending on the issue):
- rejecting the goods (in some situations, and usually within a reasonable time before the buyer is treated as having accepted them)
- claiming damages (compensation)
- requiring replacement or repair (if agreed or available)
What’s “reasonable” and what remedy is available can depend heavily on your written contract terms, the seriousness of the issue, and how quickly the buyer raises it.
How Does The Consumer Guarantees Act Affect Sales To Customers?
If you sell goods to consumers (people buying for personal, domestic, or household use), the Consumer Guarantees Act 1993 (CGA) is usually the headline law you need to get right.
The CGA gives consumers automatic guarantees-meaning you can’t simply write “no refunds” and expect that to stick.
Key CGA Guarantees For Goods
Under the CGA, consumers generally have rights that goods will be:
- of acceptable quality (safe, durable, free from defects, and acceptable in appearance/finish, taking price and description into account)
- fit for purpose (including a particular purpose the consumer made known to you)
- matching description (including advertising and representations)
- matching sample (where relevant)
Where goods fail to meet a guarantee, the consumer may be entitled to remedies like repair, replacement, or refund, depending on whether the failure is minor or substantial.
It’s also important to remember the CGA doesn’t apply to every sale. For example, it generally won’t apply where goods are supplied for resupply in trade or for use up/transforming in production or manufacture in trade-and some other transactions (like private sales) may sit outside the CGA as well.
This is why your team should understand the difference between:
- a genuine CGA issue (where the law requires a remedy), and
- a “change of mind” return (where you can set your own policy).
Having a clear, legally aligned approach to Returns, Refunds And Exchanges can prevent complaints escalating (and helps your staff respond consistently).
Don’t Forget The Fair Trading Act
Product disputes aren’t always only about defects. They can also be about what was promised.
The Fair Trading Act 1986 broadly prohibits misleading or deceptive conduct in trade. So, if your marketing overstates what a product can do, or your listing photos and specifications don’t match what’s actually supplied, you can face real risk-even if you had no intention to mislead.
In other words: clear advertising and accurate product descriptions are part of your legal foundations, not just your marketing strategy.
Can You Contract Out Of The Sale Of Goods Act Or The CGA?
This is one of the biggest questions for business owners, because the ability to “contract out” changes depending on who you’re selling to.
Contracting Out In Consumer Sales (Usually No)
If you’re selling to consumers, you generally can’t contract out of the Consumer Guarantees Act.
That means terms like “no refunds under any circumstances” or “all sales final” can create legal risk, especially if they’re used to refuse a remedy where the CGA applies.
Contracting Out In B2B Sales (Sometimes Yes)
If you’re selling to another business “in trade”, there is often more flexibility.
In many B2B transactions, parties can agree (in writing) to contract out of certain statutory protections-particularly under the CGA-so long as it’s done properly and is fair and reasonable in the circumstances.
This is where well-structured trading terms become incredibly valuable, because they can cover things like:
- inspection periods (e.g. buyer must report defects within X days)
- limits on remedies (e.g. repair/replace rather than refund in some cases)
- limitations of liability (within what the law will enforce)
- risk and title clauses (when ownership and risk pass)
However, contracting out isn’t a DIY exercise. If you get the wording wrong, you can end up with:
- terms that don’t effectively contract out at all, or
- terms that are unenforceable (or create reputational issues with customers and partners).
This is a good time to get a lawyer to review your Contract Review approach across invoices, quotes, online checkouts, and supply agreements-because inconsistency is where disputes often start.
What About “No Warranty” Or “As Is” Sales?
Some businesses try to reduce risk by selling goods “as is” or stating “no warranties”.
These phrases can be risky if you sell to consumers (because the CGA still applies). In B2B contexts, they may help if they’re properly drafted and matched with clear disclosure about condition, faults, and intended use.
If you want a more structured approach (especially where you offer a voluntary warranty or pass through a manufacturer’s warranty), it can help to formalise clear warranty information and a practical returns/repairs process that matches what you’re promising publicly.
Common “Sale Of Goods Act” Risk Areas For Small Businesses (And How To Avoid Them)
Most sale-of-goods disputes aren’t caused by one catastrophic mistake. They’re usually caused by small gaps that compound-unclear terms, rushed invoices, verbal promises, inconsistent returns handling, or assumptions about delivery and risk.
Here are common risk areas we see for NZ SMEs, and the practical fixes that help.
1. Unclear Product Descriptions And Specifications
If your listing says “compatible with X” or “waterproof”, make sure that’s accurate and not overstated. If there are limitations (e.g. “water-resistant to light splashes only”), put that in writing upfront.
Practical tip: Ensure your product pages, quotes, and invoices line up. If they contradict each other, you’re more likely to face a disagreement about what was actually agreed.
2. Delivery Terms That Don’t Match Reality
If you’re promising “next-day delivery” but you rely on third-party couriers, you need to be careful about how you describe delivery timeframes and what happens if delays occur.
Practical tip: Put delivery, risk transfer, and claims processes into your written terms, and train staff to avoid making promises outside them.
3. Returns And Refunds Handled Inconsistently
Inconsistency creates two problems:
- customers feel they’re being treated unfairly, and
- your team can accidentally promise remedies you didn’t intend to offer.
Practical tip: Have a single internal process for assessing whether it’s a CGA issue (fault) or a discretionary return (change of mind). Then make sure your written policy reflects that.
4. Over-Reliance On Disclaimers
Disclaimers can be useful, but they’re not a magic shield-especially in consumer transactions.
If you want to use disclaimers (for example, around suitability, third-party compatibility, or information-only content), it’s worth ensuring your Disclaimer wording is appropriate and doesn’t accidentally mislead customers or contradict statutory rights.
5. Weak B2B Contracting (Handshake Deals)
If you supply goods B2B and you rely on informal arrangements, disputes usually show up around:
- payment terms and overdue interest
- what counts as acceptance of goods
- who pays for returns or restocking
- warranty periods and exclusions
Practical tip: Consider having a master set of trading terms and using them consistently, plus having tailored supply agreements for higher-value or ongoing relationships.
What Legal Documents Help You Stay Protected From Day One?
Once you understand the “default” protections under the sale of goods act framework and the CGA, the next step is turning that understanding into documentation your business can actually use.
The right documents depend on what you sell, who you sell to, and how you sell (in-store, online, subscription, wholesale, etc.). But for many NZ product-based businesses, the following are common building blocks.
Terms Of Trade (Especially For B2B)
Terms of trade help set expectations and reduce disagreements about things like:
- pricing, quotes, and variations
- payment terms, interest, and debt recovery costs
- delivery and risk
- returns processes and time limits
- limitations of liability (where enforceable)
If you sell to other businesses, Terms of Trade are often one of the best “value for effort” legal tools you can put in place early.
Website Terms And ECommerce Policies
If you sell online, your checkout flow should match your legal terms. For example, customers should be able to view (and agree to) your terms before purchase.
Your terms should also align with your shipping policy and returns/refunds approach, so you’re not giving mixed messages.
Privacy Policy (If You Collect Customer Data)
Even though privacy law is a separate topic, most product businesses collect customer data (names, addresses, emails, order history). If you’re doing that, a Privacy Policy is usually part of staying compliant and building trust.
Custom Supply Or Distribution Agreements
If you have a key supplier, distributor, or reseller, it may be risky to rely only on purchase orders and invoices-especially when volumes increase.
A tailored agreement can cover quality control, lead times, IP/branding use, exclusivity (if any), and what happens if the relationship ends.
Make Sure Your Documents Match How You Actually Operate
This part is easy to overlook: even the best-written terms won’t help much if your team doesn’t use them consistently.
As your business grows, it’s worth periodically checking that your terms, policies, and staff processes still reflect reality-especially if you’ve expanded into new products, new channels (like marketplaces), or new customer types (like wholesale accounts).
Key Takeaways
- The “sale of goods act” rules (as they’re commonly searched) cover key contract principles for selling goods in NZ, and they’re especially relevant in B2B sales.
- If you sell to consumers, the Consumer Guarantees Act 1993 gives customers automatic rights around acceptable quality, fitness for purpose, and matching description/sample (but it won’t apply to every transaction-for example, goods supplied for resupply in trade are generally outside the CGA).
- You generally can’t contract out of the CGA for consumer sales, but contracting out may be possible in B2B transactions if done properly in writing and in a fair and reasonable way.
- Many disputes come down to unclear descriptions, inconsistent delivery promises, and messy returns/refunds handling-clear written terms and consistent internal processes help prevent this.
- Strong Business Terms and Terms of Trade can reduce risk around risk transfer, acceptance, remedies, and liability limits.
- If you’re not sure whether your terms (or your returns policy) match what the law requires, getting a Contract Review is a practical way to get protected from day one.
If you’d like help reviewing your sales terms, eCommerce policies, or customer-facing documents so they align with the sale of goods framework and the Consumer Guarantees Act, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
