Who Qualifies As A Consumer Under The Consumer Guarantees Act In NZ?

If you sell products or services in New Zealand, the Consumer Guarantees Act 1993 (CGA) will come up sooner or later - usually when there’s a return, a complaint, or a customer who’s unhappy with what they bought.

One of the first questions small business owners ask is: “Does the CGA even apply here?”

That question often turns on a deceptively simple issue: who counts as a “consumer” under the CGA.

This article breaks down the consumer definition under the Consumer Guarantees Act in plain English, with practical examples to help you work out when the CGA applies to your sales (and when it might not). We’ll also cover how “contracting out” works for business-to-business transactions, and what to put in place so you’re protected from day one.

What Does “Consumer” Mean Under The CGA?

The CGA gives “consumers” automatic guarantees when they buy goods or services from a supplier “in trade” (i.e. in the course of business).

Under the CGA, a person will generally be a consumer if they acquire goods or services:

• ordinarily acquired for personal, domestic, or household use or consumption; or
• for a price of $100,000 or less (regardless of the type of goods/services); or
• as a vehicle or trailer acquired for use principally on public roads.

However, there are important carve-outs - and for business owners, those “exceptions” are often where the real risk sits.

Consumers For Goods: The Practical Test

A person will generally be a consumer for goods if they acquire the goods:

• for personal, domestic, or household use or consumption (or the goods are under the $100,000 threshold, or a qualifying vehicle/trailer); and
• not for certain “trade” purposes (like resupplying, manufacturing, or repairing other goods in trade).

In practice, when you’re applying the CGA consumer definition to goods, you’ll usually ask:

• Are these goods the kind of thing people typically buy for home/personal use (even if this customer is buying them for a business)?
• Are they being bought for $100,000 or less (or are they a vehicle/trailer for use mainly on public roads)?
• Are they being bought to be resold, used up in manufacturing, or used in a process that produces something else for sale?

Consumers For Services: The Practical Test

For services, the key idea is similar: the person will generally be a consumer if the services are of a kind ordinarily acquired for personal, domestic, or household use.

But it’s not just “personal-type” services that can be covered: services supplied for $100,000 or less can still fall under the CGA’s consumer definition (unless an exclusion applies).

For example, hairdressing services are “ordinarily” personal. Commercial fit-out services are not - although they may still be caught if they meet the $100,000 threshold and no exclusion applies.

This matters because the CGA is not just about refunds. It creates a set of legal obligations around quality, fitness for purpose, timeframes, and remedies.

Why The Definition Matters For Small Businesses

It’s tempting to think the CGA only affects “retail shops” selling to the public. In reality, small businesses get caught by the CGA all the time - including in B2B situations.

That’s why understanding who qualifies as a “consumer” under the CGA isn’t just a legal technicality. It helps you:

• assess whether you must provide a CGA remedy (repair, replacement, refund, or fixing the service);
• set the right expectations for staff handling complaints;
• draft customer-facing terms that reduce disputes;
• decide whether you should contract out in B2B sales; and
• price and manage risk properly (especially if you provide higher-risk services).

Just as importantly, it helps you avoid the two common mistakes we see:

• Over-complying (offering refunds when you don’t legally have to, which can become expensive); and
• Under-complying (refusing a valid remedy, which can escalate into complaints, chargebacks, reputational damage, or disputes).

Common Scenarios: Is Your Customer A “Consumer”?

Let’s make this real. Here are common situations where small business owners get stuck when applying the CGA consumer definition.

1) A Business Buys “Consumer-Type” Goods (And The CGA Still Applies)

One of the biggest surprises in NZ is that a customer can be “in business” and still qualify as a consumer.

For example, if you sell goods that are ordinarily acquired for personal or household use, the CGA may still apply even if the buyer is using them at work.

Example: You sell an office kettle, a standard microwave, a smartphone, or a basic vacuum cleaner to a small business. Even though the buyer is using it in their workplace, those goods are typically personal/household-type items. That can mean the buyer is still a “consumer” for CGA purposes.

Why this matters: if the goods fail and the customer is a “consumer”, they may have CGA rights (e.g. to repairs, replacements, or refunds depending on the failure).

2) The Customer Buys Goods For Resupply (Usually Not A Consumer)

If your customer is buying goods to resell, they are generally not a consumer under the CGA (even if the goods are under $100,000).

Example: You’re a wholesaler selling skincare products to a retailer who will stock and sell them to the public. That retailer is buying for resupply in trade, so they typically won’t be a “consumer” under the CGA for that purchase.

That said, your obligations under the Fair Trading Act 1986 (e.g. not misleading customers) can still apply in many contexts - so it’s not a complete free pass.

3) The Customer Buys Goods To Use In Manufacturing Or Production (Usually Not A Consumer)

Customers who acquire goods to use them up in a manufacturing process (or to produce other goods in trade) are also generally outside the CGA’s consumer definition.

Example: You supply ingredients, raw materials, or components that are used to make a product your customer sells. That purchase is usually not “consumer” under the CGA.

4) The Customer Buys Services That Are Clearly Commercial (Usually Not A Consumer)

If you provide services that are not “ordinarily” personal/household in nature, you’re often dealing with non-consumers in B2B situations.

Example: commercial building services, large-scale equipment maintenance for factories, or specialist consulting for corporate transactions will usually sit outside the CGA consumer definition (depending on the details).

However, many service businesses deliver a mix of personal and commercial services (think: cleaning, photography, IT support). That’s where you need to slow down and assess which category you’re in.

5) Mixed-Purpose Purchases (The Grey Area)

Some purchases sit in the middle - and these are often the ones that turn into disputes.

Example: A sole trader buys a laptop “for work”, but it’s a standard consumer-grade laptop (and they also use it at home). Goods like that can be tricky, because they’re the kind of product that’s ordinarily acquired for personal use.

Also keep in mind the $100,000 threshold: even where something is clearly “for business”, the CGA can still apply unless an exclusion (like resupply/manufacturing/repair in trade) applies or the CGA has been properly contracted out (where permitted).

If you’re regularly selling into these grey areas, it’s worth having tight sales processes (e.g. asking the right questions at checkout for B2B accounts, and ensuring your terms are clear).

What Guarantees Apply If The Buyer Is A “Consumer”?

If the buyer is a consumer, the CGA implies a set of guarantees into your sale (you can’t simply “opt out” for consumer sales).

For goods, these include guarantees that goods are:

• of acceptable quality (safe, durable, free from defects, acceptable appearance/finish, etc.);
• fit for purpose (including any particular purpose the consumer makes known);
• matching their description and (where relevant) any sample/demonstration model; and
• supported by available repair facilities and spare parts for a reasonable time (with some exceptions).

For services, guarantees include that services are carried out:

• with reasonable care and skill;
• fit for a particular purpose (where the consumer relies on your skill/judgment); and
• within a reasonable time if no completion time is agreed.

From a business owner’s perspective, this is where good documentation helps. Clear scope, clear descriptions, and clear customer expectations reduce CGA disputes significantly.

If you sell online, it’s also smart to align your customer comms and policies (delivery, returns, timeframes) with your actual operations - your Shipping Policy and your approach to Returns, Refunds And Exchanges should match what you can genuinely deliver.

Can You “Contract Out” Of The CGA For Business Customers?

Yes - sometimes.

In New Zealand, the CGA allows businesses to contract out of the CGA when the goods or services are supplied to another business for business purposes, as long as contracting out is done properly.

This can be a big deal if you sell B2B, because it lets you manage risk and set clear limits around remedies and liability.

When Contracting Out Can Work

Contracting out is generally only available where:

• the goods/services are supplied to another party in trade (i.e. you’re operating as a business);
• the buyer is acquiring them for the purposes of a business; and
• you have a written agreement to contract out; and
• it is fair and reasonable to do so in the circumstances.

In other words, you can’t just put “No CGA” on a receipt and assume you’re covered.

What “Fair And Reasonable” Looks Like In Practice

Whether contracting out is “fair and reasonable” depends on context, but factors can include things like:

• the relative bargaining power of each party;
• whether the buyer had the chance to negotiate terms;
• how clearly the clause was presented (fine print tends to be risky);
• the nature of the goods/services and the likely loss if something goes wrong; and
• industry norms (what is typically expected in that market).

If you’re dealing with a large customer who insists on their own purchasing terms, contracting out (or negotiating liability) becomes even more important. This is one of those areas where getting a lawyer involved early usually saves time and cost later.

Where To Put Contracting Out Terms

For many small businesses, contracting out is typically included in:

• B2B terms of trade;
• service agreements;
• master services agreements / statements of work; or
• online terms (for example where you have separate business customer terms).

If you sell online, your E-Commerce Terms And Conditions can be drafted to reflect the difference between consumer purchases and business purchases (where contracting out might be available), rather than trying to force one-size-fits-all terms across every sale.

And if you provide warranties or voluntary promises beyond what the law requires, it’s worth making sure those are documented properly - for example in a Warranties Against Defects Policy where relevant.

Practical Steps To Apply The “Consumer” Definition In Your Business

Even if you understand the CGA consumer definition, you still need a practical way to apply it day-to-day - especially if you have staff handling sales and complaints.

Here’s a simple process many small businesses adopt.

1) Identify Whether The Customer Is Buying As A Consumer Or A Business

Start by looking at the nature of the transaction:

• Did they buy under a company name?
• Did they request a GST invoice?
• Is the delivery address clearly commercial?
• Are they buying in bulk?
• Did they sign a service agreement / terms of trade?

None of these factors alone is decisive - but together, they can help you work out the likely category.

2) Consider The “Ordinarily Acquired For Personal Use” Test

This is the part many businesses skip, but it’s crucial. Ask:

• Are these goods/services commonly bought by everyday consumers?
• Or are they specialised commercial inputs, plant, or trade-only services?

This is why two customers can buy the same product and still trigger a CGA debate - because the type of product (consumer-type vs commercial-type) matters as much as the buyer’s label.

3) Be Careful With “No Refund” Or “No CGA” Statements

Blanket statements can cause problems quickly.

For consumer transactions, you generally can’t contract out of CGA guarantees. And if your marketing suggests customers have fewer rights than they actually do, you may create risk under the Fair Trading Act as well.

If you want to manage expectations properly, do it with tailored, compliant terms and clear staff scripts - not a one-line sign at the counter.

In some cases, you might also use a properly drafted Disclaimer (for example, around informational content, limitations of advice, or website materials), but disclaimers don’t replace CGA obligations for consumer sales of goods and services.

4) Set Up A Clear Complaint And Remedy Process

When a complaint comes in, your team should know:

• what information to ask for (proof of purchase, what went wrong, how the product was used);
• how to assess whether the CGA applies (including the $100,000 threshold and whether an exclusion like resupply/manufacturing applies);
• how to decide whether the issue is a minor or substantial failure; and
• what remedy pathway applies (repair, replace, refund, re-supply the service, etc.).

This doesn’t just reduce disputes - it also improves customer experience and protects your brand.

5) Make Sure Your Key Documents Match Your Sales Model

If you sell goods or services to the public (or to a mix of consumers and businesses), your legal documents should be aligned and consistent.

Depending on what you do, that may include:

• consumer-facing terms (online or in-store);
• B2B terms (including CGA contracting out where available);
• a returns policy and shipping policy for online orders; and
• warranty documents if you offer voluntary warranties.

Getting these documents drafted properly is one of the best ways to stay compliant without over-promising. If you need tailored advice on your setup, a Consumer Lawyer can help you design terms that reflect how your business actually operates.

Key Takeaways

• Working out whether someone is a “consumer” is central to whether the CGA applies to your sale of goods or services.
• A buyer can sometimes be a “consumer” even if they’re a business, especially where the goods/services are ordinarily acquired for personal, domestic, or household use or the purchase is $100,000 or less.
• Customers buying for resupply or to use goods in manufacturing/production in trade are usually not “consumers” under the CGA.
• If the buyer is a consumer, the CGA implies guarantees about acceptable quality, fitness for purpose, and reasonable care and skill (for services), and you must provide the appropriate remedies when things go wrong.
• You may be able to contract out of the CGA in B2B transactions, but it needs to be in writing and fair and reasonable in the circumstances.
• Clear terms, aligned policies, and a consistent complaints process can reduce disputes and protect your business from day one.

If you’d like help reviewing your sales setup, drafting B2B terms (including CGA contracting out), or making sure your customer-facing policies are compliant, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.