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New Zealand law explained for everyone

Consumer Guarantees Act 1993

Guarantees in respect of supply of goods

5: Guarantees as to title

You could also call this:

“Promises sellers make about who owns the things they sell you”

When someone sells you goods, they make certain promises about those goods. These promises are called guarantees. Here are the guarantees about ownership that the seller makes to you:

The seller promises that they have the right to sell the goods to you. This means they can transfer ownership of the goods to you when you buy them.

The seller promises that no one else has a secret claim on the goods. A secret claim is when someone else says they own the goods, but you weren’t told about it in writing before you agreed to buy them.

The seller promises that you can keep and use the goods without anyone bothering you about them. However, this promise can be changed if:

You’re buying the goods through a hire purchase agreement, which is a special way of buying things over time.

There’s a security agreement, which is a promise you make to give back the goods if you don’t pay for them. But for this to be okay, two things must happen:

  1. Someone must explain to you how this agreement could affect your use of the goods. You need to show you understand by agreeing in writing.
  2. You must get a written copy of the agreement or the part that talks about this change.

If you’re only renting or leasing the goods, some of these promises are different. The seller doesn’t have to promise they have the right to sell the goods or that there are no secret claims. They just need to promise that you can use the goods without being bothered for as long as you’re renting or leasing them.

If the seller breaks any of these promises, you have the right to complain and ask for things to be made right. The rules for how to do this are explained in Part 2 of this law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM312802.

Topics:
Money and consumer rights > Consumer protection
Business > Fair trading
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Part 1 Guarantees in respect of supply of goods

5Guarantees as to title

  1. Subject to section 41, the following guarantees apply where goods are supplied to a consumer:

  2. that the supplier has a right to sell the goods; and
    1. that the goods are free from any undisclosed security; and
      1. that the consumer has the right to undisturbed possession of the goods, except in so far as that right is varied pursuant to—
        1. a term of the agreement for supply in any case where that agreement is a hire purchase agreement within the meaning of the Income Tax Act 2007; or
          1. a security, or a term of the agreement for supply, in respect of which the consumer has received—
            1. oral advice, acknowledged in writing by the consumer, as to the way in which the consumer's right to undisturbed possession of the goods could be affected, sufficient to enable a reasonable consumer to understand the general nature and effect of the variation; and
              1. a written copy of the agreement for supply or security, or a written copy of the part thereof which provides for the variation.

            2. A reference in subsection (1)(a) to a right to sell goods means a right to dispose of the ownership of the goods to the consumer at the time when that ownership is to pass.

            3. An undisclosed security referred to in this section means any security that was neither disclosed to the consumer in writing before he or she agreed to the supply nor created by or with the express consent of the consumer.

            4. Nothing in subsection (1)(a) or (1)(b) shall apply in any case where the goods are only hired or leased.

            5. Where the goods are only hired or leased, the guarantee set out in subsection (1)(c) shall confer a right to undisturbed possession of the goods only for the period of the hire or lease.

            6. Part 2 gives the consumer a right of redress against the supplier where the goods fail to comply with any guarantee in this section.

            Compare
            • 1908 No 168 s 14
            • 1971 No 147 s 11
            Notes
            • Section 5(1)(c)(i): amended, on (effective for 2008–09 income year and later income years, except when the context requires otherwise), by section ZA 2(1) of the Income Tax Act 2007 (2007 No 97).